Ghana’s Pharmaceutical Industry Forecast For Growth

In 2014, pharmaceutical sales in Ghana was USD 12.29 per capita, BMI forecasts pharmaceutical sales in Ghana to double by 2019 to USD 365 million, compared to the proportionally smaller market size of USD 329 million in 2014.

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The Ghanaian pharmaceutical market is made up of approximately 30% locally produced drugs and 70% imported products; the latter originating mainly from India and China (Harper, Gyansa-Lutterodt, 2007). In 2005, the total market was estimated at USD 250 million at retail price level in Ghana and with the assumption that a growth rate of 6-8% (drug expenditure tends to grow above overall economic growth) the total market size was estimated to have been around the range of USD 300 million. Another factor driving growth has been the introduction of health insurance in Ghana, measurably increasing utilization of health care facilities; more patients mean more prescriptions.

According to the World Health Organization, Ghana had an estimated 7.2 million cases of malaria in 2006. Of those cases, 3.9 million of them occurred in children under five years old. Malaria is thus considered a nationwide problem. Past estimates of the economic burden of malaria on households and the economy abound. Asante and Asenso-Okyere, 2003 estimated in a research paper that a 1 % increase in malaria morbidity reduces economic growth by about 0.41 %, and that an episode of malaria costs households US$15.79 (in 2003 dollars). A study by Abotsi, 2012 also further surmised that an episode of malaria costs households between US$10.20 (uncomplicated malaria) and US$46.62 (severe malaria) (in 2007 dollars). Furthermore, Sicuri et al. found that households spent between US$5.70 (uncomplicated malaria) and US$48.73 (severe) in Ghana.

The World Health Organization (WHO) estimates that although costs of investing in malaria elimination between 2016–2030 could reach US$101.8 billion (with another US$673 million invested in research and development annually), the returns on such investment could be 40:1 globally and 60:1 for Sub-Saharan Africa, implying, for example, that for every US$1 spent, economic gains of US$40 or US$60 would be accrued.

The demand for quality anti-malarial drugs alone, has always been high in Ghana which places pharmaceutical manufacturers of anti-malarials under pressure to supply the ever increasing demand of the drug. As per moving annual total (MAT) for the third quarter of 2011, Sanofi generated $6.7 billion and Novartis $5.8 billion, making them the two largest pharmaceutical multinational corporations in emerging markets. With their respective local growth rates of 13.6% (Sanofi) and 8% (Novartis). Norvatis is one of the largest manufacturers of anti-malarial drugs in Africa.

As noted by BMI, Novartis for instance is aiming to increase its presence within Ghana through sales from cardiovascular disease therapeutics. In 2014, Novartis' sales from cardiovascular products worldwide amounted to USD 8.0 billion. Having a local presence in Ghana will open the doors for Novartis to neighboring countries suffering from similar cardiovascular diseases; Ghana has a particularly high rate, with 75% of adults suffering from hypertension, but only 4% having it under control. This demonstrates a combination of both unaffordable medicines and a lack of health care services in Ghana.

In 2014, pharmaceutical sales in Ghana came in at just USD 12.29 per capita, compared to USD 24.8 in Zimbabwe and USD 22.3 in Cote d'Ivoire. Highlighting revenue earning opportunities in Ghana, BMI forecasts pharmaceutical sales in Ghana to double by 2019 to USD 365 million, compared to the proportionally smaller market size of USD 329 million in 2014.

Ghana’s local pharmaceutical companies including, Kinapharma, Ernest Chemist, Tobinco have made inroads in the country’s pharmaceutical sector, the growth drivers of these companies is as a result of the increasingly urbanized population, which means better infrastructure and greater household purchasing power.

Ghana is positioned to also play a key role in driving and accelerating pharma growth in Africa. Underestimating the pharmaceutical industry in Ghana could lead to loss of revenue to most big pharma. Even though, the local pharma sector in Ghana has a very effective large supply and distribution chain systems that provide efficacious medicines across most of West Africa and parts of sub-Saharan Africa and are also available to all income levels, Ghana’s drug manufacturing sector is grappling with how to improve its capacity. For example, industry commentators suggest that out of 3,000 drugs registered by Ghana’s Food and Drugs Board (FDB) only 900 are produced locally.

Potential mergers and acquisitions will therefore increase capacity to help meet the increasing demand. In a bid to increase its capacity, DANNEX Pharmaceutical acquired local drug manufacturer Starwin Products Limited in 2014 and in 2016 also went on to acquire Aryton Drugs, a subsidiary of Adcock Ingram. ASPEN also acquired 65% of the issued share capital of KAMA, a privately owned company incorporated in Ghana for a purchase consideration of USD4.5 million.

Ghana presently serves as the regional hub for pharmaceutical manufacturing and distribution to the over 300 million people who live within the Economic Community of West African States (ECOWAS). There is still room for lots of growth in Ghana's pharmaceutical manufacturing. Even though most factories in Ghana are not operating at full capacity, Ghana’s pharmaceutical exports to other countries in the region are valued because of its high quality. This industry has many advantages for investors, such as a sound structure in place and access to a large and in-need market.

Our data shows that the value of M&A transactions carried out in the pharmaceutical product and preparation sector from 2004 to 2016 stood below $25 million. This reflects how the volume of pharmaceutical deals in Ghana has remained relatively flat though it has great potential.