Africa is fast emerging as a favourite export destination among mid-sized Gujarati pharmaceutical companies. In the last two years, pharmaceutical exports from the state to different African countries has increased by around 30 to 40 per cent.
"For small and mid-sized companies who do not have adequate infrastructure to meet the European Union or US Food and Drugs Administration(USFDA) countries in Africa offer good business opportunity. The regulatory authorities are liberal and the organised sector is not well developed," said Mahendra G Patel, managing director, Lincoln Pharmaceuticals Ltd (LPL).
The Rs 130 crore firm which has drug registrations for about 100 formulations in more than 10 African countries exported drugs worth Rs 40 crore to Africa in 2010-11 and has set an export target of Rs 65 crore for this financial year.
The average cost of clinical trials to generate safety related data required by a particular country is in the range of Rs 3-5 crore.
"This is in addition to the cost of development of the drug as well as overhead costs. A relatively liberal regulatory environment in Africa makes it easier for smaller firms to set foot in that market. While regulated markets offer higher margins as products could be priced at a premium, they are relatively more difficult to crack," Mahendra Patel said.
The African market, at the same time, is hugely dependent on imports. The African generic drugs market is clocking a 25-30 per cent growth rate on a year-on-year basis, and is hugely dependent on imports, said Kamlesh Patel, chief executive officer, West Coast Pharmaceuticals, a city based company.
He was a part of a 55 member delegation to Nigeria sent by the Pharmaceuticals Export Promotion Council of India (Pharmexcil) under its 'Brand Pharma India' campaign recently.
Nigeria, Rwanda, Madagaskar, Zimbabwe, Mozambique, Tanzania are among the major countries that import drugs from India. Pharmexcil has set a target of Rs 300 crore for exports to Nigeria alone for this financial year.
Buoyed by this growth story, Gujarat-based firms like Astra Lifecare have gone in for backward integration to support their business in Africa.
Azizali Bhaidani promoted Astra Lifecare started off as drugs trading and marketing company with operations in East African countries like Uganda, Tanzania, Kenya, Rwanda among others. It then went ahead and set up an export-oriented-unit (EOU) at Bavla near Ahmedabad that would manufacture formulations.
Astra will be expanding capacity by around 2.5 times from the current capacity of 10 million tablets and 5 million capsules per day to support its Africa-expansion plans. The company is looking at doubling its turnover to Rs 150 crore during 2011-12 from its Bavla EOU.
Some like Cadila Pharmaceuticals have also decided to utilise the opportunity thrown open by the governments of the African nations that are promoting domestic pharma manufacturing by introducing friendly policies, incentives, and investments in the industry.
The Ahmedabad based privately held company has is all set to step into Rwandan soil. CSM Global Pharma, a joint venture between Cadila Pharma and US-based Holtzman Group will invest $65 million to set up a pharmaceutical manufacturing facility in Kigali, Rwanda in association with the Rwandan Development Board (RDB).
"There indeed has been a spurt in exports to the continent. Even small firms like Medivil Pharmaceuticals, Callion Laboratory have started to explore opportunities to countries like Nigeria and Rwanda," said an Indian Drug Manufacturers Association (IDMA) official.
