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									       SECTOR STRATEGY
FOR ACCESS TO MEDICINE IN COMESA




SURVEY OF THE PHARMACEUTICAL INDUSTRY IN COMESA




                        12 April 2011




         1|ac c es s   to   medicine   in   COMESA
SURVEY OF THE PHARMACEUTICAL INDUSTRY IN COMESA

TABLE OF CONTENTS

1.   INTRODUCTION                                                                                                                                            4
2.   EGYPT                                                                                                                                                   4
     1.1. Production ......................................................................................................................................... 5
     1.2. Composition of Egyptian Trade in Pharmaceuticals .......................................................................... 5
3.   KENYA                                                                                                                                                   7
4.   DR CONGO                                                                                                                                                8
5.   ETHIOPIA                                                                                                                                                9
6.   MALAWI                                                                                                                                                10
7.   MAURITIUS                                                                                                                                             10
8.   UGANDA                                                                                                                                                11
9.   ZAMBIA                                                                                                                                                12
     9.1 Problems reported by the Zambian manufacturers ........................................................................ 12
     9.2 How are the procurement issues being addressed?........................................................................ 13
     9.3 Is production of APIs or other raw materials a possibility? ............................................................. 13
10. ZIMBABWE                                                                                                                                               14
11. SUMMARY                                                                                                                                                14




                                          2|ac c es s          to    medicine              in    COMESA
ACRONYMS


ACDIMA
APIs      Active Pharmaceutical Ingredients
APML      Ajanta Pharma (Mauritius) Ltd
ARV       Anti-Retroviral
COMESA    Common Market for Eastern and Southern Africa
DRC       Democratic Republic of Congo
EAC       East African Community
EIPICO    Egyptian International Pharmaceutical Industries CO.
GDP       Gross Domestic Product
GMP       Good Manufacturing Practice
LDCs      Least Developed Countries
MVA       Manufacturing Value Added
OTC       Over the counter
PASS      Pharmaceutical Administration and Supply Service
PHARMID   Pharmaceutical and Medical Supply Import and Wholesale Share Company
PPPs      Public Private Partnerships
SADC      Southern African Development Community
VAT       Value added tax
WTO       World Trade Organization




                            3|ac c es s   to   medicine   in   COMESA
     SURVEY OF THE PHARMACEUTICAL INDUSTRY IN COMESA


1. INTRODUCTION

This paper surveys the existing pharmaceutical industry in COMESA member states,
commencing with the major producers, Egypt and Kenya, and then reviewing a
selection of other member states with very different profiles, namely Ethiopia, Malawi,
Mauritius, Uganda, Zambia and Zimbabwe. The survey considers the industry profile in
each of these member states, their achievements and the problems that they face.

2. EGYPT

A report by the pharmaceutical market researcher Episcom (Egypt, Pharmaceutical
Market Intelligence Report, Quarter I 2010 („the Episcom report‟), estimates that Egypt
had a pharmaceutical market worth US$ 2.3 billion in 2008 and estimated at US$ 4.1
billion in 2010. This would be equal to approximately US$ 48 per capita, 1.9% of GDP
and 30.6% of health expenditure. However, the projections in the report should not be
taken at their face value since the two numbers above would imply an annual growth
rate of the pharmaceutical market in period 2008-2010 equal to 33%, which is much
more than the annual growth rate in period 2004-2008 (18.9 %) and the annual growth
rate projected for period 2010-2015 (15%). Even this 15% growth rate seems to be on
the high side because it is achieved by assuming a constant share of the
pharmaceutical market in GDP and multiplying the share with GDP projections which
would imply 15% GDP growth rates. This is does not seem to reflect the real picture,
and in contradiction of the growth rates of around 7% reported just one line below the
GDP levels.
Less than one fifth of the market was supplied by importers in 2008. Half of the total
market was supplied by local private producers, almost one quarter by multinationals‟
Egyptian affiliates and about one tenth by Egypt‟s public producers. Between 2004 and
2008, the share of imports and domestic private production have increased while the
relative importance of public production and local production by multinationals have
somewhat declined. If the market is evaluated in terms of the number of units sold, the
share of imports is even smaller (6.8%). This implies that imported drugs sell at a higher
unit price than drugs from local sources, probably because they are on average more
advanced than domestic production. Recently drug counterfeiting has become a serious
problem.




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Figure 1 Suppliers to Egyptian pharmaceutical market


                 Suppliers to Egyptian pharmaceutical
                                market
                                                       Local public
                                                          10%

                                                                      Imports
                                                                       17%
                                     Local private
                                        50%            Multinationals in
                                                            Egypt
                                                             23%




Episcom Report, 2010



1.1.    Production

According to the Episcom report, Egypt has around 68 pharmaceutical producers, which
invested US$ 1.2 billion and employed about 22,000 people in 2007. Exports represent
10% of Egypt‟s pharmaceutical production, the rest is sold on the local market.
Each producer falls into one of the following categories:
       Local public producers
       Local private producer
       Multinationals with manufacturing facilities in Egypt

Public production is represented by the state-owned Holding Company for
Pharmaceuticals, Chemicals and Medical Appliances („Holdipharma‟). HoldiPharma
does not only produce pharmaceuticals but is also involved in export, import and
distribution. It operates through its 12 affiliated companies, nine of which are producers
while the remaining three are responsible for trading and packaging.
Local private producers represent the vast majority of all producers. The most important
ones include ACDIMA, Amriya, EIPICO, Minapharm, October Pharma, Sedico and
Tenth of Ramadan. They produce generic drugs and drugs under licence from
multinational companies. EIPICO is probably the largest producer in Egypt, with sales in
2001 equal to US$ 67.5 million.
The multinational producers operating in Egypt are AstraZeneca, Bristol-Myers Squibb,
GlaxoSmithKline, Hikma, Novartis and Pfizer. They produce both branded products as
well as generics.

1.2.    Composition of Egyptian Trade in Pharmaceuticals

According to the Episcom report, Egypt‟s pharmaceutical exports equalled US$ 131
million and imports equalled US$ 646 million in 2006. While the vast majority of Egypt‟s

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pharmaceutical exports consist of finished or semi-finished medicaments, raw materials
represent a substantial share of its imports (39% in 2006).


Figure 2 Composition of Exports 2006             Figure 3 Composition of imports 2006


         Composition of                                   Composition of
         exports (2006)                                   imports (2006)

                         Raw
                        material
                          s                                                      Raw
                         14% Semi-                                              material
                               finished                                           s
                               medica                                            39%
                                 ments
                                                                Finishe
              Finishe            13%
                                                                   d
                 d                                              medica
              medica                                            ments
              ments                                              57%                      Semi-
               73%                                                                      finished
                                                                                        medica
                                                                                         ments
                                                                                           4%
Episcom Report, 2010

Europe accounts for more than two thirds of Egypt‟s raw-material imports and almost
90% of its imports of medicaments.




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Figure 4 Importers of raw materials                  Figure 5 Importers of medicaments


         Importers of raw                                         Importers of
            materials                                             medicaments


                 Others    German                                             German
                  14%                                             Others         y
                              y
         India                                                     20%         14%
                            16%
          6%
                                      Switzerl           Netherla                        Switzerl
       Italy                           and                                                and
                                                           nds
        7%                             12%                                                14%
                                                           7%
        China                                                 UK                     Belgium
        11%                        Belgium
                                                             12%                       9%
                                    12%
                 USA                                              USA
                          France                                  3%       France
                 11%       11%                                              21%



Episcom Report, 2010


3. KENYA

The manufacturing industry in Kenya is the second largest in the COMESA area. It
represents more than 2% of Manufacturing Value Added (MVA) in Kenya and employs
around 3,400 people. The ratio of exports to imports is fourfold in this sector. The
estimated market size in 2008 was US$240 million but this could be greater if donor
purchases and illegal trading are taken into consideration.

The Kenyan pharmaceutical industry comprises 42 manufacturing companies and
supplies less than 30% of the market excluding donor purchases. When donor
purchases are taken into consideration, the local industry‟s share of the market is much
lower. One major multinational is established in Kenya (GSK) but it carries out mainly
trading operations with little manufacture. The other companies are locally owned and
tend to range from small- to medium-size and have similar generic product ranges.

Kenyan companies are producing at between 50-70 percent of their actual capacity
which has a significant bearing on the unit costs. As a consequence, this affects the
competitiveness of the products on the market. Compared to imports, the prices of
generics manufactured in Kenya are much higher. Improving efficiency in this sector is
therefore, one of the challenges faced by the Kenyan pharmaceutical industry.


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As regards Good Manufacturing Practice (GMP) standards, few manufacturers have
invested in the necessary plant and equipment in order to meet the World Health
Organisation‟s standards. This excludes them from donor-funded procurement. For
other companies, this has not been possible due to lack of finances or simply due to
their choices to produce their existing product range. The drug regulatory body (the
Pharmacy and Poison Board) also has insufficient experience and is short of staff to
carry out effective inspections.

Another problem relevant to this industry is the shortage of trained pharmacists. The
level of pharmacists in Kenya is still low. Locally trained ones have problems working in
the industry.

Kenya also faces the inability of local manufacturer to undertake bioequivalence
studies. The main reasons are financial limitations, limited know how and lack of
national guidelines on this subject.

Over and above problems faced at the production level, the Kenyan manufacturers also
have to face issues such as internal competition among themselves, increasing
volumes of low priced imports, a zero-rated tariff for pharmaceuticals, insufficient quality
tests for imported drugs and low penalties for import of substandard products.

Kenyan producers are also disadvantaged especially regarding donor-funded
procurement mainly because of the non-WHO prequalification status, inability to
produce in large volumes and to the technical standard required. Concerning local
procurement from the government, import prices downplay local products and very often
companies face delays in VAT and duties refund.

Kenya‟s largest export markets are Tanzania and Uganda. Given that these countries
import in small volumes, Kenya has comparative advantage over China and India where
imports are in full container loads and freight volumes have to be added on. The other
advantage is that credit terms are more attractive from the Kenyan side.

In order to be competitive with increasing imports, Kenyan manufacturers face the
challenge of upgrading their existing set up and partnering with foreign companies. This
will provide additional strength to the companies and enable them to be on a level
playing field with their competitors.

4. DR CONGO

The pharmaceutical manufacturing activity in DRC consists of 28 local manufacturers.
Most of them are companies owned by DRC nationals who produce essential medicines
(mainly OTCs). The majority of these plants are based in Kinshasa, the capital city.
DRC is a net importer of pharmaceutical products and locally produced pharmaceuticals
represent an estimated 15% of the total demand. The manufacturers do not have GMP
standards but claim to be audited by European companies.



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The major problem faced by the pharmaceutical producers of DRC is that of counterfeit
products. According to the manufacturers this issue seems to be difficult to control. The
other problems faced by DRC pharmaceutical manufacturers are the high cost of raw
materials due to customs duties on the products. Pharmaceutical products in DRC are
subject to customs duties. There are no provisions for local products to benefit from
any preference during tenders. Almost all expenditure related to pharmaceuticals comes
out of the consumer‟s pocket.

5. ETHIOPIA

Ethiopia is one of the most populated countries of Africa with a high demand for
pharmaceutical products and yet has an annual health expenditure per capita of only
(PPP) US$30. The manufacturing for pharmaceutical products in Ethiopia is quite small.
There are actually 8 main private local manufacturers of various pharmaceutical
products including medical supplies, finished product formulation using imported raw
materials and one of them produces empty gelatine capsules. Two companies have
developed joint ventures. The local production represents less than 10% of the total
market for pharmaceutical products. The industrial base is not well developed and the
manufacturing companies have relatively low production capacities. Usually local
manufacturers tend to be given preference in the case of procurement from the
government. The prices of the locally manufactured products are actually higher than
imported products.

None of the Ethiopian manufacturers meet the World Health Organisation‟s basic Good
Manufacturing Practice (GMP) standards. This is explained by the low level of technical
capabilities. In terms of personnel Ethiopia seems to have enough trained pharmacists.
One of main issues that ought to be addressed by local manufacturers is the need to
access updated technology.

The import and distribution of pharmaceutical products is done through public sector,
private sector, NGO's and international organizations. The Pharmaceutical
Administration and Supply Service (PASS) of the Ministry of Health and the
Pharmaceutical and Medical Supply Import and Wholesale Share Company
(PHARMID), which is a quasi−governmental organisation, are responsible for
importation and distribution to the public sector. The public procurement is done through
international and local tenders as well as by direct purchasing or negotiation.

Private companies import directly but have to abide by the list of Authorised products.




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6. MALAWI

Malawi represents a market of about US$100million of which only about 8-10% is
produced locally. Most of the products are imported mainly from India and China and
only about 2% from the region. There are 10 major importers in the country and 4
manufacturers. The local importers mainly supply to the government which represents
60 -75% of the market. The rest of the market is mainly absorbed by the mission
hospitals (who tend to import directly) and private medical practices. The
pharmaceutical manufacturing companies are Kantum Products, Pharmanova, MPL and
SADM. All of them manufacture over the counter (OTC) medicines and some IV fluids.
The competition for local manufacturers is first of all among themselves (with the OTC
products) to some extent having the same range of products but the main competition is
from Kenya. Imports from Zambia tend to be rather complementary.
Locally manufactured pharmaceutical products tend to be 100% more expensive due to
high cost of imported materials and labour. The manufacturers also face the problem of
skilled labour and efficiency.

Local products tend to get 10% preference from government tenders but whether this is
always applicable is debatable. Local importers are disadvantaged regarding
international tenders as they have to quote in Kwacha.

One of reasons for importing from the region is the fact that the products can land in
Malawi in 3-4 days either from Kenya, Tanzania or Zambia. It is not always a question
of cost effectiveness but that of the time factor.

The pharmaceutical manufacturing business in Malawi still has some potential but its
main aim will be to cater for the low volume and ensure availability of OTC products at
very short delays.

7. MAURITIUS

Mauritius is a relatively small market for pharmaceutical products by COMESA
standards with 1.2 million people. The Mauritian pharmaceutical sector is largely
dominated by imports. There are 2 local companies manufacturing pharmaceutical
products in Mauritius.

Mauritius Pharmaceuticals Manufacturers is Mauritian owned and has long catered for
some generics and over the counter (OTC) products for the local market. It has been
bought twice by Indian partners. The new partners who acquired the company will be
starting operations soon to produce both for the local and regional markets.

Ajanta Pharma (Mauritius) Ltd (APML) is an Indian company which started operations in
1996. It was partly producing generics for the local market but the main activity was the
production of generics for western Africa. The main reason for setting up operations in
Mauritius was because of the investment incentives but also to be able to cater for
smaller volumes. Mauritius, being a French speaking country, has an advantage in

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terms of the labelling and documentation. Ajanta Pharma has been exporting to mainly
central and western Africa but also to Madagascar, Mauritius and Comoros in the Indian
Ocean. The products that it manufactures include Anti-malarials, Antibiotics, Anti-HIV,
Antibiotics/Anti-bacterials, Anti-tuberculosis, and an Ortho-Rheumatologic range as well
as diverse pharmaceutical formulations such as tablets, capsules and injectables.
APML is compliant with WHO GMP standards and has research and development
support from its parent company in India.

8. UGANDA

There are currently 8 manufacturers of pharmaceutical products in Uganda which
produce mainly injectables, tablets, syrups and liquid mixtures and surgical gauze. The
number of pharmacies and drug shops was estimated at 425 and 4,370 respectively in
2008. Inputs for the manufacture of these products are imported from all over the world
including India and China. Given that there is no customs duty on pharmaceuticals in
Uganda, local production faces strong competition from similar imported finished
products which are much cheaper (40-60%).

Quality Chemicals has a purchase agreement from the government which absorbs all its
production. This is however, not the case with the other producers who mostly sell on
the local market. Government buys less than 10% of its requirements from local
producers. The rest is imported mainly from India, China and also from Kenya.

There seem to be availability of skills in the country with various universities providing
courses for pharmacists and pharmacy technicians.

As an LDC, Uganda enjoys special treatment that currently allows it to deny patent
protection for pharmaceutical products. The government has incorporated this in its
industrial policy to attract investors in this sector. In February 2009, a joint venture was
launched between Quality Chemicals, a Ugandan local pharmaceutical manufacturer,
and Cipla, one of the major Indian generic manufacturers, for the manufacture of
several anti-retroviral (ARV) drugs and anti-malaria medicaments, at a new production
site in Luzira, Kampala, Uganda. For some time, the production site at Luzira was
limited to drugs formulation activities. All ingredients required for the production of the
drugs, including active pharmaceutical ingredients (APIs), were imported from Cipla‟s
manufacturing plants in India. Cipla applied for a WHO pre-qualification certification on
behalf of Quality Chemicals. On 10 March 2010, Quality Chemicals became the first in
sub-Saharan Africa to obtain WHO pre-qualification of a pharmaceutical manufacturing
plant outside South Africa (please see case study 2 above). However, a key element in
reducing production costs is to make the joint venture less dependent on imported
pharmaceutical ingredients, especially APIs. Cipla envisaged establishing an on-site
R&D centre, pending certain developments under Uganda‟s domestic intellectual
property legislation. Senior Cipla staff have especially voiced concern regarding
pending implementation of the “mailbox” provision (discussed in the introduction).

Regarding harmonization of registration and on pooled procurement of medicines, the
Ugandan government supports the harmonization of registration and management of
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drugs and this is being done through the East African Community. Pooled procurement
may disadvantage local or regional manufacturers if it results in more imports from
outside the COMESA region but the government has not taken a position on this. Some
manufacturers see it as a threat for pharmaceutical manufacturing in the region.

Some of the manufacturers are of the opinion that COMESA should develop a
pharmaceutical base and put restrictions on drugs entering COMESA when they can be
produced locally.

9. ZAMBIA

Zambia has four main manufacturers of pharmaceutical products, all based in Lusaka.
They are IDC, Pharmanova, Teejay and VYKing Pharmaceuticals. It is estimated that
the local production represents between 10-15% of the demand for pharmaceuticals in
Zambia. [The rest is imported, predominantly from India.] Locally manufactured
products consist of over-the-counter medicines such as tablets, pain killers, syrups and
also some antibiotics and injectables with each company specialising in some niche
products. Almost all of the raw materials are imported except for water and sugar. All
other raw materials are sourced mainly from India and China. A small percentage is
also imported from South Africa.

The local production is split between the supply to the local market and exports to the
regional markets. The main destination is Malawi with some exports to southern DRC.
This is also due to partnership of some Zambian manufacturers with Malawian
companies.

The manufacturing companies in Zambia do not meet WHO prequalification standards
which limits their production as it excludes supply of products for some public tenders.
Some of them have thought of upgrading which would require significant investment but
are faced with the risk of not being able to sell to the local market. Although they are
supposed to have a 15% preference over imported products in government tenders this
is not always the case. Not being able to access guaranteed market locally is a major
concern for local companies. For one of them the business is sustainable only because
of the export market.

Companies interviewed indicated that they are ready to partner with foreign
manufacturers with higher levels of manufacturing capabilities and higher-end products
if there is government support at the local procurement level. This could also open
avenues for export on the regional market such as Malawi, DRC and Zimbabwe.

9.1 Problems reported by the Zambian manufacturers

Despite existing investment incentives for manufacturers in the pharmaceutical sector,
they have to pay import duties (5%-25%) and VAT (16%) on raw materials and also
VAT on active pharmaceutical ingredients (APIs) and packaging material. The VAT is
refundable but constitutes additional financial burden on the companies‟ cash flow as
refunds usually take between 6-8 months. The paradox is that similar finished products

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are VAT-free which represents a serious competitive disadvantage for local
manufacturers of similar products. For some products the price difference can be as
high as 100%. VAT or duty exemptions can be granted on an individual basis, but there
is no guarantee of result or immediate consideration if requests are made. Each
manufacturer seemed to have its own way of dealing with the administration. This
constitutes a serious hindrance to ensure competitiveness and maintaining a level
playing field in this area for companies, especially considering that the manufacturing of
pharmaceuticals is one of the investment priority sectors set by the Zambian
Development Board.

Other problems faced by the local manufacturers in Zambia are the necessity to keep
significant stocks of both raw materials and finished products. This again adds pressure
on the companies‟ finance with an added risk of stocking products with limited shelf life.
Qualified manpower is another problem faced by local manufacturers. There is a
serious lack of skilled labour at all levels and trained personnel tend to leave the
company earlier than expected. The cost of labour is also an issue. Very often at the
technical level, technicians have to be called in from abroad. It is difficult to employ
foreigners due to restrictions in issuing work permits.

9.2 How are the procurement issues being addressed?

In order that manufacturing operations are viable the four local manufacturers are
seeking guaranteed purchases by the government and have organized themselves as
the Zambian Pharmaceutical Business Forum. In a letter dated 4 October 2010 to the
Permanent Secretary of the Ministry of Health, they proposed a scheme of direct
manufacturing for 39 essential medicines, with production of each medicine allocated
among themselves. The scheme included a plan on import of raw materials.

Although the idea of pooled procurement seemed to be of interest to all manufacturers
interviewed, it is difficult to implement in practice because the orders are always given
behind time. Pooling of orders will result in delays and would make delivery even later.
Direct local manufacturing would be a more reliable means of supply in their opinion.
Zambia has not participated in pooled procurement but instead entered into a
framework contract with UNIMED for two years up to August 2010 to supply all
requirements of the Ministry of Health. Coordination among government procurement
units to dispose of expired medicines would be a good idea. The sole supplier in
Zambia would have actually benefitted when products expired.

9.3 Is production of APIs or other raw materials a possibility?

The Zambian market is too small to justify the production of APIs or other raw materials.
Due to Zambia‟s landlocked situation, high transport costs of ingredients for the
production of APIs or other raw materials would not make production very competitive
even if the regional market was targeted. It would be difficult to compete with Indian and
Chinese prices. Even sourcing from the wider region (South Africa) does not seem to be
viable because of the high prices.



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10. ZIMBABWE

The Zimbabwean economy is still at a crossroads with a number of challenges ahead.
However, investment in the pharmaceutical sector seems to be one the government‟s
priorities. The present expenditure per capita on healthcare is quite low around US$18
at the moment. Zimbabwe does not have an operational national health care system
given the present circumstances which implies that all health related expenses are met
out of pocket.
A drug market survey for 2009 conducted by Zimbabwe Pharmaceuticals and
Healthcare Report indicated that generic drugs comprised 68.5% of the total drug
market followed by the over the counter („OTC‟) segment at 22.5%.
Zimbabwe has 14 domestic pharmaceutical manufacturers and all are GMP-compliant.
None of these manufacturers are owned by, or subsidiaries of, multinational companies.
The Zimbabwean manufacturers produce both generic and OTC products. Zimbabwe
does not have the capacity to carry out research and development.
The majority of the pharmaceutical local demand is still met by imports. All inputs for
local production are also imported. Similar to some other COMESA member states,
Zimbabwe imposes duties on raw pharmaceutical materials but none on imported
finished products.
Zimbabwe exports to countries in the region, namely Zambia and Malawi. These
exports were worth a total of US$1.8million in 2009.
According to latest reports from the Zimbabwe Pharmaceuticals and Healthcare Report,
“the Zimbabwean drug maker Granite-side Chemicals is currently struggling to achieve
sustainable output. Staff shortages and a lack of adequate funding or credit-lines from
the government have been highlighted as a massive part of this problem.” The same
report mentions that “another generic drug maker Varichem, (sole manufacturer of a
combination antiretroviral (ARV) treatment), has closed one of its two plants in
Zimbabwe.” This is also exacerbated by lack of maintenance and low availability of
spare parts for many manufacturers.


11. SUMMARY

 11.1 Manufacturing capacity
Pharmaceutical manufacturing capacity in COMESA is focused in two countries: Egypt
and Kenya.

Egypt has an internal market which is almost equivalent to the total imports for the
whole of COMESA. It stood at US$2.3 billion in 2008 and a cautious estimate for 2010
was US$2.7billion. Kenya has an internal market worth US$240 million or around 10%
of that of Egypt.

Egypt has by far the most advanced set up for the manufacture of pharmaceuticals in
COMESA with 68 pharmaceutical producers, with a total investment level of US$1.2 billion and
employing around 22,000 people. Egypt‟s experience in the pharmaceutical sector dates back
to the 1930's. Egypt produces finished and semi-finished products but imports significant

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amounts of raw materials. The vast majority of Egyptian production is sold on the local market;
only 10% is exported.

Egypt‟s manufacturing industry includes public sector, local private sector and multinational
producers. HoldiPharma is a state-owned holding company involved not only in the production
but also export, import and distribution of pharmaceuticals. There is a number of large local
private sector producers who manufacture both generic drugs and branded drugs under
license from multinational companies. Six major multinationals operate in Egypt: AstraZeneca,
Bristol-Myers Squibb, GlaxoSmithKline, Hikma, Novartis and Pfizer, where they are involved in
the production of both branded and generic drugs both through direct local manufacturing and
licensing of local producers.

Kenya has the second largest manufacturing base in the COMESA area with 42
producers employing around 3,400 people. Kenya imports most or all inputs for the
production of drugs. It represents a supply value of less than 30% of its internal market
on one definition but a much lower value when donor purchases are taken into
consideration.

Kenya‟s manufacturing base is growing particularly due to increasing demand from
Tanzania, Uganda, Rwanda, Burundi and also Malawi. Its geographical location is
strategic and can enable it to supply not only its EAC partners but further afield within
COMESA. Kenyan companies are presently producing well below their capacity which
indicates potential to cater for a larger market.

Pharmaceutical manufacturing companies in Kenya are mostly locally-owned and range
from small-to medium-size enterprises. They all have similar product ranges. Most of
them manufacture generics and over the counter (OTC) products.

Many other COMESA countries have smaller production capabilities which cater for a
limited number of OTC products as well as injectables and antibiotics. They tend to
produce low volumes or to satisfy short demand and are dedicated mainly to their
respective local markets. Producers generally assemble ingredients produced from
imported inputs. Many perform only the final stages of production such as drug
repackaging or constituting raw materials into dosage form. Manufacturers face a
number of problems such as lack of capital and shortage of qualified labour.

 11.2 Research and development (R&D)
Research and development in COMESA is mainly carried out by the multinationals and
other larger companies operating in Egypt. Research and development activities tend to
focus on the manufacturing process and are often aimed at improving product quality.
Smaller firms may not have facilities for research and development activities. Egypt has
been engaged in the production of biotechnology products, particularly vaccines and
other biological products. The main challenges however, in developing research and
development comprise lack of funding, lack of experienced human resources in certain
specialized areas and lack of a suitable environment to promote research and
development. Egypt therefore is faced with a demand for increased budget so that the
establishment of companies geared towards pharmaceutical research would have to be

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financed by the national or regional pharmaceutical industries. Egypt is also pooling
resources so as to create economies of scale in research and development projects
with other countries in the Arab world. Research and development is not being carried
out yet in other COMESA countries.




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