With health issues, specifically the production and distribution of COVID-19 vaccines, expected to be high on the agenda at the upcoming Forum on China-Africa Cooperation leaders summit that is scheduled to take place later this year in Senegal, there’s heightened interest in China over how Chinese pharmaceutical companies can perform better in African markets.
Zhang Xiong 张熊, a former commercial officer in the Chinese embassy in Nigeria, proposes that Chinese pharma companies should follow the example set by Indian competitors who now lead the market with a 29% share of the African drug market, compared to China’s modest 6% share.
The former Chinese diplomat laid out his case in a lengthy WeChat article earlier this week for the site E-Pharma Manager (E药经理人). Below is a summary translation of selected highlights from the article:
Why does Indian Medicine Have Such a Big Advantage in Africa?
- ASSIMILATION: Indians have a long history in Africa that dates back centuries and have integrated well into various African societies which has paved the way for India to establish a strong economic presence in various industries on the continent.
- INDIA’S SMALLER MARKET: India’s pharmaceutical market is only a tenth the size of China’s but with 10,000 companies, it’s vastly more competitive. Given the limited market size and increased competition, this forced Indian pharmaceutical companies to expand overseas.
- A FOCUS ON GENERICS: Africa’s pharmaceutical market is dominated by lower cost generic drugs which played well to Indian pharma companies’ strengths that have become well-known manufacturers of generic pharmaceuticals.
- INTERNATIONAL EXPERIENCE: Many founders of Indian pharmaceutical companies have backgrounds in international pharmaceutical companies, thus they have unique advantages in international certification and international market access.
- VERTICAL INTEGRATION: Indian pharmaceutical companies in Africa have fully devloped the entire vertical supply chain for drug manufacturing and distribution. These companies have built manufacturing operations on the continent that are then bolstered by extensive sales and distribution channels which are also supported by a large network of Indian expatriate doctors who have opened clinics and hospitals throughout the region.
Zhang Xiong’s Recommendations for Chinese Pharmaceutical Companies on How to Expand in Africa
- DON’T COMPETE HEAD ON: Rather than compete directly with stronger Indian pharma companies, Chinese drug producers should instead find areas where they possess a distinct competitive advantage, particularly using more sophisticated high technology solutions.=
- FOCUS ON FRANCOPHONE COUNTRIES: Indian companies are especially strong in both eastern and southern Africa where they have deeper historical roots but they are comparatively weak in francophone countries in West Africa.
- SALES AND MARKETING: Strengthen local sales networks and invest in brand building in regional African markets.
- HIRE EXPERIENCED INDIAN MANAGERS: Leverage the experience that Indian pharmaceutical talents have already established in the market by hiring them to work in Chinese companies.
- OBTAIN WHO CERTIFICATION: Chinese pharmaceutical companies often lack the WHO Performance Qualification (PQ), especially for various non-COVID vaccines (Sinopharm and Sinovac have both received WHO certification). Therefore, Chinese companies are not qualified to compete for most international tenders. Chinese companies should build focus their efforts on obtaining international certification qualifications so they can compete in this lucrative market.
- THINK LONG TERM: Chinese drug makers should develop long-term plans to fully integrate into the African market
Zhang Xiong 张熊 worked in the Economic and Commercial Office of the Chinese Embassy in Nigeria. During his tenure in Africa, he worked in food and drug development initiatives between China and Nigeria.
Read the full article by Zhang Xiong in Chinese on the 好望观察 WeChat page.
