The pharmaceutical market opportunity in Africa is significant and growing, but manufacturers need to be aware of the challenges involved in developing viable market strategies in this fast-evolving region, says a new report.

Pharmaceutical spending in Africa is expected to reach $30 billion by 2016, driven by a compound annual growth rate (CAGR) of 10.6%, which is second only to Asia Pacific (12.5%) and in line with Latin America (10.5%), says the study, from IMS Health.

Other significant forecasts included in the study are that:

- demand for medicines in sub-Saharan Africa (excluding South Africa) is expected to reflect rapid economic growth that is outpacing any other region of the world;

- the middle class in Africa continues to increase and now accounts for 34% of the population;

- the urban population of Africa is expected to exceed that of China and India by 2050; and

- 10 major African cities are expected to represent 20%-30% of the total pharmaceutical market opportunity by 2016.

Since 2000, health spending across 49 African nations has increased at a CAGR of 9.6%. The combination of economic growth and an expanding middle class is driving increased investment in health system structure, capacity building, treatment provision and specialised services, says IMS.

It also notes a marked shift in the burden of illness from communicable to non-communicable diseases (NCDs) across Africa, as well as the continued impact of HIV/AIDS and a relative reduction in infectious and parasitic illnesses. The proportional contribution of NCDs to the region's healthcare burden is expected to rise 21% to 2030 and, in addition, Africa is forecast to experience the largest increase globally in death rates from cardiovascular disease, cancer, respiratory disease and diabetes during the next decade, resulting in greater demand for healthcare and medicines.

In Africa, there are three elements to consider which are similar to market assessments elsewhere in the world - location, operational strategy and portfolio selection, IMS advises. However, it adds that what makes these assessments different is that Africa is highly heterogeneous by geographic, economic and cultural characteristics, its market access processes are nascent and its markets are poorly understood, given the limited availability of data.

Considering the importance of location, IMS points out that four established markets - South Africa, Egypt, Algeria and Morocco - accounted for more than half of all pharmaceutical sales in Africa last year. It considers the "rising stars" in sub-Saharan Africa - Kenya, Nigeria and Botswana - to be areas of significant market opportunity, and that the top 10 tier-one and tier-two cities across the continent have the potential to become even bigger drivers of growth, given the concentration of wealth there.

Strategic partnership with locally-trusted stakeholders can help companies navigate non-transparent elements of the market access process, enabling them to leverage proven channels and reach target patient groups to optimise their go-to-market strategies, the study advises.

Turning to portfolio selection, IMS says that success here will be based on good positioning for the public and private sector, leveraging safety and brand loyalty. Safety is a primary concern in Africa, given the penetration of counterfeit and substandard medicines, it emphasises. 

Success in these markets will be driven by a company's ability to address the challenges of both market and patient access, and overcoming these hurdles is contingent on rapport-building, local stakeholder buy-in and trust, says the study. It also highlights the importance of value-added services when introducing products into the market - these can be critical to driving sales and solidifying a company's long-term success.

Africa's potential will reward commitment, engagement and a business model that strengthens the path to market, says the study, which also emphasises the importance of taking a long-term view on engagement and of learning from companies with successful business strategies in the region, such as Sanofi and GlaxoSmithKline.