Chapter 4: Africa’s pharmaceutical industry
4.2 Research and development in pharmaceuticals
Africa has a small but fast growing capacity in basic and applied pharmaceutical research. As there is lim-ited data on national funding of health and pharmaceutical-related research and on patent and technology transfer, we use publication trends in science, engineering and technology fields related to pharmaceuticals as proxy for assessing trends in research and development performance. We complement this with data from some recent targeted surveys.
4.2.1 Trends in publications in the life sciences
Tracking publications in all sectors linked to the pharmaceutical sector is a major challenge due to the mul-tidisciplinary nature of the area. To gain some insight, we tracked all publications that fall within the broad category of pharmacology, such as pharmacy, general internal medicine, chemistry, cardiology, infectious diseases, biochemistry and veterinary sciences.
Trends in peer-reviewed journals in these fields show a general and steady increase in publications, as shown in Figure 4.8. The number of papers published more than doubled from 2000 to 2009 in all the six countries compared here. Most of the capacity is concentrated in South Africa and Egypt, which now publish around 400 articles per year, followed by Nigeria and Kenya.
While the number of publications is increasing, the total number of papers published is still small interna-tionally. For comparison, applying the same criteria, Brazil registered about 1538, while China published over 4077 in the same fields.
Figure 4.8: Publication profiles of selected leading countries in pharmaceuticals
Source: Web of Science, UNECA Analysis
4.2.2 Trends in pharmaceutical research and development investment
Globally, pharmaceutical firms are among the top investors in R&D. For example, seven of the top 30 R&D investing firms in the Europe are pharmaceutical related companies. As shown in Table 4.3 these firms invest up to 20 per cent of their sales in R&D. Traditionally, a pharmaceutical company may be assessed on R&D output, for example: the number of key products it has introduced on the market; the number of products submitted for regulatory approval; or about to be approved; and the number of innovative products under development, i.e. the R&D product pipeline.
Table 4.3: Top R&D based pharmaceutical companies in Europe
Rank Company R&D investment (in Euro billion) Ratio of R&D to net sale
4 Sanofi-Aventis 4.390 13.6
5 GlaxoSmithKline 4.379 13.2
8 Bayer 3.211 9.2
9 AstraZeneca 3.205 12.9
14 Boehringer Ingelheim 2.453 19.5
24 BASF 1.507 2.4
25 Merck DE 1.397 15.6
27 Novo Nordisk 1.272 15.6
Source: UNECA analysis based on European R&D Scoreboard 2011 (http://iri.jrc.ec.europa.eu/research/scoreboard_2011.htm)
While in-house R&D performance is important, companies may undertake other activities to maximize their R&D-based return on investment. This may take the form of: (a) acquiring innovative start-up com-panies; (b) outsourcing R&D; (c) licensing in or out of new products; and (d) co-investment in emerging technologies, to complement its in-house R&D activities.
With respect to African pharmaceutical companies, some of the major global companies have subsidiary companies in Africa, but very few African companies have R&D units or R&D directors to oversee product development and technology transfer. Some of Africa’s largest pharmaceutical firms have some limited R&D activity. There are also a few biotechnology-based pharmaceutical (biopharmaceutical) companies in South Africa and, to some extent, Egypt.
A Deloitte Consulting study on 10 R&D multinational pharmaceutical firms investing in South Africa revealed that they collectively invested about R400 million (about $57 million) in R&D in 2006. Almost
all of that was on clinical trials (Deloitte Consulting, 2007). The same companies spent about R5.3 billion on procurement of goods, services and skills, and R1.8 billion on infrastructure development in the same year. This suggests that although there is market-led international investment in Africa by some of the top multinational pharmaceutical firms, it is not directed at innovative R&D but rather at product evaluation and production, marketing and sales. These firms are not undertaking R&D activities to discover drugs and vaccines to counter Africa’s unique health challenges .
There is growing realisation that African-led R&D will be needed to complement and compensate for inter-national R&D to meet the specific health needs of Africa. A recent initiative partnered by ECA and WHO, the African Network for Drugs and Diagnostics Innovation (ANDI),93 is attempting to stimulate such activ-ity. A review of ANDI-initiated applications submitted by some of Africa’s top health-related R&D centres revealed a steady but modest increase in annual funding of health innovations over the three year period considered (2008-2010). Of the 117 centres reviewed, seven were African-based pharmaceutical companies involved in R&D.
Figure 4.9 shows how significant private sector funding can be, with the seven firms accounting for about a third of the R&D investment among the 117 centres. The total R&D funding reported by the 117 centres increased significantly from $240 million in 2008 to $330 million in 2010, from about to over. This is a sub-stantial increase, which is largely accounted for by increased foreign funding. As shown in Figure 4.9, domes-tic funding of R&D centres increased by about $10 million, while foreign funding increased by slightly over
$60 million from 2008 to 2010. While the trend offers some hope that funding, including indigenous fund-ing, for health R&D is increasing in Africa, the continuing high dependence on foreign sources of funding is worrying. Interestingly, as is common within the private sector in Africa, the R&D budgets of the seven innovative manufacturers were largely met by internal company resources.
Only 27 of the 264 agencies that funded the 117 centres were based in Africa. The National Research Foun-dations of South Africa was the only African institution that made the list of the 20 most frequently quoted health research donors in Africa, over the period covered here. European and North American agencies and countries are the main donors. Despite much international dialogue about South-South research partner-ships, the emerging economies, namely China, India, Republic of Korea and Brazil, did not feature on the list of top donor countries.
Figure 4.9: Sources of R&D funding of the 110 centres and seven firms
Source: UNECA analysis based on 117 ANDI Applications for Centres of Excellence94 93 www.andi-africa.org
94 Ibid