- Africa’s pharmaceutical distribution market and supply chain are highly fragmented, and drugs are simply not affordable for a large portion of African patients.
- Distributors and retail margins are also significantly pushing up the price of medications.
- To combat the industry’s numerous issues, there is a need for companies that improve market access for manufacturers while still decreasing the price for patients.
Pharmaceutical distribution usually faces three common problems in sub-Saharan Africa.
Firstly, the retail market is highly fragmented, consisting of mom-and-pop pharmacies and other informal outlets. Secondly, the supply chain is also highly fragmented with intermediaries creaming off significant margins. And thirdly, non-counterfeit drugs are not affordable for vast swathes of African consumers.
Take Nigeria, for example, where informal retail accounts for more than three quarters of the value of the pharma market. Counterfeit and medicines are widely distributed and are difficult to distinguish from the genuine article. Therefore, competition is fierce, and customer acquisition is very difficult.
In Kenya, intermediaries control the highest margins, accounting for an excessively high 50% of a pharma product’s final price. Compare this with the OECD countries, where distributors account for between 2-24% of the final price.
With distributor and retail margins pushing up the price of drugs, it is not surprising that patients are often forced to seek cheaper but potentially unsafe counterfeit drugs. There is a great need for solutions which improve both market access from the manufacturer’s standpoint and affordability of drugs from the patient’s standpoint.
mPharma, a Ghanaian venture-backed startup, is attempting to provide such a solution. It streamlines the drug supply chain by using data to understand what drugs are in demand and through which channels they can be best delivered. By aggregating demand and consolidating distribution, mPharma creates sizable efficiencies throughout the value chain, allowing it to half the final retail price of drugs and thereby increase accessibility to patients.