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Sub-Saharan Africa contains 11 % of the world’s population but bears 24 % of the global disease burden¹ (World Bank). A recent the International Finance Corporation (IFC) study, with McKinsey, estimated that to meet its growing health care needs, new investment of $25–$30 billion will be needed in the regions health care assets² (IFC, 2008) over the next decade.

Danadams Pharmaceuticals, established in 2005, is one of Ghana’s leading pharmaceutical manufacturers, its only maker of anti-retroviral drugs (ARVs) for people living with HIV/AIDS (PLHIV), and a key player in the African Union’s plan to grow pharmaceutical manufacturing across the continent.

¹ World Bank data
² The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives – IFC (World Bank Group)

Increasing demand across Africa

In addition to the most obvious need for improved health care across Africa, there are two major factors shaping pharmaceutical supply and demand. The first is a rapid increase in the number of Africans who are able to afford to pay for better health care.³ The second is more strategic: global pharmaceutical companies are seeking to develop their African markets in anticipation of markets in Asia and Latin America reaching maturity.

With the high incidence of diseases such as malaria and tuberculosis (TB) in Ghana, there has always been demand for cost-effective drugs, which, until now, has largely been met by imports and foreign donors. Germany’s Gesellschaft für Technische Zusammenarbeit (GTZ) estimated in 2007 that Ghana’s pharmaceutical market for over the counter [OTC] and prescription medicines was made up of approximately 30 % locally produced and 70 % imported products, originating mainly from India and China4 (Harper, 2007). It also showed that Ghana’s pharmaceutical market supply was shared approximately 50/50 between the private and public-donor sectors. This pertains with local manufacturing still largely focused on OTC products, while the donors, mainly the Global Fund (GF) cater for priority endemic diseases. Now, however, with Ghana is ranked by the World Bank as one of Africa’s newest lower-middle income countries, the government is being encouraged to make provision for the cost of health, including setting aside funds for priority endemic disease.

Ghana’s demands

My initial businesses in the 1990s included two pharmacies, and my decision to move into drug manufacturing was in part a response to opportunities and in part to help establish a local manufacturing sector. The move from retailing to manufacturing, unsurprisingly, brought its own challenges – not least that locally-manufactured drugs were not well regarded at a time when counterfeit and substandard drugs were flooding the market.

Unlike countries where manufacturers benefit from government incentives, Ghana’s pharmaceutical manufacturing was beset with import tariffs, levies and bureaucratic wrangling over product registration. Importing packaging and raw materials, too, often resulted in delays, irregular customs processes, and expensive distribution logistics. Other factors, such as the high cost of utilities, and a lack of skilled Ghanaian workers, also added to costs.

Then there were cash flow issues – the move to manufacturing meant extended payment cycles. This was especially true after the introduction of Ghana’s National Health Insurance Scheme (NHIS),5 which not only capped the price drugs, but also meant that payments could take six months to be processed.

Additionally, accessing the significant funding needed to develop manufacturing facilities that complied with requirements for international tenders, specifically World Health Organization (WTO) prequalification criteria was difficult. But without it, we were excluded from most lucrative tender processes

Back in 2005, local manufacturers mainly focused on the OTC market; Danadams, however, opted for the endemic-disease market, arguing that Ghana could lessen its dependence on foreign imports if it had a viable local alternative. While a lack of business data made the market hard to evaluate, Danadams could, to an extent, gauge demand through hospital prescriptions seen in the retail side of our business – in 2007, Ghana’s semi-independent teaching hospital in the capital, Korle Bu (Roberts, 2011),6 was writing up to 2,000 prescriptions a day, of which more than 70 % came from private suppliers.

In 2007, Danadams started production of oral solid dosage drugs, including ARVs, as well as anti-malaria and other OTC products such as analgesics. Sourcing contracts was key, especially as Danadams was the only local manufacturer of ARVs. The company established good relationships with government bodies and was able to seize an opportunity when the government ran out of its regular imported supplies and agreed to purchase drugs from us.

Our comparative advantage was proximity – no waiting for months for cargo from India or China. Indeed, we would often halt general production to supply urgently needed ARVs. We could also solve some internal distribution and logistics challenges by using our country-wide sales force. And importantly, local PLHIVs came to trust our drugs, which they found as effective as those imported by the GF.

But being a stop-gap meant that Danadams had no continuity of ARV sales – one year there would be a sizeable contract, but the next none, as the government had imported enough. Danadams did, however, supply the government with anti-malarials and other drugs. We also increased sales to private health institutions and the limited number of wholesale distributors in the country all of whom had more predictable tendering and ordering processes. For them, we simply had to outbid the competition and provide discounts. We also supplied OTC products to thousands of licensed retailers across the country, which necessitated growing our sales force in line with factory production.

Danadams also looked for opportunities across the broader West African region. Although this involved registering our drugs in these markets, the regional focus paid off when the Economic Community of West African States (ECOWAS) and the West Africa Health Organization (WAHO) began to actively support the development of a local pharmaceutical manufacturing sector.

Competing with aid

Although it took several years to master the sales challenges, Danadams established itself as supplier of anti-malarials and ARVs in the region. But it was in this space that we started to experience the drawbacks of donor funding.

Big pharmaceutical companies have been exceedingly generous, and everyone is aware of the GF’s provision of massive funding to fight HIV/AIDS, TB and malaria. But because of the disproportionate power that donor programmes wield, local manufacturers find themselves cut out of tender processes and working collaboratively on public health strategies. Furthermore, government agencies and structures that could work with local manufacturers focus on meeting donor requirements and processes that even the World Health Organization (WHO) recognizes as over-complex, inefficient and wasteful.

The GF is by far the largest donor organization working in Africa – Ghana has eleven active grants,7 five for HIV/AIDS, totaling over $623 million, through which 76,000 PLHIV receive their ARV treatments. But because Danadams does not have WHO Prequalification status,8 it cannot participate in GF tenders.

Similar circumstances surround anti-malarials. The GF’s Affordable Medicines Facility-malaria (AMFm) programme was launched in 2010 to expand access to affordable and effective anti-malarials – artemisinin-based combination therapies – by providing a 80–90 % subsidy. Anti-malarials were part of Danadams core product range, but soon after AMFm was introduced, sales plummeted. We had always been able to count on a steady market for these drugs as most Ghanaians have two malaria episodes a year, but by 2011, along with other local pharmaceutical manufacturers, we virtually halted production of anti-malarials.

Adapting to change

Despite improving our R&D capacity and developing a range of analgesics, we knew we had to expand of our product range and we made a concerted effort to look for needed drugs that were not readily available or which were yet to be imported by our competitors. By 2012 Danadams had identified fifteen products to diversify our range through contract manufacturing.

The change in strategy required two key business changes. First, to bring our production costs more in line with Chinese and Indian competitors, we carried out a comprehensive exercise to understand our production costs and introduce more effective operations, increasing automation and acquiring new packaging equipment which more than quadrupled output while allowing greater variety in packaging methods. Then we sought new sources of both raw materials and contract-manufactured medicines that would not compromise our quality standards.

Strategically, there was one further major gap in our business model that could not be ignored: despite my reservations about the value of donor aid, as a businessman I recognized that Danadams was being excluded from lucrative donor tenders because we did not have WHO Prequalification certification. Our market share in West Africa would grow exponentially were we able to compete for GF tenders, but obtaining certification is dependent on investment.

Investment activity for any emerging industry in Africa, however, is closely tied to the investment climate in the respective country. Not only do we have to convince investors that our company is a good proposition – we have to demonstrate that our national government has effective policies and laws, tax breaks, tariff and other incentives, and has sufficiently prioritized our industry to establish a favourable investment climate.

Further, the WHO certification process is not just about the quality of products and facilities; it also focuses on having the right people and right processes. Investors also examine these areas as part of their due diligence process, and as a result Danadams has examined its organization and instituted improvements.

Danadams has prioritised attracting investors by being vocal about the potential. The company has engaged with strategic stakeholders such as the United Nations Industrial Development Organization (UNIDO) and UNAIDS and have been active participants in initiatives driven by the African Union and WHO to raise standards and build Africa’s local pharmaceutical sector. We have also advocated more public-private partnerships and for governments to ensure they set aside portions of their health budgets to encourage local drug manufacturers.

Danadams has no intention of moving away from manufacturing drugs for Africa’s pervasive diseases. A recent International Finance Corporation report shows that the private sector will continue to play a vital role in the financing and provision of health care in Sub-Saharan Africa and emphasizes that engaging the entrepreneurial talents of the private sector is essential in improving access to health care in the region (IFC, 2008).9 In terms of the market, a recent Business Monitor International report 10 showed that Ghana experienced growth in excess of 13 % in its pharmaceutical sector between 2012 and 2013 – making the industry worth $379 million. At Danadams, we believe our role in growing the industry could be greatly enhanced were African governments to learn from countries, such as India and Brazil, who recognized the need to nurture their embryonic pharmaceutical industries through legislative measures and incentives. But real growth will only come when companies show operational excellence and the kind of business intelligence that helps them secure investment and assures them of sustained growth.

Danadams is proud to be an African company that is making medicines in Africa. And as Africans, we have to remain committed to building our own future.


³  According to the African Development Bank (ADB) Africa has experienced the greatest urban growth over the last two decades within the developing world, and that by 2025, according to the World Bank, its cities could contain up to 85% of the population. The ADB also calculates that the continent’s middle class has tripled over the last 30 years, and now makes up 34% of its population.
4 The Viability of Pharmaceutical Manufacturing in Ghana to Address Priority Endemic Diseases in the West Africa Sub-Region (2007)
5 The National Health Insurance Scheme is a form of national health insurance established by the Government of Ghana, with a goal to provide equitable access and financial coverage for basic health care services to Ghanaian citizens.
6 Pharmaceutical Reform: A Guide to Improving Performance and Equity By Marc J. Roberts
9 Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives IFC,

References / Harper, J.; Gyansa-Lutterordt, M., 2007. The viability of pharmaceutical manufacturing in Ghana to address priority endemic diseases in the West Africa sub-region. 2007; Deutsche Gesellschaft für Technische Zusammenarbeit GmbH, Eschborn, (Accessed 16 August 2011). // International Finance Corporation, 2008. The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives, Washington, DC: The World Bank Group. Disponible sous le lien suivant : // Roberts, M.J., 2011. Pharmaceutical reform: a guide to improving performance and equity. World Bank Training Series – Paperback – September 21. // World Bank, Database.