Pharmivoire Nouvelle is a pioneering manufacturer of medical intravenous solutions in Côte d’Ivoire. Its 25 years’ experience are proof that locally-based production of pharma products is a realistic, sustainable and viable alternative in terms of accessibility challenges but that it requires public sector support to be able to grow.
Pharmivoire Nouvelle specialises in manufacturing intravenous solutions used in primary healthcare in hospitals for systemic rehydration of patients. Its production facility, located in an industrial park in Abidjan, produces 3 million medical pouches annually for a local market estimated to consume between 15 and 20 million pouches a year.
As is the case for most medicines, the intravenous solutions market is structurally import-based but dependence on imported products has a number of drawbacks: high cost due to high transport costs; long delivery lead times for international orders that negatively impact availability; the costs and problems involved in storing these bulky products; and the risk of counterfeit goods. Faced with insufficient local production, importing has long been the default solution however the efforts of the various different stakeholders need to focus on a gradual shift to local production.
Emergence of a local player for an essential product
Pharmivoire Nouvelle dates from 1999 and the acquisition of the industrial plant of Pharmivoire, a company that had been in operation since 1991. The buyer was Copharm, a pharmacists’ cooperative set up in 1993 by Conseil national des Pharmaciens de Côte d’Ivoire to help Ivorian pharmacists engage in concerted action and invest in activities that did not previously exist to help complete the country’s pharmaceutical industry infrastructure. In its early years, the Company’s strategy was based on technical partnerships with South African medical pouch manufacturers who provided technical assistance, upgraded equipment and trained the production team.
But Pharmivoire Nouvelle experienced difficulties from the outset. The plant had been idle for over a year when it was acquired and it was hard to get wholesalers to buy the first production batches. The activity was also negatively impacted by the socio-political crisis in Côte d’Ivoire and in 2008 the Company appointed a new CEO with a mandate to restructure the business and this was duly accomplished. Pharmivoire Nouvelle gradually began to grow and to establish itself as a key player in locally-produced intravenous solutions.
The importance of local production
The key advantage of local production is closeness to the market and product availability. The local production facility is capable of making the product available immediately after the quarantine period. Therefore local production is in phase with the need of health clinics to have what is considered an essential medicine constantly in stock and to avoid running out of supplies.
Due to their bulk, wholesale distributors do not like storing large quantities of intravenous solutions. Because they essentially consist of water, they take up a lot of space but only generate very low margins when compared with other medicines. These same characteristics make them expensive to import due to high freight costs which are calculated by weight and volume. Despite these constraints, wholesale distributors must constantly have at least three months’ stocks on hand to avoid running out.
Local production is only really relevant if it can provide populations with access to quality medicine. The Company’s quality strategy is based around the Good manufacturing practices (GMPs) which the supervisory body, the DPML applies when it performs its regular – unannounced – inspections. This strict control gives local production a big advantage over imported products whose traceability and reliability is very hard to guarantee.
The growth phase
In 2011, once the Company had got back on a sound footing, management conducted a major review with the aim of enhancing its production capabilities. The existing production facilities limited annual output to 3 million pouches whereas the local market is estimated at 15-20 million pouches a year. And if the market potential is expanded to include the surrounding region which still imports most of what it needs due to the absence of local players, the total demand is estimated at between 50-100 million pouches a year. Major expected growth in the sector is being buoyed by demographics, increased purchasing power, better access to insurance and better health cover. The recent announcement of universal health cover for Côte d’Ivoire is also driving this positive dynamic.
Seeking to harness this potential, Pharmivoire Nouvelle has drawn up a development plan to upgrade its production facilities, boost its production capacities and ultimately enhance its competitiveness by generating economies of scale. The pharmaceutical sector is very capital intensive and this development project is no exception: it lifts plant production capacity to 12 million pouches a year in exchange for a major investment plan in the order of €9 million. It has been made possible thanks to the support of financial partners like Investisseurs et Partenaires (I&P) and the West African Development Bank (BOAD). These stakeholders were attracted by the idea of growing an industry with regional development ambitions that offers a genuine alternative to imported goods in a key sector. For I&P, the prospect of partnering a local player with a clearly structured development strategy, generating major value added and strengthening a local, high-impact pharmaceutical industry were all major deal clinchers.
Pointers for developing locally-based production
Government support is crucial for developing local industry and this should take the form of the type of public procurement and incentive policies that have been successfully deployed in other countries (i.e., Morocco, Tunisia and Egypt). To take just one example, Morocco, which has become the Continent’s second pharmaceutical manufacturer after South Africa, has introduced the principle of national preference into public tenders. This country now has around 40 pharma production facilities that meet 70% of domestic demand and export some of their wares to neighbouring countries.
In terms of public procurement policy, we need to develop arrangements whereby both public and private purchasing agencies give priority to buying from local producers and have recourse to imported solutions only for volumes that cannot be produced locally. A lot is expected of public procurement bodies both in terms of placing reliable orders and making timely payments to businesses that could suffer very negative cash flow impacts if accounts fall long overdue.
Incentive policies need to factor in the features and constraints inherent to the pharma industry. Building and maintaining production facilities is very capital intensive and, unlike other industries, laboratories are subject to very strict marketing authorization controls for new products. However, the incentives available are the exact same as for other industries and this situation needs to be corrected to attract capital into this sector whose importance has been clearly recognised by the various different governments.
Manufacturers like Pharmivoire Nouvelle are now targeting the regional and not just the national market. To achieve optimal regional integration, this market needs to be made more accessible through more standardised legislation; for example, by introducing a single procedure for obtaining marketing authorisations (MA) that would be valid throughout the Economic Community of West African States (ECOWAS). Similarly, greater clarification is needed of customs requirements for imports used as inputs for manufacturing medicines. While imported medicines are not subject to any tax, customs regulations for certain manufacturing inputs are a very grey area and this discourages local production. Lastly, support for the pharmaceutical sector should be underpinned by measures to upskill the local labour force and this could be achieved by both initial and in-service training throughout the sector.