Exploring MINT: Part 3 – Nigeria
August 22, 2014 | emerging markets
In the third of a series of posts focusing on each of the ‘MINT’ markets, I take an in-depth look at the opportunities and challenges for pharma in Nigeria.
Why Nigeria?
In economic terms, Nigeria is – by some margin – the smallest of the MINT markets, but one of the fastest and most consistently growing. Nigeria is poised to challenge South Africa as the largest African economy, with its growth being driven by rising global oil prices, given it is Africa’s leading oil producer. At a regional level, Nigeria is at the centre of a West African trading hub. The size of its own population, currently approaching 170 million and set to overtake the US by 2050, make it too big to ignore.
From a healthcare perspective, Nigeria has some parallels with the other MINT markets of Mexico and Indonesia. These include:
- A healthcare system strained by the dual burden of both communicable and non-communicable diseases
- Challenges with rural access to healthcare and wide urban-rural disparities in healthcare provision, meaning the opportunity for pharma is concentrated in urban areas
- Increasing urban affluence stimulating growth in the private sector
- Government initiatives to expand the public sector and achieve universal coverage, expected to result in cost-containment initiatives that leave little opportunity for innovative products
- No established private health insurance culture, with only a small segment of the population covered
Medical tourism and brain drain
As we saw in Indonesia, the current lack of world-class private healthcare facilities within the country (despite rapid expansion in this sector) means affluent Nigerians often seek medical care overseas, particularly in India. Due to the more extreme deficit of adequate medical facilities in Nigeria, some commentators also identify ‘medical refugees’, those pushed to the brink of bankruptcy by travelling abroad to obtain better healthcare.
The flow overseas is not just confined to patients, however. ‘Brain drain’ is an issue Nigeria faces in many sectors.Healthcare is no exception, with physicians in particular being lured abroad for more attractive working conditions, leaving a shortfall in the country.
Lax regulatory environment and political challenges
Pharma companies wishing to gain a foothold in Nigeria face further hurdles due to the lack of political will to enforce greater control and legislation over the industry. Regulation of drugs is weak and intellectual property laws are lax. Drugs not officially registered in the country frequently find their way in and the counterfeit drug industry is sizeable. The ongoing political turmoil and security concerns, particularly relating to the unrest in the troubled northern region, are also off-putting to overseas investors. In March of this year, Nigerian media reported that the whole healthcare system in the northern state of Borno had collapsed as healthcare professionals fled from Boko Haram militants and violence.
Untapped potential
While Nigeria’s healthcare system clearly has challenges, pharma has increasingly started to make noise about the opportunity. Bayer chief executive Marijn Dekkers was recently quoted as saying that in 2014, an African strategy is ‘high on the agenda’, with Nigeria earmarked as a country of considerable potential. Eli Lilly also mention Nigeria as one of their priority Sub-Saharan countries, with diabetes their key therapy area of focus across the region.
HIV/AIDS is an extreme unmet medical need in the country. While Nigeria’s population represents just over two percent of the global population, it is home to an estimated ten percent of the world’s HIV population and has the second-highest number of new infections worldwide. At present, antiretroviral treatment is primarily funded by philanthropic organisations, with generic companies such as Indian Cipla, Hetero and Ranbaxy among those supplying low-cost generic ARVs to African governments.
Towards universal healthcare coverage
Nigeria’s three tiers of government (federal, state and local) are all involved in public sector healthcare provision, with confusing and overlapping roles and responsibilities. Fractured federal governance has resulted in considerable regional disparities, and households bear the bulk of their own healthcare costs, with eight out of ten Nigerians having no access to health insurance. Such high out-of-pocket contributions have considerable access implications.
The government has stated its commitment to ‘equitable, qualitative and universally acceptable healthcare for all Nigerians’. They aim to achieve this by implementing a National Health Insurance Scheme, intended to provide universal healthcare for all citizens by 2015. This will be partially funded by contributions from all income earners-formal and informal- with special funds made available to cover the poor.
While the goal is widely supported, there is a question mark over how achievable it actually is. The tax base will need to be expanded to fund the coverage. Increasing awareness of the benefits of health insurance will be critical, as insurance remains voluntary. Huge infrastructural improvements will be required to elevate the standard of Nigeria’s healthcare services, currently dogged by numerous challenges, sporadic electricity supplies and low public confidence among them. Public-private partnerships are also expected to play a key role, with the private sector currently an important buffer for the inadequacies of the public sector across all levels of healthcare provision.
In search of a different business model
In conclusion, Africa’s most populous country and one of only four African nations in which the pharma market volume currently exceeds US$1 billion, Nigeria clearly has immense potential. The need for healthcare among its booming population is only going to grow in tandem with rising GDP. To grasp that opportunity will require major adjustments to big pharma’s current business model. Given the infrastructural, political and fiscal challenges, Nigeria’s potential may also take longer to realise, relative to the other MINT markets.
Pharma is increasingly realising, as it reconsiders its strategy in emerging markets, that the established business model that yielded success in the US and Europe cannot be forced onto markets with very different healthcare environments. This is even more critical for ‘frontier markets’ such as Nigeria.
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