Health sector in Africa targeted
Chinese firms are poised to tap into the health sector in Africa after being already well established in mining, manufacturing, construction and finance.
The continent is home to more than 26 million Aids/HIV patients - two thirds of the world's total cases. The number of tuberculosis patients is rising by 2.4 million a year and more than US$10 billion is spent on treatment for malaria.
But most African countries remain poor. Their health spending is low and the sector underdeveloped. The scarcity of pharmaceutical labs leaves the continent heavily dependent on imported drugs, mostly from Europe and India, and much of it provided through international aid or by charities.
But even those sources are under threat, given the economic problems in many traditional donor countries. It is unlikely that aid will grow in accordance with the number of Africans who need access to affordable drugs, so new solutions must be found, not just in obtaining more aid but in the overall approach to aid, says Dr Mark Stirling, the UN country co-ordinator on Aids in Beijing.
'China's approach to aid is broader, not only in technology transfer, but to also encourage trade because African countries are increasingly concerned about their dependence on foreign aid,' said Stirling. 'Foreign aid itself can't deliver the help required and those countries seeking greater self sufficiency at least in basic health care.
'But strengthening the capacity of African countries to produce pharmaceuticals will require different types of investment - public and private partnerships, technology transfers, research and development, and building greater capacity. Many of these cannot be achieved through aid and assistance programmes. I think China's approach of co-operation based on the needs of developing countries is more appropriate to face such challenges.'
Sino-African co-operation in health has been mainly in technological and material support. China sent its first medical team to Africa in 1963 and over the years built 30 malaria treatment centres and provided 190 million yuan (HK$231.2 billion) worth of anti-malarial drugs.
Several mainland companies that have obtained internationally recognised credentials to produce drugs have invested in production facilities or established sales offices in Africa.
Dr Lu Xin, executive deputy director of Peking University's Institute for Global Health, said pharmaceutical companies needed to establish a greater presence in Africa, not just to be more effective development partners but also for their own growth. 'Many domestic companies that have reached bottlenecks in their growth at home can reach the next level if they venture overseas and Africa is probably their best choice because access to those markets is relatively easy,' Lu said.
China is a major supplier of active pharmaceutical ingredients (APIs), which are key components in pharmaceutical and chemical products such as pesticides. But it also has the capacity to produce generic antiretroviral (ARV) drugs used to treat HIV. 'The entire industry has the capacity to become a better partner of the Africa pharmaceutical industry, and demand in those countries gives us opportunities,' Lu said.
Many regional development programmes within Africa offered opportunities for partnerships, said Wang Jie, vice-president of Shanghai Desano Pharmaceuticals, which supplies about a third of the world's supplies of APIs for ARV drugs. 'For example, the East African Community Regional Pharmaceutical Manufacturing Plan of Action seeks to boost local production [of affordable drugs for the region's most serious diseases]. It provides opportunities for Chinese and African collaboration because it's really the only way the plan is going to work,' Wang said. 'For the foreseeable future, the quantity of the API required can only be made in China.'
But Chinese companies still face significant challenges in the continent. Compared with their Indian counterparts, which have a longestablished presence in Africa, Chinese firms lacked knowledge about the markets due to language, culture and other historical reasons. 'China should be able to achieve more because it too has an old and good relationship in Africa,' Wang said.
The patent issue was also a big hurdle for China to overcome in competing with Indian firms in Africa, Wang said. 'New products are protected by the innovators but India, which has less stringent patent laws and much government backing, has no such problem. If you want to address the issue of affordability and you want to achieve cheaper drugs you have to break this barrier.'
Lu said Chinese firms also had difficulty understanding the market and accessing the regulated channels of drug procurement that vary from one country to the next. Support from government agencies or industry associations was needed to help them understand market dynamics.
The percentage of the world's malaria cases in Africa. Southeast Asia has 13 per cent. Africa has 91 per cent of malaria deaths