Africa Pharmaceutical Logistics Market Research Report: Forecast (2022-27)

Market Definition

Pharmaceutical logistics are comprised of processes & activities of procurement, warehousing, inventory management, and transportation of the pharma goods while maintaining the quality of medicines during inventory management & delivery. It entails specific medical equipment, storage facilities, coherent handling procedures, and strong-mutual aid between the cold chain partners. With the growth in demand for temperature-controlled drugs & vaccines in the region, the need for sophisticated pharmaceutical logistics solutions is soaring in the region.

Market Insights

The Africa Pharmaceutical Logistics Market is projected to grow at a CAGR of around 5.13% during the forecast period, 2022-27. The major factor contributing to the growth has been the growing pharmaceutical manufacturing in the region due to rising investments by global pharmaceutical & biopharmaceutical companies. Moreover, the local manufacturing of pharma products leads to an increased demand for logistics services in countries such as South Africa, Nigeria, and Algeria, among others.

However, in line with the World Bank’s Logistics Performance Index (LPI), in 2018, Sub-Saharan Africa achieved a score of 2.45 on a scale of 1-5, with the highest being 5. Hence, this implies a grave need for better infrastructure & enhanced Logistics services across the countries for all the sectors, especially healthcare, in the coming years. The African continent, as a whole, has been incapable of catering to its pharmaceutical demand from its domestic production. Moreover, some countries have been developing their capabilities lately and are gradually moving towards exporting their pharmaceutical products, while others have to import to satisfy their domestic demand.

Further, the region has some trade agreements with Europe & North America to boost its imports & exports activities, which have also affected the pharmaceutical industry & the pharmaceutical logistics market of Africa. According to UNIDO (United Nations Industrial Development Organization), the COVID-19 pandemic drew attention to vulnerable parts of the region, owing to their insufficient pharmaceutical manufacturing. The region imports about 94% of its pharmaceutical needs from around the globe. Further, China & India have been the major exporters of pharmaceutical products to the region.

Key Trend in the Market

• Implementation of IoT Platform to Boost Supply Chain

The pharmaceuticals logistics industry has been gradually utilizing IoT-based tracking sensors, GPS, and smart devices. The use of these products has erupted due to the increasing Radio Frequency Identification (RFID) & internet availability. The implementation of IoT provides the real-time data of the shipment to the manufacturing companies & ensures safety, efficiency, and control of the logistics processes. The use of IoT devices & sensors doesn’t require scanning of the barcodes as they can provide the data to other IoT devices on the same platform through the internet. IoT is also widely adopted by the warehouse to get the data about the inventory, detect theft, and monitor the temperature of the warehouse. The application of IoT in logistics in Africa had been in an initial stage, however, now, it's getting widely adopted by several pharmaceutical logistics companies for digitization, cold shipping, etc., such as Imperial, Ubipharm, Kuehne+Nagel, etc.

Furthermore, it is estimated that the use of IoT, for the development of products in pharmaceutical logistics like appliances, packages, products, vehicles, etc., would be required for collecting accurate & real-time data. Thus, the vast application has been a prominent trend in the pharmaceutical industries and is estimated to fuel the market logistics segment.

Impact of COVID-19 on Africa Pharmaceutical Logistics Market

The continent has a high dependency on imports for pharmaceutical goods, where around 70% to 90% of the pharmaceutical & medicinal needs of Sub-Saharan Africa are met by import. Africa comprised around 375 pharmaceutical manufacturers in 2019, compared to 5,000 and 10,500 manufacturers in China & India. Hence, the outbreak of COVID-19 highlighted the vulnerability of Africa. The high dependence of the countries on imports led to the shortage of available medicine & surged the procurement duration.

Therefore, this encouraged the government of various African countries to increase their focus on local production & reduce their dependency on imports. Thus, the establishment of new manufacturing units in the country for pharmaceutical drugs as well as for devices is projected to have a tremendous impact on the growth of the African pharmaceutical logistics market.

Furthermore, the setup of new pharmaceutical manufacturing facilities in the African countries would also impact the demand for chemical-pharmaceutical products, thereby contributing to the growth of the pharmaceutical logistics market. Moreover, the local production is further expected to boost the exports from the countries in the coming years.

Market Segmentation

Based on Mode of Transport (Route):

• Air
• Road
• Sea

Of them all, Roads captured the majority share in the Africa Pharmaceutical Logistics Market, owing to the majority of the countries (Chad, Niger, Central African Republic, Zimbabwe, Botswana, etc.) being landlocked in the region. Thus, road transport is the most reliable source for transportation of pharmaceutical products inter-countries & within the countries. Moreover, the road transport methods have proved to be cost-effective, compared to air & sea mode of transport. Despite the region's positive growth, it has been hampered by poor road infrastructure, inhibiting the growth of roads in the overall market. Further, to overcome this, the national governments in the region, including Morocco, Kenya, Nigeria, etc., introduced their national strategies for road infrastructure development for the overall betterment of the road network of the individual countries.

Based on Service Type:

• Transportation & Freight Forwarding
• Warehousing
• Cross-Docking
• Value Added Services (Inventory management, Packaging, Labelling, etc.)
• Others (Customs Brokerage, Marketing, Call Support, etc.)

Among them, Transportation & freight forwarding has contributed, consequentially, to the total Africa Pharmaceutical Logistics market during the past years. This can be justified by the increasing requirement of transportation & freight forwarding for domestic supply & procurement of chemical pharma products, along with imports & exports with other countries in the regions.

Further, 54 countries combined have a population of nearly 1.2 billion, portraying a severe healthcare requirement. The region has insufficient local production capabilities and therefore is dependent on the rest of the world for all of its pharmaceutical needs. In addition, the region is home to some major ports, including the Port of Durban, the Port of Suez Canal, the Port of Lagos, etc., which have a substantial demand for transportation and freight forwarding services within the pharmaceutical industry.

Based on Logistics Provider Type:

• 3PL (third-party)
• 4PL (fourth-party)
• Integrated Logistics

Among the three, 3PL held the largest share in the market in 2021, owing to the region consisting of numerous small logistics companies that could cater to the limited logistics needs at a time. Furthermore, the African region does not have a widespread pharmaceutical & biopharmaceutical industry. Hence, the major logistics services are primarily for the warehousing and transportation of imported goods from other continents.

In 2021, Ibnsina Pharma announced an investment of around USD28.16 million to provide third-party logistics services in Egypt. Its investment company 'AIM' had established Ramp logistics, which offers warehousing, transportation, and other third-party logistics services to serve the pharma sector. Further, the new warehouse was developed to double the storage capacity & cater to the growing demand for warehousing & transportation outsourcing in the pharmaceutical business.

Country Landscape

• South Africa
• Egypt
• Nigeria
• Algeria
• Morocco
• Rest of Africa

Amongst all countries in the African region, South Africa captured the largest share in the Pharmaceutical Logistics Market in 2021. The rise in communicable diseases, such as COVID-19, AIDS, TB, etc., and non-communicable diseases like cancer, hypertension, diabetes, cardiovascular disease, etc., in South Africa, induced more demand for medicines among consumers. Accordingly, these factors pushed the pharmaceutical manufacturers to enhance their production capacity, which has accelerated the market growth in recent years.For instance:

• In 2018, Aspen Pharma established a high-containment facility in Port Elizabeth, South Africa, with an investment of about USD70 million. Furthermore, the facility produced drugs, viz., Alkeran, Leukeran, & Purinethol for treating cancer, Imuran to treat autoimmune diseases, as well as Benztropine for the treatment of Parkinson’s disease.

This manufacturing facility reinforced South Africa’s Industrialization Program by supporting the local production of products. In addition, the development of interstate initiatives like the South African Development Community (SADC) expedited the market for pharmaceutical companies to produce more medicines, which, in turn, has positively impacted the pharmaceutical supply chain services.

Market Dynamics

Key Drivers: Increasing Government Spending on Regional Healthcare

With the deficient presence of healthcare services in the region and the lack of adequate availability of medicated drugs to the residents, the government of Egypt, South Africa, etc., have stressed the need to invest extensively in pharmaceutical drug manufacturing to ensure a constant supply of pharmaceutical products to the consumers. In the period of COVID-19, in 2020, the growth of healthcare-related services & medicines caused a shortage of healthcare products in several countries of Africa.

Furthermore, the increased shortage of medical products & institutions in Africa forced the government to increase its expenditure in the healthcare sector to cope with the growing pandemic. These initiatives can also be seen with the increasing government investments & launch of strategies to boost the availability of healthcare drugs in Africa. For instance:

• In June 2021, the African Finance Ministry & World Bank announced a partnership to support the African Vaccine Acquisition Task Team (AVATT) initiative with resources to allow African countries to purchase & deploy vaccines for up to 400 million people in the region.

Thus, the increase in government spending would lead to surging production & consumption of pharmaceutical products, which would require logistics for efficient delivery, ultimately booming the Pharmaceutical Logistics market.

Potential Challenges: Limitations in Supply Chain Infrastructure

The pharmaceutical market of Africa is micro-fragmented & accounts for about 2%-3% of the global pharmaceutical market, excluding the evolving South African market. The constant shortage of storage capacity, poor road infrastructure, fragmented airline routes, and limited airfreight connections have contributed significantly to a reduction in the revenue of logistics providers. Furthermore, security risks prevalent in Africa's supply chain due to in-efficient infrastructure are pharma thefts & the sale of sub-standard counterfeit product brands. According to the International Criminal Police Organization (INTERPOL), as of April 2020, more than 61,000 respiratory masks & one artificial respirator were reported to be stolen during transit & manufacturing in Morocco.

According to Transported Asset Protection Association (TAPA), the top five incidents from where the theft has taken place in the region are theft from a vehicle (77%), theft of a vehicle (5%), hijacking (4%), a theft from the trailer (4%), and theft of trailer (3%). Moreover, the lack of drug regulations in the region is hampering the healthcare operation leading to a costly distribution of medicine with only a few drug companies registering their medicines in African countries.

Key Questions Answered in the Market Research Report:

1. What are the overall statistics or estimates (Overview, Market Size- By Value, Forecast Numbers, Segmentation, Market Shares) of the Africa Pharmaceutical Logistics Market?
2. What are the country-wise industry size, growth drivers, and challenges?
3. What are the key innovations, opportunities, current & future trends, and regulations in the Africa Pharmaceutical Logistics Market?
4. Who are the key competitors, their key strengths & weaknesses, and how do they perform in the Africa Pharmaceutical Logistics Market based on the competitive benchmarking matrix?
5. What are the key results derived from surveys conducted during the Africa Pharmaceutical Logistics Market study?