counterfeit drugs – David South Consulting

Safe Healthcare is Good Business and Good Health

By David South, Development Challenges, South-South Solutions

Many people have been shocked by recent stories about the proliferation of counterfeit drugs and the rate at which they are killing and harming people in Nigeria. The International Narcotics Control Board found that up to 50 percent of medicines in developing countries are counterfeit. This has driven home the point that without the presence of legitimate players in the African drug market, the illegal sharks will step in to make large profits – and a literal killing.

To counter this negative trend, what is most needed is support for reliable Africa-based companies: businesses that are long-term, sustainable and not living from one grant to the next. But as experience has shown around the world, nurturing businesses requires certain fundamentals: they must work to be profitable, they must find a market and exploit it, and they need cash infusions that are timed to the company’s growth, not to the cycle of international donors. This role, often served in developed countries by venture capitalists, who want a fast return of 35 percent – is too onerous a burden for most African businesses. What African companies need is a more conservative, long-term approach; one that expects returns of between five and 10 percent.

Kenyan company Advanced Bio-Extracts (ABE) is one good example. Only 18 months old and based in Nairobi, the company produces one of a new generation of low-cost anti-malarials known as artemisinin-based combination therapies (ACTs). The drug is produced from the green leafy plant Artemisia, or sweet wormwood. The company is the first in Africa to make this drug, and employs 7,000 local farmers in Kenya, Tanzania and Uganda, as well as scientists.

ABE has received two infusions of cash from non-profit social venture capitalists Acumen, as well as investment from Swiss drug giant Novartis. Acumen has so far invested US $9.6 million in 11 active investments focused on a diverse set of health challenges, including basic healthcare access in rural areas and treatment for malaria and HIV/AIDS.

“We are commercializing a product that had never been commercialized,” said ABE’s owner, Doug Henfrey, to the New York Times. “Those little windows of support make these things happen. We could not have done it otherwise.”

Acumen’s Kenya country director, Nthenya Mule, said “there are positive things happening in Africa, but they are not happening overnight, and some are happening quietly. ABE is exemplary. You will not see it as front-page news, but in 18 months they set up a factory with 160 people interfacing with 7,000 farmers and supplying one of the major pharma companies in the world.”

Stimulating private sector solutions to African healthcare problems is receiving an additional boost from a new fund established by the World Bank’s private sector arm, the International Finance Corporation. To be launched later in 2007, it will offer cash and loans totaling US $500 million to commercial healthcare projects in Africa. According to its own statistics, 60 percent of health expenditure in sub-Saharan Africa is privately funded, and the market, excluding South Africa, is worth US $19 billion.

Published: May 2007

Resources

Roll Back Malaria Partnership: Launched in 1998 by the World Health Organization. UNICEF, UNDP and the World Bank to coordinate the global campaign, to fight malaria.
Malaria Atlas Project (MAP): An online map showing up-to-date information on high-risk areas for malaria.
A paper on the global threat of counterfeit drugs: Click here

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

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ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

Combating Counterfeit Drugs

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Access to good quality drugs is a serious problem across the South. The International Narcotics Control Board estimates that up to 15 per cent of all drugs sold around the world are fake or counterfeit, and in parts of Africa and Asia this figure jumps to 50 per cent. The US Food and Drug Administration estimates counterfeit drugs make up 10 per cent of the global medicine market. The US Centre for Medicines in the Public Interest predicts counterfeit drug sales will reach US $75 billion globally in 2010, an increase of more than 90 per cent from 2005.

Fake drugs are a major cause of unnecessary death and destroy public confidence in medicines and health services. While counterfeit drugs have been on the rise, there is little co-ordinated or effective action to counter this menace afflicted on the sick.

But in Ghana, a solution has emerged that shows a way to guarantee that quality drugs get to the sick who need them. CareShop Ghana uses the franchise model – where licenses are sold to approved vendors who adhere to strict guidelines – to ensure that the quality, accessibility and affordability of essential medicines in and around Accra is guaranteed. CareShop has made deals with close to 300 franchisee pharmacies – often modest operations – who sell over-the-counter drugs.

In Ghana, preventable and curable illnesses like malaria and diarrhoeal diseases are among the leading causes of death. Their treatment pushes many people to financial despair; they can ill afford the extra burden of worrying about counterfeit drugs and the harm they do. Like many countries in the South, Ghana’s public healthcare system is unable to meet these needs and so most people turn to the private sector for help.

An estimated 65 per cent of people turn to licensed pharmacies. But many of these operate haphazard businesses, dispensing expired or counterfeit drugs.

The Ghana Social Marketing Foundation Enterprises Limited (GSMFEL) founded CareShop in 2002, hoping to battle common infectious diseases in poor areas by making sure good drugs get through to the sick.

GSMFEL makes a small profit as the franchisor by selling high-quality drugs to the franchisees. The key to CareShop’s success is imposing standardization on franchisees, so they have to stick to common diagnosis, quality and pricing. They make more money when they adhere to these rules than when they break them. To ensure there is no tampering with the drugs, they are delivered straight to the vendor’s doorsteps, and it is all backed up with health and business training support and branded materials.

The tide can be turned around on fake drugs: in 2002, the WHO reported that 70 per cent of drugs in Nigeria were fake or substandard: by 2004 that figure had fallen to 48 per cent.

Stimulating private sector solutions to African healthcare problems is now receiving an additional boost from a new fund established by the World Bank’s private sector arm, the International Finance Corporation. Launched in 2007, it offers cash and loans totalling US $500 million to commercial healthcare projects in Africa. According to its own statistics, 60 per cent of health expenditure in sub-Saharan Africa is privately funded, and the market, excluding South Africa, is worth US $19 billion.

Published: May 2008

Resources

SafeMedicines.org is a website offering the latest reports on fake medicines and is a good place to report incidences.
Website: http://safemedicines.org/in_the_news/
A paper on the global threat of counterfeit drugs: Click here.