OTC Healthcare in Kenya
Euromonitor International's OTC Healthcare in Kenya market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.
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Tables: 10 | Publication date: Aug 2006
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive environment
Product coverage
Adult mouthcare; Allergy care; Analgesics; Calming and sleeping products; Child-specific OTC healthcare; Cough; cold and allergy (hay fever) remedies; Digestive remedies; Ear care; Emergency contraception; Eye care; Medicated skin care; NRT Smoking cessation aids; OTC obesity; OTC statins; Vitamins and dietary supplements; Wound treatments
Executive summary
Fight for Kenyan OTC healthcare
There is a growing trend indicating major battles in OTC healthcare in Kenya between multinationals and local drug manufacturers on one hand, and distributors and importers on the other.
This led to tough negotiations amongst industry players in Kenya and their East African counterparts, who regard Kenya as the powerhouse for manufacturers and hence the distribution of drugs, thus taking away opportunities for OTC healthcare in both Uganda and Tanzania.
Kenyan OTC healthcare is defined by the presence of a myriad of international subsidiaries such as GlaxoSmithKline EA Ltd, AstraZeneca Group Plc, Pfizer Consumer Healthcare Inc, Novartis Consumer Health SA, Sanofi Winthrop Industries, and Aventis SA. There are also a number of local manufacturers already setting ground rules on retail share and penetration.
The local drug manufacturers represented by the Industry Association and The Kenya Federation of Pharmaceutical Manufacturers, consist of companies such as Biodeal Laboratories Ltd, whose Managing Director is the Chairman of Association, Universal Limited, GlaxoSmithKline East Africa Limited, Ellys Chemical Industries Limited, Pharmaceutical Manufacturing Company Limited, Cosmos Limited, Regal Pharmaceutical Limited, Dawa Pharmaceuticals Limited, Beta Healthcare International Limited and almost 30 other manufacturers and a stream of official distributing firms for international brands and generic manufacturers. These companies come second only to South Africa in the Sub-Saharan Africa region in the manufacturing and distribution of drugs, making them a very formidable force in East and central Africa region.
The position these companies have taken to protect both local OTC healthcare and the outlying East African region poses serious threats to their counterparts in the region in terms of trade in drugs. Cases of complaints regarding Kenya's handling of pharmaceutical imports and exports have created enough challenges for the East African community secretariat in Arusha Tanzania, as they try to find a common ground for all drug companies in the community.
The power struggle is also between generic drugs and branded drugs, especially within analgesics, wherein the local firms control almost 80% of sales. However, volume does not necessarily translate to value, as the remaining 20% is controlled by multinationals and international distribution agents, who compensate for their share through high costs and quality guarantees, advanced marketing and advertising campaigns, which endear them to the consuming public. GlaxoSmithKline on the other hand uses its industry advantage gained by long years of service and the loyalty of consumers by being associated with households throughout the country to entrench itself in OTC healthcare.
The import of generics and subtype brands is posing a serious challenge to local companies, both multinational subsidiaries and indigenous manufacturers. These imports claim almost 30% of sales using dumping policies, which take advantage of loopholes in control systems to penetrate the local arena with drugs where quality is questionable.
GlaxoSmithKline is a world leader in OTC brand category
GlaxoSmithKline EA Ltd is the oldest company in OTC healthcare in Kenya with a sales value totalling over US$400 million per year. Research shows that the company controlled 52% of systemic analgesics in 2005 in Kenya and the East African region.
Its dominance has been challenged by local firms who have tried to influence healthcare trends by the introduction of paracetamol and combination products such as Beta Healthcare International Ltd's Mara Moja and Action Headache quick relief caplets. These brands claim to be effective in both speed and strength of relief, which appeals to the hard working "JuaKali" artisans and construction workers. The battle has been taken to the doorsteps of GlaxoSmithKline, which responded through the introduction of a stronger version of Hedex Extra to complement its range of Panadol and regular Hedex caplets, by claiming faster relief from headaches and stress related pains.
The dominance of GlaxoSmithKline EA Ltd has not come without a price, as recent reports indicated that a batch of its paracetamol tablets, Panadol, came under criticism for being poorly formulated and substandard, which almost resulted in all out war when the government lead Pharmacy and Poisons Board, the industry monitor, came to the defence of the pharmaceutical giant, drawing outcries from competitors that this indicated a biased leaning which might be costly to the country in the long run.
The claims and counter claims within the industry drew sharp focus to the emerging trade wars which almost dented the overall image of the drug manufacturer. The British pharmaceutical giant remains the industry leader in all OTC healthcare categories despite the threats from both local and international competition.
Gearing for self regulated medical regime
Drug use in Kenya has undergone multitudes of challenges, especially in terms of controlling OTC and under the counter purchases of drugs.
The Kenyan public practises high levels of self medication, not only in the allowed category, but also in the under the counter category, especially antibiotics, wormicides, and malarial treatment. Most of the so called OTC only drugs happen to be useful in the treatment of opportunistic infections such as HIV/AIDs, which has landed many chemists in a flurry of sales as the combination of OTC and ARVs makes it very easy for consumers to just ask for ethical drugs "over the counter", and their requests are accepted owing to the nature of their requirements.
It is estimated that almost 60% of the population self medicate, and this is due to several factors, key among them being distance from health facilities or to a large extent the high costs charged by medical institutions for both drugs and treatment.
Whereas the government controls nearly 52% of health institutions, these facilities are lacking in proper drug stocks and personnel, as well as being far distances apart, making access difficult for rural communities. Therefore, families in rural areas rely heavily on the "kiosks" and "dukas" for the supply of paracetamol, which they hope will treat a range of ailments. This is where the problem comes in. as the majority of kiosk owners sell mostly cheap generics, which to a large extent is all this segment of the population can afford.
Parallel trade hurting OTC healthcare
Recent indications show that almost 30% of OTC healthcare runs on parallel imports. The parallel trade in drugs has been blamed on low margins by mainstream businesses, especially by chemist/pharmacy outlets. Unscrupulous business people import goods marked "Not for Export" and resell them locally at below market rates. They are then legally distributed by multinationals and authorised distributors.
Due to varying trade policies in different countries, the products do not have uniform prices, and the traders import the goods cheaply and sell to local distributors for about 20% less. In turn, the distributors undercut their competitors by a hefty margin in selling to the end user. Yet the benefits do not trickle down to consumers, as there is no guarantee on quality, or where the products are packaged, similarly then the market prices prevail, hence the end price remains constant irrespective of cost of acquisition.
The worst trends are recorded in the import of drugs such as analgesics, whereby the cost of resale is almost 80% less than the trade price. The parallel importers on their part do not keep proper records such as receipts and or invoices as required by government regulations. This makes it hard to track the actual drugs being sold.
Whereas official distributors spend huge sums of money to acquire licenses as well as establish market presence, the parallel importers on the other hand spend less by riding on the backs of these legal distributors. They claim a high retail value share by capitalizing on the goodwill already in place.
Examples of unfair trade have been noted in the import of the Deep Heat range of analgesics, where packaging is similar in all senses, be it legal or parallel. While the legal distributors spend as much as US$20,000 per container on the drugs, it is claimed that the parallel importers spend a meagre US$2,000, and sell to the pharmacists at US$2,200, while the latter will sell the drugs at as much as US$22,000 per container in single units.
This is just an example of the unscrupulous tendencies in the OTC trade that forms the basis for requirements for stringent government control.
Counterfeit drugs and expired drugs
All over world counterfeit drugs sales account for almost 10% of overall value. In Kenya the problems of sale of counterfeit drugs is compounded by that of expired drugs, especially in rural and semi formal neighbourhoods, which accounts for nearly 70% of the total population of the country.
The World Health Organization in conjunction with The Ministry of Health and other industry players are working hard to eliminate these sales from the market, not only to protect the drugs trade but also to level risk exposures to consumers/patients who may use these substances due to ignorance and duplicity.
It has been alleged that Kenya being at the centre of regional trade in East and central Africa also serves a growing network of counterfeit drug dealers, and more caution should be exercised in dealing with this menace. Kenya has always been blamed for being lax in monitoring the flow of international drugs. The many porous border points allow free flow of unregulated drugs, and the government suffers a lack of drugs inspectors, which has caused a number of dangerous substances to filter into the country.
Kenya's drug regulatory body, the Pharmacy and Poisons Board, is understaffed with a mere 20 drug inspectors to monitor close to 3000 outlets in the form of chemists, pharmacies, parapharmacies, kiosks and dukas, all dealing various forms of drugs. Added to this is the threat of parallel trade, which though is meant to complement the imports of regulated drugs, also forms a conduit through which counterfeit drug dealers use to flood the market with their illegal wares.
Added to the difficulties faced by the monitoring unit to regulate actual drugs trade is the threat posed by a second form of drug abusing "illegal medics". These are semiskilled medical practitioners and even some unscrupulous medically trained personnel who open clinics and health facilities in the slum areas where they employ unqualified staff to manage the facilities. Government efforts have raised the level of awareness posed by these "fake" medical facilities and a number of them have been shut down having been found with packets of expired drugs. The matter is further complicated by the nature of some of these drugs which at times bare markings of the main government supply agency, indicating that the rot at times goes deeper than reported.
The United Nations health agency in Rome has issued a statement urging customs officials, police and drug enforcement agencies to share more information on fake drugs and their distribution methods to shut down international networks.
Table of contents
OTC HEALTHCARE IN KENYA : MARKET INSIGHT
1. EXECUTIVE SUMMARY
2. OPERATING ENVIRONMENT
2.1 OTC Registration and Classification
2.2 Vitamins & Dietary Supplements Registration and Classification
2.3 Advertising
2.4 Packaging and Labelling
2.5 Distribution
2.6 De-listing or De-reimbursement
2.7 Traditional Remedies
2.8 Homeopathy
2.9 Generics
2.10 Consumer Expenditure on Health Goods and Medical Services
2.11 Life Expectancy
Table 1 Life Expectancy at Birth 2000-2005
3. OTC HEALTHCARE SALES
3.1 Market Performance
Table 2 Retail Sales of OTC Healthcare by Sector: Value 2000-2005
Table 3 Retail Sales of OTC Healthcare by Sector: % Value Growth 2000-2005
3.2 Switches
3.3 Competitive Environment
Table 4 OTC Healthcare Company Shares by Retail Value 2001-2005
Table 5 OTC Healthcare Brand Shares by Retail Value 2002-2005
3.4 Leading Company Profile: Biodeal Laboratories Ltd
Summary 1 Biodeal Laboratories Ltd Production Statistics 2005
3.5 Leading Company Profile: GlaxoSmithKline East Africa Ltd
3.6 New Product Developments
3.7 Retail Distribution
Table 6 Retail Sales of OTC Healthcare by Distribution Format: % Analysis 2000/2005
Table 7 Retail Sales of OTC Healthcare by Sector and Distribution Format: % Analysis 2005
3.8 Retailer Activity and Private Label Trends
3.9 Forecast Market Performance
Table 8 Forecast Retail Sales of OTC Healthcare by Sector: Value 2005-2010
Table 9 Forecast Retail Sales of OTC Healthcare by Sector: % Value Growth 2005-2010
4. DEFINITIONS