Africa’s Medical Device expansion, a decade of growth?
Africa is largely regarded as the final frontier for Medical Device expansion. With a population of 1.2 Billion people, it is a continent whereby the demand for Medical Devices far outweighs the supply.
However, despite the opportunity for both genesis market capitalisation and human enrichment, Africa has been relatively ‘under’ infiltrated when we compare it to EMEA, APAC, and NASA.
The question isn’t so much as why, but when, this final oasis of opportunity will be explored. Whilst this article will detail some of my personal opinions as to why Africa has remained relatively behind the curve, I will venture further into an analysis and suggest when and how I see the Medical Device sector taking off within Africa in the coming decade.
Before I go into the reasons of why; I think it would be apt to give a little bit of context to my use of the phrase ‘under infiltrated’. I am applying this phrase from a purely capitalistic standpoint and the statistics that support this are as follows. As of 2017, Africa accounted for some $4,900M of revenue for its complete Medical Device sector. In comparison, the U.K, whose population sits at around 65 million, accounted for a $9,500M valuation as of 2015. These statistics translated to a valuation per capita, give some scope to just how under infiltrated Africa truly is.
So why has it taken so long for Africa to garner increased interest from the Medical Device companies of the world? I shall specifically mention two points; the first is the GDP (Gross Domestic Product) of Africa. Whilst there are swathes of Africans with immense wealth who can afford high-end medical treatment, and a burgeoning middle class forming across the continent; especially in countries such as Nigeria, South Africa, Egypt, Algeria, and Morocco. The World Bank recorded that 85% of Africans live on less than $5.50 p/d (2019). People just don’t have access to the financial requirement that is necessary to obtain the high-end medical devices. There is also a significant lack of people utilising Health Insurance companies, as well as relatively low budget proportioned to state-sanctioned healthcare, meaning that the ROI does not equate to a sensible risk evaluation for investment; at the moment.
Couple this factor with an economy that previously had been hampered down by the ramifications of a colonial past, whereby its infrastructure and subsequent connectivity levels are still in its infancy; as well as an economy which has been heavily focussed on the exportation of primary goods that therefore leaves an economy at heightened risk from global market fluctuations. Africa had not been an attractive investment opportunity for the medical device sector.
However, according to a report by AFRICA’S TRADE POTENTIAL: EXPORT OPPORTUNITIES IN GROWTH MARKETS; through the current programmes of work within transport and infrastructure alone, Sub-Saharan trade is forecasted to ‘’grow by more than US$ 20 billion annually in 2025 and generate an increase in SSA’s trade by up to 51% beyond the forecasted natural growth.’’ The recent ‘new investment’ that is occurring within Africa; especially focussing around its transport and infrastructure shortfalls is set to alter the previous barriers mentioned above, that had, in my opinion, played a role in inhibiting Medical Device investment into these areas. As the GDP of these nations grows through the increase of trade, this increase of trade stabilises a previously volatile economy/currency and allows more prosperity for the layman. This will, without doubt, cause a domino effect which will have a positive impact on the medical device sector.
How this links into the cardiovascular space for companies such as Medtronic, Boston Scientific, Abbott, and AtriCure, to name but is a few, is as follows. In Africa, cardiovascular deaths account for some 9.2% of all total deaths per annum, with cardiovascular deaths accounting for 21.9% of all deaths in Tanzania. Furthermore, of all adult medical admissions to hospitals; cardiovascular diseases account for 7-10% of these, with heart failure contributing 70%+ of these. Moreover, cardiovascular disease is the leading cause of death in Africa for those aged over 45. If we remind ourselves, that this is a continent of 1.2BN, then this potential customer base becomes, for use of a better adjective, impressive. With a new middle-class burgeoning as a direct correlation of trade and economic stability, more and more people will be able to afford the luxuries of premium-level healthcare. Furthering this, African governments will also be able to divvy more of their budget towards social healthcare needs. Thus, I stipulate that Africa is primed for innovation and heavy investment, and could offer the right company the authority of being the ‘first market mover’.
The benefits of being this ‘first market mover’ have been well established in other scenarios. These benefits are best synopsised by Professors Marvin Lieberman and David Montgomery – who write that they are: Technology Leadership, Control of Resources, Brand Loyalty and Buyer Switching Costs. Whilst there are Medical Device companies present and operating within Africa, as we pointed out in the beginning. Africa is now on the precipice of a positive economic trajectory and I feel that the coming year or so will show us a major change in the influence that the largest Medical Device companies in the world put towards this continent. Remember, it wasn’t too long ago that APAC and specifically India and China were not considered as top investment portfolios… and now the CAGR that these countries provide for Medical Device companies is exponential and instrumental to their global success.
I’ve tried to maintain throughout this article that Africa is a continent that is tipping towards major economic growth. It can no longer be viewed with prejudiced western eyes, and there has to be a reality check to many people’s misconception of this continent. This is a landmass with huge potential and I believe it will burst onto the scene within the decade. With such a vast population, that has been relatively untapped in terms of Medical Device sales; it would seem sensical that the large Medical Device companies start directing their 1, 2, 3, and 5 year plans to include this continent. The market capitalisation benefit of gaining genuine first-mover authority across the nations, and not just concentrating on the Big 5 economies, could and would eventually catapult any companies revenue per annum by Billions.
 file:///C:/Users/Oliver/AppData/Local/Temp/WEDF_African%20trade_for%20web.pdf (Page V)
 Gaziano TA. Economic burden and the cost-effectiveness of treatment of cardiovascular diseases in Africa. Heart 2008;94:140-4.