Novartis AG (ADR) (NVS), Sanofi SA (ADR) (SNY): Pharma Big Wigs Warm Up to Africa’s $40 Billion Opportunity

Sanofi strengthening its distribution channel

In North Africa, Sanofi SA (ADR) (NYSE:SNY) is not leaving anything to chance. To enhance its already formidable footprint, the French company has invested €20 million (around $25 million) in a state of the art distribution hub in Casablanca, Morocco. The logistics hub will handle 1,300 products destined for Sub Saharan Africa and the local market. This comes at the heels of the company’s pledge to help Type 1 Diabetes patients in Morocco. Sanofi SA (ADR) (NYSE:SNY) is the market leader in Morocco and boasts of a 50 year presence.

Outside Morocco, Sanofi SA (ADR) (NYSE:SNY) is also doing a lot to enhance its brick and mortar presence. In the near future, Sanofi SA (ADR) (NYSE:SNY) plans to open a third Algerian factory at a cost of €70 million (around $90 million). It is evident that Sanofi SA (ADR) (NYSE:SNY) has a good presence in North Africa. Most parts of North Africa are better off economically when compared with the Sub Saharan region. This means that patients will be able spend on treatment.

Trust issues

Reputable brands like GlaxoSmithKline plc (ADR) (NYSE:GSK), Sanofi, and Novartis AG (ADR) (NYSE:NVS) have a huge edge over other players. There is a higher trust level among consumers and authorities when it comes to big brands. In a past case, Nigeria’s National Agency for Food and Drug Administration found antibiotics on sale that actually contained corn flour, reports African Business. Such cases are the staple in areas where unscrupulous traders flourish. The proliferation of recognized brands will therefore be welcome news for both authorities and consumers.

Conclusion

With the spotlight placed on Africa and its immense growth potential, pharmaceutical big wigs could not have timed their increased activity in Africa any better. Disposable income is set to increase and African consumers will be able to spend more on chronic and non communicable diseases moving forward.

GlaxoSmithKline plc (ADR) (NYSE:GSK), Sanofi, and Novartis AG (ADR) (NYSE:NVS) should turn in impressive profits from their African operations in the long run. In addition, they will be instrumental in reducing Africa’s disease burden and creating positive change for African society and the world at large. It is a win-win situation.

Lennox Yieke has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Lennox is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Pharma Big Wigs Warm Up to Africa’s $40 Billion Opportunity originally appeared on Fool.com is written by Lennox Yieke.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.