A pipeline of new pharmaceutical factories in Tanzania will boost the domestic industry. According to the Tanzania Medicines and Medical Devices Authority (TMDA), 12 pharmaceutical facilities are under construction in Tanzania as of December 10 2021, of which eight are for human medicine and four are for veterinary medicine. The dosage forms expected to be manufactured by these facilities include large volume parenterals (LVP), Oral Liquids, powders, tablets, vaccines, topical formulations, creams, ointments and ophthalmic preparations. It is our view that once these facilities start operating, local manufacturing in Tanzania will receive a significant boost and make the country a more competitive pharmaceutical market.

Tanzania - List Of Facilities Under Construction

 

 

Source: TMDA, Fitch Solutions

Increasing manufacturing activities in Tanzania will support pharmaceutical market growth ahead. We project that Tanzania's market will grow by a ten-year compound annual growth rate (CAGR) of 10.2% in local currency terms and 9.7% in US dollar terms, to reach TZS3.8trn (USD1.6bn) by 2030. We expect the market to post a mixture of high single-digit and double- digit growth over the forecast period in local currency terms, supported by the increase in local production. Furthermore, due to low purchasing power, generic drugs will comprise the majority of Tanzania's pharmaceuticals market. This is also highlighted by the type of companies that are investing in Tanzania listed above, which are largely generic drugmakers rather than multinationals manufacturing patented drugs.

Increased Local Production To Support Market Growth Ahead

Tanzania - Pharmaceutical Market Forecast

 

f = Fitch Solutions forecast. Source: DESA/UNSD United Nations Comtrade Database, local news sources, domestic companies, Fitch Solutions

The manufacturing plants will also boost exports. We believe that an increase in local manufacturing in Tanzania will also boost pharmaceutical exports to neighboring countries. Malawi, Kenya and Ethiopia are the main destinations for pharmaceutical products manufactured in Tanzania, and these will therefore be the main beneficiaries to this boost. We forecast that Tanzania's pharmaceutical exports will grow at a five-year local currency CAGR of 17.5% (17.0% in US dollars), to reach TZS10.3bn (USD4.4mn) by 2025.

Exports Will Register Strong Growth

Tanzania - Pharmaceutical Trade Forecast

 

f = Fitch Solutions forecast. Source: ITC, Fitch Solutions

Finally, we believe that Tanzania will remain an attractive market for pharmaceutical investment in East Africa. According to the TMDA, Tanzania is offering attractive incentives for pharmaceutical manufacturers. These include: the exemption of VAT for manufacturing equipment; reduced application processing timelines; no retention fees; no importation fees for raw materials; and assisted exportation for finished products. These provide a favourable environment for companies and therefore makes it an attractive destination for drugmakers.

However, in terms of the operating environment, extensive red tape presents significant obstacles for investors looking to enter Tanzania. For example, the processes involved in opening a business as well as obtaining business-related permits remain time-consuming and costly. Furthermore, Tanzania is one of the most difficult countries in East Africa for acquiring construction permits involving long waiting times and numerous procedures. Widespread corruption within the government also creates a challenging legal environment and lowers investor confidence.