News Room



2014/01/06 00:00:00

“To understand any consumer, you have to put yourself in his or her shoes. That’s why you need people who understand, live and breathe the consumer environment in any given market,” says Kofi Amegashie, Adcock Ingram Managing Executive - Africa

This fundamental truth informs Adcock Ingram’s strategy when it comes to conducting business in Africa, north of the Limpopo and south of the Sahara. “We have hired people with an intimate knowledge of their respective regions to head up our three Africa hubs, namely the east (incorporating Nairobi and Kenya); the SADC south; and the west (based in Ghana),” says Amegashie.

There is a perception in South Africa that everything north of Limpopo is Africa, but not South Africa itself. “This is a misplaced notion. The economy in South Africa is characterised by a massive polarity. While nine to 12 million people live fairly cosmopolitan (or first-world) lives, the remaining 40 million or so form part of a ‘secondary’ economy that looks similar to many of the economies north of the Limpopo,” says Amegashie.

Amegashie says the greatest issues faced by lower income people on the continent are affordability, accessibility and acceptability.  “Let’s take man on the street in Africa - the equivalent of a security guard or gardener here in South Africa - affordability is a major issue and purchases are based on absolute cash in pocket.

“This person is not going to buy a 100 ml or 200ml bottle of fever or cough suppressant when his child is sick. He is lucky if he has a fridge at home - so where does he store the product once it has been opened?

“In South Africa we sell product in 100ml and 200ml bottles. Our entire manufacturing process is geared towards producing this product, but we can’t assume it is what we should be selling on the continent. The vast majority of people on the street are immediate consumption people - when they get a headache or cough, they want something immediately. They have limited cash in their pockets and don’t want to buy something that might go to waste,” says Amegashie.

To meet the needs of these consumers, Adcock Ingram began producing medication incorporating acceptable preservatives in 5ml sachets. “This means they can buy exactly what they need without needing to refrigerate it. I can also differentially price the product on the continent - not an option in South Africa due to single exit pricing,” says Amegashie.
Pack formats are vitally important in addressing the affordability issue. Unlike the more fortunate 9 - 12 million South Africans, who purchase their goods at shopping centres or their nearest Pick n Pay or Woolworths outlets, the average man on the street will make many of his purchases at market stalls or small shops. Many will buy goods at tables, often outside someone’s house and usually run by woman. These are the people who will be selling singles.

Amegashie says clever MBA graduates will calculate the minimum drop size should be about two cases of PANADO to a retail outlet. “But, what about the woman manning a table outside her house? Two cases of PANADO are out of her reach. Nevertheless, she’s an extremely important link in the supply chain to get to the folks that matter. So, how do we sell her one pack of PANADO, which contains 20 tablets, so that she can sell two’s? We do exactly that - we sell her two’s on a card that she can snap off for her customers.”

Getting product to the smaller sellers presents its own challenges. “We cannot use a 10-ton truck to deliver one pack of PANADO to a table outside someone’s house. It’s not viable. In Kenya we have overcome this by having wholesalers in high density areas and then using bicycles to take product to the seller. We only sell over the counter products on bicycle, not high-end drugs. And to stop the guy on the bicycle from being knocked over the head for cash, we conduct mobile transactions,” says Amegashie.

Ultimately, these transactions will allow Adcock Ingram to build up a databank of statistics, which will inform future tactics when operating in Africa. “We can’t buy data on the continent. We have to create your own. Analysing our own data will help us determine how many transactions are concluded by bicycle per day and what tables or stalls are selling more than others. By finding out why one person is doing better than others will help us understand consumer better.”

Understanding the customer also means knowing what is acceptable to them. “Most PANADO syrup is sold in strawberry and mint flavours. These are European flavours - inherited from South Africa’s past. A kid in Ghana has never even seen a strawberry, least of all tasted one. As it is, it’s hard to get kids to take medication and now we’re trying to administer it in a strange flavour. To address this, Adcock Ingram has created banana, guava and pineapple-flavoured PANADO.”

With the mandate to bring acceptable, affordable medication to as many people on the continent as possible, Amegashie is noticing changes. “There is a growing middle class. More people are able to go to doctors instead of sangomas. As you make medication more affordable, you bring more people into the franchise and save lives. Isn’t that a beautiful thing?”