Africa’s Malaria Battle: Fake Drug Pipeline Undercuts Progress

May 28, 2013, 10:39 p.m. ET

Africa’s Malaria Battle: Fake Drug Pipeline Undercuts Progress

By BENOÎT FAUCON in Luanda, Angola, COLUM MURPHY in Guangzhou, China, and JEANNE WHALEN in London


When customs officials in Luanda, Angola, searched a cargo container from China, they found something hidden inside a shipment of loudspeakers: 1.4 million packets of counterfeit Coartem, a malaria drug made by Swiss pharmaceutical giant NovartisNOVN.VX +0.56% AG.

The discovery, last June, led to one of the largest seizures of phony medicines ever. The fakes—enough to treat more than half the country’s annual malaria cases, had they been genuine—are part of a proliferation of bogus malaria drugs in Africa that threatens to undermine years of progress in tackling the disease.Massive Western aid programs have financed the purchase of millions of doses of Coartem and other antimalaria efforts such as insecticidal nets and spraying. Combined, they have helped bring about a sharp reduction in malaria fatalities, health experts say. Over the past decade, annual deaths from malaria in Africa fell by a third, to about 600,000, according to the World Health Organization.

But the blizzard of fakes threatens the progress. “There could be a reversal” in fighting the disease, Angola’s health minister, Jose Van-Dunem, said in an interview, calling fake antimalarials “a new phenomenon.”

More than one in 10 Angolans is diagnosed with malaria every year, making the drugs a part of everyday life there. The disease can be lethal for pregnant women and children under 5 if unchecked, said Mr. Van-Dunem. While there are no statistics on fatalities possibly linked to fakes, health authorities fear that any deaths related to counterfeits could be mistakenly attributed to other causes.

Coartem treatment for adults showing symptoms consists of 24 pills taken over a three-day period. The counterfeits seized in Luanda contained none of the active ingredient in real Coartem. Instead, they were made of calcium phosphates, fatty acids and yellow pigment, according to a copy of a Novartis analysis of the tablets reviewed by The Wall Street Journal.

The fakes are popular with Luanda street merchants, some of whom are struggling Congolese immigrants who knowingly sell the cheap counterfeits—sometimes for the same price as the genuine drugs.

Large quantities of legitimate Coartem are supplied to Africa through aid programs backed by Western governments, which purchase the drugs from Novartis at or below cost. Some of these tablets are distributed through government health clinics that give them away free, while others are sold by licensed pharmacies for about $5 for a full course of pills. Some of the genuine drugs are stolen from public facilities and wind up for sale at street markets, say local authorities and merchants.

Whether genuine, fake or stolen, antimalarials are highly visible at the markets. They are typically displayed alongside Chinese-manufactured bluejeans, shoes, wheelbarrows and power generators. Customers weave their way around goats, wild dogs and ponds of putrid water, walking atop tracks made of crushed soda cans, cardboard and plastic bags.

Some sellers acknowledge knowing that some of their pills are copies, but many maintain they are still effective at treating malaria. “It’s good quality,” Congolese street seller Pierre Masamba said of the Coartem-labeled pills he was selling.

Mr. Masamba said they were “Chinese copies” but thought they contained active ingredient. Upon learning they didn’t work, he said “I have no equipment to analyze them so I can’t know if they work or not.”


A study published last year by the Lancet medical journal and conducted by a unit of the National Institutes of Health found that 35% of 2,300 malaria drug samples tested in sub-Saharan Africa were of “poor quality”—either fake, expired or badly made. Such pills “are very likely to jeopardize the unprecedented progress and investments in control and elimination of malaria,” the paper’s authors concluded.

A spot-check of pills by The Wall Street Journal found mixed results. At a market in Northern Luanda, the paper purchased samples from different vendors, with the knowledge of local authorities, and sent them for testing to the London School of Hygiene & Tropical Medicine, an independent facility. Three samples, described by sellers as copies that were effective, turned out to be fake and lacking Coartem’s active ingredients. Three others, described as Coartem, were the genuine drug.

Julia Francisco, 29, who was shopping for medicine at a market where cheap counterfeit malaria drugs have been found, said Coartem costs too much in pharmacies—and isn’t always available through other legitimate outlets. “We can’t find it at hospitals,” she said.

Nongovernmental organizations and the health minister deny there is a shortage. “Antimalaria [treatments] are in sufficient quantity in hospitals,” said Mr. Van-Dunem in an interview. If people buy the drugs in markets, he said, it is for reasons of convenience.

At hospitals, “they have to go for a prescription. They have to wait. So it’s easier” to procure at markets, said Mr. Van-Dunem.

Though the sale of fakes is illegal, counterfeit manufacturers, intermediaries and street traders are subject to little local enforcement, according to Angolan officials, who say they are working to strengthen anticounterfeit laws, but haven’t provided any details.

Coartem isn’t the only malaria drug available in Angola. But it is the most widely used because it is a relatively new form of treatment that global health authorities consider more effective than previous generations of medicine.

Novartis, which doesn’t break out profits for individual products, says it is concerned about the damage the Coartem fakes could do to patients. “Counterfeiting medicines is a serious crime against patients who rely on safe and quality-assured medicines to prevent and cure disease, alleviate pain and save lives,” the company said in an emailed statement.

Novartis said it is “collaborating with partners in government, industry and law enforcement” to fight counterfeits. It has also added new security features on its packaging to make copies more difficult to produce.

The company is also concerned about how fakes might impact its credibility. “Reports of adverse reactions…could materially affect patient confidence in the authentic product, and harm the business of companies such as ours,” the company says in its latest annual report to the U.S. Securities and Exchange Commission.

An examination of the path traveled by the bogus Coartem seized in Luanda traces it through a smuggling route that ships counterfeits from China’s bustling trading hub of Guangzhou to the street markets of Africa.

Customs records show the fake Coartem was shipped from China by a Guangzhou freight company called Starway International Ltd., whose listed address is a drab building also occupied by a record company.

Aben Iduku Hubert, the owner of the company, is a Congolese businessman who divides his time between Guangzhou and Congo. He confirmed in a phone interview that he is the owner of Starway International Ltd. Both he and Starway’s day-to-day manager, Robert Ngapa, who is based in Guangzhou, said they didn’t know the loudspeakers contained medicine, and were unaware that the cargo had been seized. “You are the first to tell me [about the seizure],” Mr. Aben said. “We don’t export medicine.”

Messrs. Aben and Ngapa are part of a growing diaspora of African traders involved in the export of goods from Guangzhou. Mr. Aben says he arrived in China in 1988 as a student, before setting up a freight company that ships Chinese products to Africa. He says his company ships everything from loudspeakers to shoes to television sets and wigs.

Angolan police are now investigating Mr. Aben and his company Starway—along with several men based in Luanda—over any potential role in shipping the fakes, according to an Angolan police official. Mr. Aben, who the official said hasn’t been charged with a crime, said he was unaware of the investigation, had not been contacted by any enforcement authorities and had committed no crime.

Angolan police have not contacted Chinese authorities, according to the Angolan police official. An Angolan police spokesman couldn’t be reached for comment.

Such counterfeits are collateral damage from the fast-expanding ties that have turned China into Africa’s largest trading partner. In recent years, Beijing has clinched massive deals to import African oil in exchange for building roads and housing on the continent. The value of trades is estimated to have doubled to more than $200 billion last year, according to China’s commerce ministry.

The trade relationship between China and the continent has also strengthened on less formal levels. A variety of vendors peddle cheap goods to African street markets from Guangzhou, population 13 million. The traders live there in an area known for its large concentration of Africans, where they can access wholesale leather, clothes, bags, sneakers and jeans—and anything else their clients in Luanda or Lagos crave.

The neighborhood is like a microcosm of Congolese daily life. Local cafes serve goat, beans and fufu, a starchy staple made from vegetables. Diners speak loudly in French and Lingala—the lingua franca of the Democratic Republic of Congo—to the sound of Soukous, a popular music in the African country.

It isn’t known where the fake Coartem was manufactured. But on April 24 of last year, it set out on a two-month sea voyage from Guangzhou to Luanda, according to customs records. The container carrying the counterfeits was unloaded in Luanda along with pornographic DVDs—also hidden in the loudspeakers—and a grab bag of other, legitimate goods: bras, sofas, tricycles, hair extensions and keyboards destined for a local church, according to a customs inventory of the cargo. Messrs. Aben and Ngapa said they didn’t know the loudspeakers contained illegal pornographic DVDs or fake drugs.

According to customs documents, the container was consigned to a small-time trader, Felipe Pembele, who says his firm makes a brisk business of importing cheap Chinese goods to the streets of Luanda, population five million. Angolan police and customs officials also confirmed the details about the goods shipped and their recipient.

Mr. Pembele’s firm, General Trade Organizations Filemos Ltd., is based in a room in his home in Luanda, just behind a line of freshly hung laundry. Visited there, Mr. Pembele acknowledged importing goods from China, but said he didn’t know the container concealed the DVDs or drugs, let alone fake ones. “I don’t deal in medicine,” he said.

The intended recipient of the loudspeakers containing the fake Coartem, according to Mr. Pembele and a top Angolan police official, was a Luanda pharmaceutical distributor named Antonio Kinavuidi.

Mr. Pembele and Mr. Kinavuidi were briefly arrested and questioned over the counterfeit shipments but were subsequently released, according to an official at the economic police and Mr. Pembele. The two men haven’t been charged, according to an Angolan economic police official and Mr. Pembele.

A visit to Mr. Kinavuidi’s pharmacy showed it continued to operate as normal. He couldn’t be reached to comment by phone or email. Angolan police said Mr. Kinavuidi doesn’t have a lawyer because he hasn’t been charged.

China’s foreign ministry said the country “has always attached great importance to drug safety and resolutely combats the…manufacture and sale of counterfeit medicines.” The ministry added that it is “not aware” of evidence that any fake Coartem found in Africa came from China.

Exports of counterfeits from China to Africa are difficult to investigate because they involve large, opaque networks. Mr. Pembele said he acted as intermediary for a group of Luanda businessmen who had joined forces to buy various goods from China. “Clients don’t always say what they buy so I have had bad surprises. You can never trust people,” he said.

In another seizure last year, Nigeria’s pharmaceutical enforcement agency, working with Novartis, confiscated 40 cartons of fake Coartem packets stored at a consumer-electronics shop in Lagos, the country’s economic capital. Shipping documents reviewed by The Wall Street Journal show the counterfeits came from a Nigerian trader based in Guangzhou.

Counterfeit Coartem has also been found and seized in Guangzhou itself. In February 2012, the Chinese police and the Chinese Food and Drug Administration seized 600 boxes of fake packets of the drug—enough to treat 18,000 patients—in two lorries in Guangzhou, according to a private investigator familiar with the haul.

The fake Coartem found in Luanda, Lagos and Guangzhou appeared to be manufactured specifically for the African market. The counterfeits all carried the logo of Nigeria’s medicines regulator, the National Agency for Food and Drug Administration and Control—which is used as a stamp of approval for authentic Coartem throughout the continent.

The fakes in all three countries also used expiration dates that ended 24 months after the alleged date of manufacture instead of the usual 23 months for genuine Coartem.

In Luanda, the health ministry is setting up laboratories to spot-check medicine in an effort to find counterfeits. But many Angolan health and police officials complain their hands are tied.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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