Local manufacturing: How can it improve access to essential medicines in Africa?
We shared a blog in January 2021, ‘the world needs supply chain heroes’, which outlined how the COVID-19 pandemic has disrupted the global supply chain like never before. The knock-on effects of the pandemic include the shutdown of manufacturing plants in China (which supply the bulk of raw pharmaceutical materials to many African producers), as well as supply chain disruptions due to border closures, social distancing and other measures.
Across sub-Saharan Africa, these challenges have led to increased drug shortages and greater numbers of deaths due to diseases like Malaria. This highlights how dependent African nations are on pharmaceutical imports and their need for more self-reliant health infrastructure.
The potential of local manufacturing
A research study conducted by PSA last year, informed by African policymakers and supply chain professionals, made a call for increased local manufacturing in Africa. Local manufacturing can improve medicine availability as well as affordability; fragmented supply chains with large numbers of intermediaries can increase costs. For example, in Kenya intermediary margins can make up to 50% of the final cost of medicines.
However, simply importing Active Pharmaceutical Ingredients (APIs) and finalising manufacturing in-country can actually reduce profits and effectively make locally produced generic drugs more expensive than imported alternatives. This has discouraged local drug production, despite the many other benefits it provides.
The ability to produce APIs locally and remove dependency on imports from places like China has therefore long been at the top of the list for pharmaceutical manufacturers in Africa. Whilst local production of APIs can help drive growth of manufacturing businesses in Africa and improve medicine availability, this is only one factor in a complex and large scale issue.
Next steps to increase local manufacturing
Over the last decade, African governments have implemented many policies which aim to strengthen local manufacturing of pharmaceuticals. PSA interviewed an expert in the pharmaceutical manufacturing sector in Sudan in late 2020, who noted that local manufacturers can be supported in the short term through government incentives, availability of hard currency for material supplies etc. They also noted how Sudan has banned products produced locally from importation, with the hope of reviving the national pharmaceutical industry.
The end of 2020 also brought an encouraging promise to the pharmaceutical manufacturing sector across sub-Saharan Africa. In December, the European Investment Bank (EIB) launched the first ever investment scheme (EUR 50 million) to strengthen public health supply chain and reduce dependency on drug imports – largely by scaling up local manufacturing. The African Continental Free Trade Area Agreement (AfCFTA) is also expected to help the continent’s manufacturing sector by facilitating access to new markets for small and medium-sized enterprises (SMEs), increasing economies of scale and facilitating exports diversification.
More work and support is still needed to sustain the development of the African pharmaceutical industry. Local manufacturers require governments to help make the process smoother through providing hard currency for purchasing ingredients, a fast-track registration process, and the removal of all governmental charges. Improved infrastructure, such as a stable energy supply, and government subsidies towards logistics costs would also help create a supportive environment for local manufacturing.
Looking towards the future
Local manufacturing has the potential to improve availability and affordability of medicines in Africa. Positive steps have been taken to support the local manufacturing industry, including actions by individual governments and organisations as well as investment from the European Investment Bank.
Local manufacturing is also only one part of broader solutions for improving access to essential medicines and therefore should be considered holistically. Where possible, countries should also look to increase the manufacturing of APIs. With further government support and coordinated action from multiple stakeholders, local manufacturing could ultimately help tackle future pandemics and improve healthcare on the continent.