Africa is building drug factories; Now it needs enough buyers

 

About 70% to 80% of medicines consumed in Africa are imported, according to the Access to Medicine Foundation

ANALYSIS | PATRICIA AKANKWATSA |  Africa is pouring money into pharmaceutical manufacturing as governments seek to reduce dependence on imported medicines. The bigger challenge may be finding enough buyers to keep the factories running.

About 70% to 80% of medicines consumed in Africa are imported, according to the Access to Medicine Foundation. The continent also relies on overseas suppliers for about 95% of its active pharmaceutical ingredients and almost all of its vaccines.

That dependence was exposed during the Covid-19 pandemic, when African countries struggled to secure vaccines and other essential medical supplies as richer markets competed for limited global production.

Now governments and manufacturers want to build a more resilient supply chain at home. The risk is that investment in factories could outpace demand.

“African manufacturers were encouraged to invest, and after the need disappeared, people just ignored them,” said Dr Mariatou Tala Jallow, Director of the African Pooled Procurement Mechanism at Africa CDC, at the launch of an Access to Medicine Foundation report on Sept. 8.

Some manufacturers expanded capacity during the pandemic only to face weaker orders once the emergency passed.

For pharmaceutical companies, that creates a difficult equation: plants need high volumes and predictable orders to compete on price.

“How can you have competitive pricing if you don’t get the volumes?” Jallow said. “The predictability of demand is very critical.”

Demand is the missing link

The report examined eight generic drugmakers operating in or supplying African markets, including Aspen Pharmacare, Cipla, Emzor Pharmaceutical Industries, EVA Pharma, Hikma Pharmaceuticals, Sothema, Universal Corporation and Viatris.

It found that manufacturers are expanding supply chains, developing local skills and broadening their portfolios to address diseases that are becoming more prevalent across the continent.

The shift is also visible among manufacturers outside the companies covered by the report. In Uganda, for example, Quality Chemicals Industries Limited, the country’s largest pharmaceutical manufacturer, is expanding its production capacity as it seeks to supply a wider range of medicines locally.

Two months ago, the company said it had completed a new manufacturing facility for hydroxyurea and launched Sikurea, a locally produced treatment for sickle-cell disease, which affects millions of people across Africa.

The move reflects a broader effort by African manufacturers to diversify beyond a narrow group of medicines and respond to the continent’s changing disease burden.

Quality Chemicals CEO Ajay Kumar Pal said the company had made significant progress in expanding its portfolio, including the launch of 15 new products for both private and public markets. The medicines cover a range of therapeutic areas, including HIV, malaria, tuberculosis, sickle-cell disease, diabetes, fungal infections, hypertension and reproductive health, as well as gastroenterology, antihistamines and non-bacterial infections.

Such expansion could become increasingly important as African health systems confront a combination of persistent infectious diseases and a growing burden of chronic illnesses.

But Jayasree Geyser K Iyer, chief executive officer of the Access to Medicine Foundation, said the industry needs more predictable purchasing from governments and donors.

“It really is predictable demand,” she said. “Ensuring there is predictable demand for certain medicines that are absolutely critical” would give manufacturers a better chance of sustaining production.

That could determine whether Africa’s pharmaceutical push becomes a viable industry or leaves behind factories operating below capacity.

The continent’s fragmented markets make the problem harder. A manufacturer seeking to sell the same medicine across several African countries can face different registration procedures, procurement systems and regulatory requirements.

Claudia Martínez, the foundation’s director of research, said country-by-country approval processes can slow access.

“Getting a medicine approved country by country in Africa is, at times, slowing access,” she said.

Greater regulatory cooperation could reduce duplication and allow manufacturers to reach larger markets without repeating costly processes in every country.

The disease burden is shifting

The opportunity is also changing as Africa’s health needs evolve. Malaria, HIV and tuberculosis remain major health concerns.

But diabetes, cardiovascular disease and other non-communicable illnesses are increasing, creating demand for medicines that patients may need throughout their lives.

That is pushing manufacturers to diversify beyond traditional infectious-disease products. Companies are expanding into insulin, medicines for hypertension and other chronic conditions, as well as maternal healthcare.

“We are seeing insulins being produced now in Africa,” Martínez said, with locally manufactured human and analogue insulin already entering commercial supply.

The shift could create a larger and more stable market for manufacturers, but producing the medicines is only part of the challenge.

Products still need regulatory approval. Governments, insurers and health systems need to purchase them. Distribution networks need to reach patients. And prices must remain affordable.

Scale could change the economics

Africa’s 55 national markets are a disadvantage when compared with pharmaceutical markets such as India and China, where large populations can support high production volumes.

The African Continental Free Trade Area could help change that equation, but regulatory barriers remain.

Rather than each country attempting to build a complete pharmaceutical industry, African governments could specialise in selected products and pool procurement across regions.

East African countries, for example, could combine demand for strategic medicines, giving manufacturers greater visibility over future orders and allowing them to produce at larger scale.

That would help address one of the industry’s biggest problems: utilisation.

A factory producing at a fraction of its capacity will struggle to match the costs of competitors operating at much higher volumes.

“Africa doesn’t lack the capacity. It doesn’t lack the ambition,” Jallow said. “It’s more of lacking the opportunities.”

Self-sufficiency isn’t the goal

Africa is unlikely to produce everything it needs. And policymakers increasingly recognise that complete pharmaceutical self-sufficiency may neither be practical nor economical.

“We will never be 100% self-sufficient. It doesn’t make sense. We are in a global world,” Jallow said.

The objective instead is to reduce exposure to external shocks by ensuring that essential medicines and critical inputs can be produced closer to the patients who need them.

That would leave Africa better positioned when global supply chains are disrupted, while creating opportunities for investment, employment and technology transfer.

But it will require more than pharmaceutical companies building plants. Governments will need to create reliable demand. Regulators will need to make it easier to sell across borders.

Donors will need to consider how their procurement decisions affect local manufacturing. And manufacturers will need to demonstrate that African production can compete on quality, cost and reliability.

The ultimate measure will not be how many factories Africa builds. It will be whether those factories can keep producing medicines at scale and whether patients can afford to buy them.

“The most important challenge would be the missed opportunity of actually getting the medicines that patients need into their hands,” Martínez said.