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Manufacturing Pharmaceuticals: An Untapped Opportunity

23 June 2014
Manufacturing Pharmaceuticals: An Untapped Opportunity

Ever since the high tech generic drug production facility, Cinpharm-Cameroon, was set up, it is relatively easier for Cameroonians to have access to medicines. Now a low wage earner can access a course of antibiotics at a lower price than a Kenyan counterpart. According to the World Health Organization a 7-day course of treatment with ciprofloxacin could cost in Kenya close to a month’s wages. Unfortunately, this scenario is not uncommon across Africa.  In Uganda, it could cost about 11 days of a household income to purchase a single course of artemisinin-combination therapy used  to treat malaria for an under five-year-old child. 

Africa carries 25% of the world’s disease burden but consumes less than 1% of global health expenditure. It manufactures less than 2% of the medicines it consumes. Over 70% of the world’s HIV/AIDS cases and 90% of the deaths due to malaria currently occur in Africa. In addition, the continent bears 50% of the global deaths of under five children mainly due to neonatal causes as well as pneumonia, diarrhoea, measles, HIV, tuberculosis and malaria. The tragedy is that these diseases are treatable: most related deaths could be prevented with timely access to appropriate and affordable medicines. 

Africa’s capacity for pharmaceutical research and design (R&D) and local drug production is amongst the lowest in the world. The problem of inadequate investments in this area, unfortunately, continues. Overall, thirty seven African countries have some pharmaceutical production, although only South Africa produces some active pharmaceutical ingredients. Where there is local production in Africa, normally there is a reliance on imported active ingredients. As a result, the supply of African pharmaceuticals remains highly dependent on foreign funding and imports.  The pharmaceutical market in Africa is now 70% imported. According to trade data, India alone accounted for 17.7% of African pharmaceutical imports in 2011. Estimates further suggest that more than 80% of antiretroviral drugs (ARVs) across the continent are imported.

The poor access and affordability of medicines is compounded by factors that include long lead times for international orders; infrastructure gaps such as poor logistics and storage capacity, as well as high transport and distribution costs. In addition, there have been scarce public finances and deficient public health procurement systems. It is estimated that there is scarcity of essential medicines both in the public and private sector. People are also often being forced to  buy medicines that may not be certified. 

Many African governments spend a disproportionate amount of their scarce resources on procuring medicines. For instance, in 2006, Mali and Burundi, spent 2.3% and 2.9% of their GDP on such imports. Trends now indicate that new health challenges facing the continent will generate for their demands. Non-communicable diseases, like heart disease, lung disorders, diabetes and cancer, are rising due to demographic and lifestyle changes. These conditions will account for half the deaths in Africa, surpassing those provoked by infectious disease.

An additional difficulty results from the excessive use of originator brands, with much higher prices than the lowest-priced generic equivalents. To add to this concoction, the poor quality of drugs and their regulation not only fuel illicit transactions but also contributes to health problems. It was not long ago that 64% of antimalarial drugs in Nigeria were found to be counterfeit!

The benefits of scaling up local production of medicines

To pave a sustainable path for Africa’s health systems , scaling up pharmaceutical production is essential. It can increase the share of population with access to vital medicines, including in rural areas at a lower cost. Better health is central for people’s opportunities and contributes for them to be more productive. The economic cost of disease is well known for families and the national economies. The direct and indirect impact of malaria alone is estimated at US $12 billion annual African income. Local production of medicines is possible and has become imperative.

With economic growth projected to keep growing and the continent pursuing an agenda for economic transformation, there is a huge market opportunity.  Local manufacturing would create modern jobs, stimulate economic activities and many ways increase productivity. 

The pharmaceutical industry involves legal, scientific, technical, fiscal and financial aspects. In order to step up their production capability, countries need to tackle challenges on a variety of fronts. These range from R&D and exploring the full utilization of the Trade Related Aspects of Intellectual Property Rights (TRIPS) flexibilities, tax and tariff policies, drug regulatory and registration systems and, of course, building infrastructure.  

In some pockets of the continent, predominantly in North Africa and in South Africa, the status of local manufacturing of pharmaceutical products has gained a sturdy foothold. For example, Egypt and Tunisia produce, most of their national requirements for essential medicines. Morocco, the second largest African pharmaceutical producer, after South Africa, has 40 pharmaceutical industrial units supplying 70% of domestic demand and exporting 10% of their production, particularly to neighbouring African countries. Significant production capacity is being developed and enriched in Tanzania, Kenya, Uganda, Ethiopia, Ghana, and Nigeria. Mozambique has just commissioned an ARV plant with the help of Brazil.

Africa hosts some of the leading global innovators and generic manufacturers. Starwin in Ghana, Saidal in Algeria, Universal in Kenya, Aspen in South Africa, or Cipla in Nigeria are home grown manufacturers. This just demonstrates that Africa is producing medicines that meet international standards.

In order to enhance the pharmaceutical industry, there is a need for fewer structures and harmonization of policies through regional integration. Intra-Africa trade offers the prospect of strengthening and better exploiting regional supply chains and expanding economies of scale. This would also make larger investments attractive.

To be able to generate wealth and give its future generations a chance, Africa must take ownership of its health.