Opinion: Rethinking Africa’s pharma sector can unlock economic growth

Africa has fewer than 400 drug manufacturers to cater to the more than 1 billion people on the continent. Meanwhile, China and India are countries with similar populations but as many as 5,000 and 10,500 drugmakers, respectively. With so few manufacturers, Africa must rely largely on imports to keep its population healthy. In most of sub-Saharan Africa, imports account for as much as 70% to 90% of drugs consumed, and this drives up costs and limits the availability of medicines.

Without regular access to even the most essential medicines, millions die or suffer from protracted illnesses. Widespread ill health can trap people in poverty, as those who are healthier are more productive. A thriving pharma sector that boosts access to quality medicines will improve health care and consequently propel economic growth.

Africa’s overdependence on imported pharmaceuticals also makes it extremely susceptible to health care emergencies, as COVID-19 has demonstrated. Supply chain disruptions at the start of the pandemic in 2020 severely affected the availability of medicines across the continent because many countries that produce pharmaceuticals restricted exports.

In Nigeria, supplies to manage chronic illnesses were reportedly hard to come by, while psychiatric drugs and oral contraceptives were scarce in South Africa. Similarly, the shortage of COVID-19 vaccines on the continent highlighted the danger of overdependence on imports. As of January this year, Africa had only received about 6% of the 9 billion COVID-19 vaccine doses produced, despite having 17% of the world’s population.

Apart from improving health care outcomes to have more productive people in the economy, significant economic value can be captured from developing Africa’s pharmaceutical sector. In 2021, 40 of India’s estimated 237 billionaires reportedly earned their wealth from pharmaceutical businesses. The sector directly contributes about 2% to India’s gross domestic product and around 8% to the country’s total merchandise exports. India is one of many countries that derive export revenue and create jobs from pharmaceutical businesses.

Hence, with African economies strongly in need of economic boosts, rethinking the continent’s pharma sector as a contributor to prosperity has become imperative. Both public and private stakeholders have a role to play in these critical steps required:

Increase local manufacturing capacity and improve distribution systems. Establishing drug manufacturing hubs across Africa is the first step toward building a new pharma sector that better supports the continent’s economies.

In the words of Margaret Ilomuanya, the editor-in-chief at the Nigerian Journal of Pharmacy: “There’s a big risk in relying on elaborate global supply chains in which the supply of many essential and critical drugs is dependent on overseas suppliers. We have the wherewithal to build the local pharmaceutical industry, and we have the hands. We can take it from bench to bedside.”

However, good distribution also plays an important role in ensuring that local demand can be efficiently met. In sub-Saharan Africa, for example, the lack of organized distribution systems forces health care providers to rely on open drug markets and unlicensed drug traders, making patients susceptible to counterfeit and substandard products.

More local manufacturing and improved distribution mean affordability and better access to medicines, as well as healthier people who are productive and actively contributing to the economy. These also mean new jobs and potential export revenue.

Tap the potential of technology to improve the whole pharma value chain. The world is witnessing a tidal shift as health care systems globally struggle to improve quality service output while improving efficiency through technology. This is one of the factors that differentiate the COVID-19 crisis from the Spanish flu pandemic of 1918.

Today, digitalization has fostered instant communication and helped facilitate speedy research, development, and distribution of vaccines, demonstrating its importance to future pharma. Electronic prescriptions, telemedicine, remote monitoring for in-patient and geriatric care, wearables, and at-home testing kits are just a few of the ways tech is transforming health care.

Africa has a unique opportunity to utilize these advancements in technology and leapfrog the current infrastructure gaps affecting its pharmaceutical value chain to positively impact health outcomes on the continent. Connecting patients to responsive, resilient, and adaptive supply chains is a unique feature that technology can bring to the pharma space.

Promote health insurance to drive affordability and expand the addressable market locally. Poverty prevents most low-income Africans from seeking competent health care providers for quality medicines. People resort to self-help and alternative medicines to avoid medical bills that they often cannot afford.

However, effective health insurance reduces the financial burden of illnesses and could encourage more low-income people to approach qualified professionals, thereby increasing consumption, the market for quality health care and pharmaceuticals, and health outcomes.

The private sector has a crucial role in expanding access to health insurance. Pricing is critical, so providers need to design innovative schemes that accommodate low-income earners by leveraging risk-sharing pools in which more well-to-do clients offset the cost of other policyholders. Regulators can also encourage alternative financing streams, such as creating sin taxes that go toward funding health insurance for the poorest in society who lack access to care.

Leverage the AfCFTA to create a seamless continentwide pharma market. While Africa has more than 50 countries, with different pharma markets and trade policies, the introduction of the African Continental Free Trade Agreement offers immense integration opportunities for the manufacturing and trade of pharmaceuticals. The AfCFTA seeks to turn the continent into one giant trade bloc, potentially offering locally manufactured pharmaceuticals a larger market and a better investment outlook.

Look to India as a model. India’s pharmaceutical industry successfully meets its domestic needs and has secured a leading position in the global pharmaceutical landscape, ranking 14th globally in terms of production value and third in terms of volume. The industry moved from a turnover of approximately $ 1 billion in 1990 to over $18 billion by the end of 2018. The industry was valued at $45 billion in fiscal year 2021 and is projected to reach $60 billion by the end of 2023.

This growth is the result of decades’ worth of long-term investments in the pharma sector, as well as collaboration between public and private stakeholders. If countries in Africa aspire to India’s level of success, the continent requires significant investments in pharmaceutical value chains with a long-term view.

Ultimately, Africa urgently needs a high-performing pharma sector. With the industry inextricably linked to the economy, and COVID-19 spotlighting the risk, it is folly for the continent to continue depending heavily on imported medicines.