The value of the African pharmaceutical market is growing rapidly, but the continent still imports over 70 per cent of the drugs it consumes.
According to a 2018 report funded by the European Union, counterfeit medicines account for up to 30 per cent of the global market.
Counterfeiters prey on poor countries with porous borders, who suffer up to 30 times greater penetration of fakes in their supply chains compared to their wealthier peers.
With Africa’s immense and changing disease burden and perpetual funding challenges, combined with an increasing need for pharmaceuticals and a reliance on foreign drugs, the continent is particularly vulnerable.
Supply chain regulation, track-and-trace technology and enforcement regimes are lacking.
As a result, the EU estimates that fakes may cause up to 158,000 deaths a year on the continent from malaria alone.
Such criminal activity is piggybacking off a vast and increasing demand for genuine drugs across Africa, driven by economic growth, rising personal incomes, improving health systems and increased public spending.
According to data from consulting firm McKinsey in 2015, the value of Africa’s pharmaceutical industry jumped from $4.7bn in 2003 to $20.8bn in 2013.
By 2020 the market could be worth between $40bn and $60bn, the firm predicted, with over-the-counter, generic and prescription drug demand all expected to grow.
Despite this vast appetite, it is estimated that the continent imports between 70 and 90 per cent of the drugs it consumes, compared to 5 per cent for China and around 20 per cent for India.
The continent only has around 375 drug makers, mostly in the North Africa region, South Africa, Nigeria and Kenya.
By contrast, China and India are thought to have around 5,000 and 10,000 manufacturers respectively.
Research and development for drugs is confined to a tiny handful of African universities, despite the fearful local toll of HIV AIDS, malaria and tuberculosis.
Boosting manufacturing and R&D on the continent could be a source of immense untapped value and improve public health responses, according to Professor Bernd Rosenkranz, president of the Fundisa African Academy of Medicines Development.
“Starting with research, the diseases are different and there are genetic differences in the response to treatment, so the drugs that may work well in New York may not work well in a local region Africa…
While there is a broad agreement that Africa could play a much greater role in the industry, experts acknowledge that there are huge gaps in the continent’s technical expertise, resource availability and regulatory architecture.
With key organisations swinging behind the creation of domestic industries – including the United Nations, the African Union and regional economic communities – the continent is only beginning to understand how best to exploit the opportunities.
At the Drug Discovery and Development Centre (H3D) at the University of Cape Town, founder and director Professor Kelly Chibale oversees a team of over 60 staff working at the cutting edge of pharmaceutical research.
In 2012 the centre scored its highest profile result yet, announcing the discovery of MMV390048, a compound that could be used as a single-dose treatment for malaria, in collaboration with international researchers and the Medicines for Malaria Venture.
Pharmaceutical R&D can create jobs for the continent.
In 2014, it became the first new antimalarial medicine to enter phase 1 human studies in Africa.
Emboldened by this success, Chibale’s scientists have joined a global consortium of pharmaceutical companies and research institutions working on tuberculosis, another major killer of Africans.
Emerging from humble origins and a small team in 2010, Chibale says that H3D’s success is a refutation of those who believe that ambitious and world-leading African pharmaceutical research outfits are a pipe dream.
“The perception of Africa is as a place where you can only do clinical trials. The other perception is that you have some good universities that can do good basic science.
“But what has lacked is bridging this gap between basic science in medicine and the clinic and patients – creating something that bridges this gap to provide the translational aspects of research that we can develop, such as lifesaving pharmaceutical products.
“We as Africans need to get involved in addressing these health challenges.”
While H3D is a champion for African science, Chibale stresses that its success is dependent on robust, mutually beneficial engagement with some of the world’s largest and richest pharmaceutical companies.
He argues that capacity building, talent and infrastructure have all flowed from these collaborations.
“Industry is important – they are a partner and we need them to help build this. If you look at China and India they have built research centres – Africa is the next thing that’s going to happen.
“Most of the big pharma companies have an Africa strategy. But we need to create an environment that makes it easy for them to be attracted to set up shop.
“They need government to provide the right incentives… all agreements have to have something in it for them because companies are answerable to investors.”
Chibale says that the involvement of major investors need not be limited to the research phase, pointing to opportunities for collaboration across the manufacturing value chain.
“There is an interaction between the R&D value chain and the manufacturing value chain.
“There are multiple opportunities for companies to span out along the value chain. In 2012 when we announced the discovery of the drug, we had to outsource toxicology studies to China.
“We could not get that done in South Africa… there are opportunities to bring in manufacturing at various stages.”
Professor Rosenkranz envisages research and manufacturing hubs based in Africa’s most economically developed countries, which could act as a petri dish for local manufacturing and research champions supported by the involvement of major international investors and research institutions.
Yet many firms require continued commercial incentives to operate in Africa.
In January 2018, major UK drugmaker GlaxoSmithKline announced that it was cutting back its operations in sub-Saharan Africa, leading to unspecified job losses following disappointing sales in the region.
In a sign that the industry will not simply develop itself, IQVIA, a research company which had predicted drug sales of $45bn by 2020, downgraded its forecast to $25bn.
Without the right incentives, say critics, successful collaboration cannot be taken for granted.
Chibale argues that Africa’s fragmented regulatory approach to medicine is one major stumbling block.
While the EU has an effective pan-European regulator known as the European Medicines Agency, which offers drug companies a centralised marketing authorisation across all EU states, Africa has a patchwork of individual regulators offering conflicting rules, standards and approval procedures.
In 2018, the African Union adopted a treaty to establish the African Medicines Agency, which aims to promote and harmonise regulatory policies, standards, and scientific guidelines.
While welcomed by most as an encouraging step forward, the AMA will work to coordinate activities among countries and regional economic communities, rather than having the sweeping overarching power of the EMA. Individual regulators are likely to retain significant power.
“To get approval for a product takes a long time. In Europe if you get approval for a product, it’s harmonised.
In Africa it’s not, so each company has to go to each country or region and pay its fees. That cost is passed on to the patient,” says Chibale.
While vaulting Africa’s formidable and varied regulatory standards may be a challenge worth taking for foreign drugmakers with vast lobbying budgets given the longer term potential of the market, Africa’s emerging manufacturers are particularly hard hit by onerous regulatory standards.
As the demand for pharmaceutical products has grown exponentially on the continent, the concept of encouraging domestic manufacturing has seized the attention of policymakers.
There are sound economic reasons for this – McKinsey estimates that tablets, capsules and creams produced in Ethiopia and Nigeria tend to be about 5 to 15% cheaper than the landed price of imports from India, which are subjected to freight costs, duties and VAT.
Those numbers are encouraging for cash-strapped health ministries attempting to secure cost-effective supplies for the populace.
“There are internationally recognised standards for producing drugs, and they can appear pretty daunting. There’s a lot required to meet those standards. It requires investment and expertise amongst other issues. The range of quality within and across countries is quite stark, from pretty low standard to WHO pre-qualified products being manufactured by companies. Depending on the country we take a sample of companies and identify the critical issues that need to be addressed as a matter of priority in terms of risk to product safety, ” according to UNIDO business plan coordinator Alastair West.
“This is a capital intensive industry, payback periods are long, and nascent industries need time-limited support from government.
“Other issues include fragmented regional markets, a lack of market data to inform decision making and the need (to a greater or lesser extent) for enhanced regulatory oversight.”
Given the immense challenges, not all analysts see domestic production as a catch-all solution.
Earlier this year, McKinsey published an analysis of domestic drug production in Africa, concluding that domestic production is feasible in half a dozen sub-Saharan African countries at current and projected levels but that pharmaceuticals would remain a “relatively small sector of the overall economy”, even assuming significant growth.
They predict that the industry will boost trade balances, but could be worth a modest $190m per year by 2027 for Ethiopia and $230m per year for Nigeria.
Furthermore, they argue that local production will not be a significant engine of job creation owing to mechanised factories.
“The total job creation affected by increased local pharmaceutical production is likely to be on the order of a few thousand jobs at best, even including any impact it has on jobs upstream and downstream, in its suppliers and distributors.”
Nevertheless, UNIDO’s West believes that the sector is worth what McKinsey calls “decades of sustained and careful effort”.
“My belief that the continent should, can and will develop its industry has been strengthened not only by what I’ve seen and the work we’ve done but also by the progress being achieved…
“In the future there is an expressed desire from African countries, regions and the continent as a whole to become less reliant on imports.
“This objective takes into account both public health and economic development considerations.
“Expanding the product range is important. Demonstrating market demand is going to be important. There are all sorts of things that need to happen for investment to be mobilised.”
For Chibale, the challenges facing manufacturing – including the struggle to acquire intellectual property for drugs developed elsewhere – only deepen the need for the continent to pursue a combined approach to discovering and manufacturing its own drugs.
“Resistance will render some drugs useless, you have to keep innovating. R&D is not a luxury, it creates jobs and infrastructure.
Africa Business Magazine