Over the last 9 months, COVID-19 has claimed hundreds of thousands of lives – and thrust the pharmaceutical industry into the spotlight. The sector is now under pressure to deliver safe and effective solutions to an unprecedented problem. And though the world’s eyes may be on the West when it comes to the development of new therapeutic options, pharmaceutical industries in other parts of the world must also evolve to manage the fallout from the disease.
African countries have not experienced the huge death tolls of some of the world’s most developed economies, but concerns about their ability to manage the long-term effects of the pandemic remain. Here, Paul Tanui, Senior Programme Officer – Technical Support at the African Union Development Agency - NEPAD, and Arthur Minsat, Head of the OECD Development Centre’s Europe, Middle East, and Africa unit, outline how the pandemic is affecting the continent’s pharmaceutical industry and consider opportunities for change.
What is the current state of African pharma?
Paul Tanui: Some estimates indicate that over 70 percent of Africa’s pharmaceutical needs are met through importation. A number of African countries rely entirely on imports for their pharmaceutical supply – but many are working to change this. In 2007, for example, the African Union Conference of Health Ministers mandated the development of the Pharmaceutical Manufacturing Plan for Africa (PMPA) – a roadmap to improved pharmaceutical capacity. As a direct result, the African Medicines Regulatory Harmonization (AMRH) initiative was established. Since its inception in 2009, it has helped build a regulatory environment for the development of a more robust pharmaceutical sector.
Today, there are regional pharmaceutical associations in Southern, Eastern, and Western Africa, as well as a continental organization for regulatory issues: the Federation of African Pharmaceutical Manufacturers Associations (FAPMA). In alignment with AMRH, these industry associations and FAPMA provide a voice to promote Africa’s pharmaceutical industry. They interact as a common front with governments, multilateral institutions, and international procurement agencies to help push African pharma forward.
Arthur Minsat: The local pharmaceutical sector is burgeoning in Africa and, as Paul stated, most pharmaceutical goods are imported. Local manufacturers produce about 25-30 percent of pharmaceuticals and less than 10 percent of medical supplies that are on the African market. Over the 2016-18 period, only South Africa, Egypt, Kenya, and Morocco (in order of magnitude) exported more than $100 million, while importing about $5.8 billion in medicinal and pharmaceutical products. More than half (57 percent) of Africa’s official exports in pharmaceutical products are directed to neighboring African countries. Producing pharmaceuticals locally on the continent is key to better fight local diseases, increase resilience, and advance the African Union’s Agenda on productive transformation. Too few multinational pharmaceutical enterprises invest locally in Africa. Policies can continue to improve the incentives for better investment, and working together regionally is paramount. Here, the implementation of the African Continental Free Trade Area (AfCFTA) offers larger economies of scale by tackling the issue of fragmented markets for the local production of generic medicines, or by pooling the procurement of medicines.
How is COVID-19 affecting Africa?
Minsat: The crisis is affecting African economies through many interdependent channels. The African continent is very dependent on the international economy: commodities earnings slumped, trade in goods and services became disrupted, and external financial inflows fell drastically, in particular remittances from Europe, foreign direct and portfolio investment. Many economies suffered from massive capital outflows. COVID-19 led to postponing the implementation of the Continental Free Trade Area, thus limiting the expansion of internal trade. Countries have to run fiscal deficits, by spending more to mitigate the economy, health, and social impacts, while revenues slumped in many countries. The risk of a debt crisis becomes more acute in some countries. As a result, Africa is facing its first recession in 25 years, with various GDP forecasts ranging from -2.1 percent to -4.9 percent.
Africa’s pharmaceutical value chain is disrupted through three main channels. First, it suffers from lower access to medicine supplies owing to the shutdown of manufacturing facilities globally. African countries import much of their pharmaceuticals and protective equipment from Europe (51.5 percent of total imports), India (19.3 percent) and to a lesser extent Switzerland (7.7 percent), China (5.2 percent), the United States (4.3 percent) and the United Kingdom (3.3 percent). Second, heightened competition to access basic goods (e.g. masks) made them less available and more expensive for many African countries. Globally, about 40 countries implemented bans on the export of certain drugs, pharmaceutical ingredients, or medical equipment (so as to be able to tackle domestic demand), leading to shortages in import-dependent countries. Third, macro-economic channels (in particular currency devaluation and capital outflow) have also impacted the sector.
On the bright side, the COVID-19 crisis also gave unprecedented impetus for developing health and pharmaceutical services online and locally. Public and private pan-African cooperation based on new technologies allowed countries to negotiate better prices for medical supplies with certified global suppliers. The Africa Centres for Disease Control and Prevention – in collaboration with Janngo (a pan-African tech startup), Afreximbank, and 20 international partners and foundations – has launched a pooled digital purchasing platform – the Africa Medical Supplies Platform – to support African governments ordering diagnostics and medical equipment on the global market. Afreximbank will facilitate payments, and logistics partners (including African national carriers and global freight forwarders) will expedite delivery. In the longer term, supporting the digital transformation of African economies could foster innovative solutions in the health and other sectors, and accelerate the economic recovery.
How well is Africa coping with the pandemic?
Tanui: In my opinion, though there have been difficulties, the National Regulatory Authorities (NRAs) across Africa have responded quickly to the pandemic. NRAs have a key role in ensuring that approved products meet quality, safety, and efficacy standards. Throughout this period, they have ensured appropriate access to diagnostic tests and treatment. They’ve also found support from technical committees, like the African Medical Devices Forum and the African Vaccine Regulatory Forum, who have provided guidance on clinical trials.
What about access to essential medicines?
Tanui: In addition to responding to COVID-19, NRAs are continuing with their regular activities – ensuring faster approval of products used in other diseases and contributing to the optimal functioning of Africa’s healthcare systems.
Minsat: The informal workforce is the most vulnerable. About 82 percent of African people live without social protection, and the majority pays out-of-pocket healthcare. Data collected from more than 45, 800 respondents across 34 African countries over 2016-18 highlighted that more than half (53 percent) of Africans went without needed medicines or medical treatment at least once during the 12 months preceding the survey. This demonstrates the urgency to expand health and social protection coverage through the development of national social protection action plans to achieve universal protection and improve its quality.
What lessons can be learned from other regions’ management of the crisis?
Minsat: Africa’s epidemiology curve is at an earlier stage than many other parts of the world, which means African policy-makers have been able to learn many lessons to handle the pandemic better. Most African governments reacted more quickly to prevent the pandemic from spreading. Many governments also provided rapid support to the local economy, in the form of macro-economic and monetary interventions, lockdowns, e-schooling, support to enterprises, entrepreneurs, and cash transfers. However, we also saw the limits of lockdown and other policies in Africa, notably due to the size of the informal sector. Since late April, the necessity to keep the economy afloat led countries like Cameroon, Mauritius, Niger, Rwanda, and South Africa, to ease containment measures gradually, even though the infection curve had not yet reached its peak. The scope of the pandemic remains uncertain as cases are likely underreported and data collection varies across countries. By September 2020, the number of confirmed COVID-19 cases in Africa had risen to a million with over 50 percent in South Africa, and caused about 30,000 deaths.
It’s crucial to recognize the importance of international cooperation in mounting an appropriate response.
- In the immediate term, the international community should provide adequate support to the healthcare sector, its workers, and social infrastructure. Major producers of medical products should refrain from export bans and other trade policies that fragment production and increase the costs of essential supplies for import-dependent countries. Debt cancellation or even restructuring may also become imperative to enable countries to respond and continue to conduct counter-cyclical fiscal policies.
In the medium-term, large domestic and international resource mobilization should be prioritized and co-ordinated at the continental level to support health systems. Most African Union countries are still far from meeting the 2001 Abuja declaration target to allocate at least 15 percent of their annual national budgets on health. By 2011, only Tanzania had hit the target while 11 countries had cut their health expenditures. If African nations can develop mechanisms for early, synchronize economic policy with social and healthcare policy, and develop the capacity to monitor and evaluate these policies, it should lead to a quicker response to the virus.
What can be done to support the continued growth of the African pharmaceutical industry?
Minsat: The pandemic is exposing Africa’s reliance on external suppliers in meeting its internal demand for medicines. However, African pharmaceutical and manufacturing companies are stepping up to produce critical supplies amid global shortages, disrupted supply chains, and export bans. African leaders can now decide which production capabilities are essential for the continent’s health security going forward and provide those industries with the support they need to survive and develop.
- Countries should use this opportunity to accelerate the implementation of the Pharmaceutical Manufacturing Plan for Africa (PMPA) and establishment of the African Medicine Agency (AMA) by prioritizing investment for regulatory capacity development; pursuing convergence and harmonization of medical products regulation in regional economic commissions; and allocating adequate resources for AMA.
- Accelerating progress towards the next phases of the AfCFTA, particularly the agreements on investment, competition policy, and e-commerce, will create an environment conducive to establishing regional value chains in pharmaceuticals and will be critical to position the region as an attractive investment destination as the regional and global economy starts to recover.
I am confident in the bright future of the African pharmaceutical industry, given the high demand, the renewed political momentum, and the ingenious spirit of African entrepreneurs.
Tanui: The PMPA business plan has identified several incentives that will support the growth of the pharmaceutical industry. These include:
- supporting affordable finance
- strengthening regulatory systems and harmonization
- enhancing the quality and efficiency of production
- promoting technology transfer initiatives
- developing enabling policy and skilled human resources
Young scientists should also be encouraged to pursue careers in NRAs and the pharmaceutical industry. As they become experts in QC, GMP, and industry, we will have a wealth of talent to help guide our future trajectory. But seasoned professionals also have a role to play; their mentorship of upcoming regulatory professionals will be vital for developing skills and knowledge.
I can only express my optimism for the future of our industry.
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