By Matthew Candau
It’s been nearly four years since the onset of the COVID-19 pandemic unleashed an unprecedented global crisis. The African pharmaceutical sector, like the rest of the world, found itself in a precarious situation as foreign countries restricted their exports and borders closed. The pharmaceutical trade ground to a halt as states weighed their options, exposing the sector’s long-standing vulnerabilities.
However, amid these trials, a path to recovery emerged. The African Continental Free Trade Area (AfCFTA) heralds a promising shift in the continent’s trade dynamics, offering a catalyst for a new era of intra-African trade by allowing innovators to reshape healthcare prospects and bolster the continent’s capacity for pharmaceutical self-determination.
As we delve into the pandemic’s profound impact on pharmaceutical trade, it becomes evident that Africa’s experience reflects a broader struggle for resilience and equity. It is within this context that we can assess the continent’s prospects for health, development and prosperity.
COVID-19 and the Pharmaceutical Industry
Due to the pandemic, many states swiftly imposed export restrictions on pharmaceutical products to safeguard their own supply. This included many of Africa’s historically significant trade partners, such as India and the European Union, which accounted for over 70% of pharmaceuticals imported into the continent. Considering that the top five global pharmaceutical exporters to Africa supply the continent with over two-thirds of its personal protective equipment (PPE) and medical consumables, foreign protectionism severely hampered Africa’s ability to implement and enforce recovery policies. Furthermore, a staggering 99% of vaccine doses administered were imported.
In response to these restrictions, several African countries and companies adopted policies and practices to promote employment, diversify production, and ensure public health. For instance, when Uganda faced a shortage of hand sanitizer during the pandemic, local and international health organizations collaborated with medical personnel to manufacture low-cost alcohol-based hand rubs (ABHR). Some local alcohol distilleries also joined this production chain to help reduce costs for consumers. As a result, the annual revenue in the Ugandan hand sanitizer industry skyrocketed 550% between 2019 and 2020, and still remains 300% higher than pre-pandemic levels, with strong growth projections due to industry investments and rapid development.
In Senegal, the Pasteur Institute of Dakar partnered with UK-based pharmaceutical company Myologic to develop low-cost antigen tests to promote COVID awareness. Targeted at low-income countries, the tests do not require highly equipped laboratories or experienced medical personnel for their administration. By early 2022, the joint venture’s production capacity allowed for extensive intra-African exports, establishing infrastructure for future pandemic preparedness and surveillance.
President Andry Rajoelina of Madagascar personally ventured into the pharmaceutical market by promoting a herbal tonic derived from indigenous artemisia plants called “COVID-Organics”. He claimed it could cure and prevent contraction of the virus. Although the efficacy of the tonic remains dubious, other African countries started receiving shipments in May 2020. The international community primarily recognizes the transactions as a form of humanitarian aid.
Other African companies and countries adopted similar policies, such as textile manufacturers in Kenya and Ghana repurposing their factories for selling reusable fabric masks. Furthermore, a technology company in Sierra Leone rapidly developed a track-and-trace phone application, allowing the country to reopen its international airport relatively early.
These are just a few examples of how the continent leveraged the pandemic for growth and diversification. However, there is much work to be done to strengthen an equitable and affordable African pharmaceutical sector.
Constraints and Challenges
Currently, most African nations excessively and unsustainably rely on the Global North for their pharmaceutical products. Around 80% of medicines in Sub-Saharan Africa are imported, and the only prequalified vaccine manufacturer on the continent is the aforementioned Pasteur Institute in Senegal.
This reliance on imported medicine creates several problems beyond susceptibility to shocks and future pandemics. European pharmaceuticals, primarily designed for domestic markets, often come with insurmountably high prices for the average African citizen. Approximately 90% of the population pay for potentially life-saving medications out of pocket, and due to restrictive price-setting, millions of lives are lost annually to preventable and curable diseases.
Free trade agreements with the Global North often involve adherence to intellectual property laws, indirectly encouraging further price hikes by powerful multinational corporations and severely restricting competition. Unfortunately, this inequitable enforcement shows no signs of dissipating due to the political power and sheer wealth in big pharma.
Sub-Saharan Africa also grapples with the widespread circulation of counterfeit and substandard medicines. Nearly 20% of the continent’s pharmaceutical products are believed to be counterfeit, leading people to waste their money on ineffective remedies. This exacerbates income inequality, as wealthier citizens are not only able to afford the medicine they need but are also more likely to circumvent the extensive counterfeit market.
Other challenges facing the pharmaceutical industry include the consequences of comparatively poor infrastructure. For example, subpar road construction and fewer transportation opportunities hinder the distribution of medicines to rural areas with limited healthcare access. Additionally, the oil market has recently been wracked with price fluctuations, creating uncertainty and disincentivizing investment in transportation.
Development Prospects
The constraints facing African countries on their path to healthcare development and independence are numerous, but not insurmountable with time and investment. One recent development holds great promise: the enactment of the African Continental Free Trade Area (AfCFTA). The agreement, ratified by 54 of 55 African Union member states, is set to eliminate 90% of tariffs on intra-African trade, substantially increasing export revenues across the board.
By facilitating an interconnected network of relations, the AfCFTA framework provides the opportunity for different African nations or companies to specialize their production, thus lowering costs for both consumers and producers. This approach addresses issues related to monopoly mark-ups associated with international intellectual property adherence and encourages cooperation in tackling the problem of counterfeit medicines. As pharmaceutical prices drop and quality control improves, the overall quality of life across the continent is poised to increase significantly.
However, the AfCFTA cannot achieve these goals alone. Like many international governance schemes, the agreement lacks a mechanism to enforce its recommendations, relying entirely on each member’s government to uphold free trade.
Beyond the AfCFTA’s guidelines, there are strong prospects for growth in the African pharmaceutical sector, with some models suggesting an annual revenue growth rate of a massive 17.4%.
Several policy routes are feasible options for countries to strengthen their pharmaceutical production. One popular approach is the formation of public-private partnerships. By combining the resources and support of NGOs, government, and private profit-incentivized development, the rate of R&D can accelerate. Examples of this strategy include the Meningitis Vaccine Project, the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR), among others.
Focusing on local pharmaceutical production (LPP) is another valuable method to attract foreign direct investment (FDI) and increase output. With investment from more advanced countries, job creation and skills training become more financially feasible. For instance, the German biotech company BioNTech has recently initiated construction of its first modular mRNA vaccine manufacturing facility in Rwanda, with plans to expand into Senegal and South Africa. By promoting LPP and expanding employment opportunities, foreign firms can help address the issues of inequity associated with the current state of the pharmaceutical trade.
Development prospects are further complicated by general factors and trends within the overall sub-Saharan African populace. As population growth continues, urbanization will allow more workers to transition from agriculture into business and manufacturing but necessitate greater infrastructure development. Increased digitization and internet access will also help improve access to medical supplies and healthcare.
Even though the COVID-19 pandemic exposed the vulnerabilities and shortcomings of Africa’s pharmaceutical sector, the future of the sector looks bright, promising widespread and more equitable access to medicines across the continent. In this evolving landscape, the African pharmaceutical sector stands poised to not only overcome its challenges but lead the way in redefining resilience and self-determination.
The views expressed in this article are the author’s own and may not reflect the opinions of the St Andrews Economist.