While Africa is showing significant growth in its pharmaceutical market, many barriers still constrain the development of this industry. To address these issues, synergies between the private sector, financial institutions and public authorities are crucial.
There is no doubt: the pharmaceutical industry in Africa has a bright future ahead of it. The continent is home to some 13% of the world’s population and the increase in the population’s ability to pay, allows them to devote an ever-larger proportion of their income to health expenditure (which, however, only stands at some 6%). It is certainly thus no coincidence that Africa foresees an average annual growth rate in the pharmaceutical market, an estimated 10% between 2010 and 2020.
The pharmaceutical industry: A sector facing many challenges in Africa
While the situation promises a better future for the continent, we should not under-estimate the gaps and weaknesses which still weigh heavily on the development of the pharmaceutical industry in Africa.
Drug production is one of the symbolic markers and suffers from great disparities: only 3% of global drug production comes from Africa, mainly from a handful of “hubs” or from “pharmerging”. Consequently, while South Africa and Morocco manage to meet between 70% and 80% of their own pharmaceutical needs, in Central Africa, some 99% of the drugs in circulation are imported from abroad, particularly from Asia. This poses several problems: the high costs related to transport irreversibly increase the final price of drugs, the supply of stocks is, in fact, dependent on delivery times, which are sometimes very long, and, in particular, there is a greater risk of seeing the development of counterfeit or lower quality products on local markets.
The question of the quality of drugs is indeed a vital issue. The establishment of parallel channels, very much helped by the fragmentation of distribution chains and the proliferation of lower quality or even completely ineffective counterfeit drugs, is a real threat. In certain African countries, it is indeed extremely complicated for local manufacturers to establish good manufacturing practices (GMPs), which guarantee the quality of production.
Creating synergies between public and private stakeholders in the pharmaceutical sector in Africa
In our opinion, four criteria can be used today to define the challenges related to the accessibility of medicine in Africa: the provision of health products is consistent with population needs, is at affordable prices and in sufficient quantity for patients, with a guarantee of high level quality and efficiency, and further supported by effective distribution networks. To address these challenges and remove the obstacles that persist on the continent, it is essential for synergies to be created between private actors, development finance institutions and public authorities. The latter tend to already be faced with limited budgetary resources and are increasingly calling on private actors to play a complementary role in health product supply and distribution systems.
One response to the accessibility of medicines in Africa is the development of the production capacity at regional level. Investments to support African pharmaceutical laboratories are required to produce more and extend already available therapeutic product ranges. This particularly concerns treatments for the fight against neglected and endemic diseases, whether in the form of generic drugs, those produced under licenses (volunteers or patent pools), or one’s own brand. To achieve this, different catalysts are to be seized by public authorities: regional regulatory harmonization – for example a single marketing authorization procedure in the Economic Community of West African States (ECOWAS) –, or incentive policies for investments, such as support for public procurement with a percentage of the supply from local and regional producers are examples of possible measures.
Beyond drug production, development finance institutions need to support upgrades of the quality standards applied by African pharmaceutical industries, in particular via technical assistance. Specifically, such support can make it easier for laboratories to undertake the implementation of standards for Good Manufacturing Practices, or a WHO prequalification process, which is essential in order to be referenced as a supplier to international organizations: UNICEF, Global Fund, GAVI, etc.
Taking action on drugs’ supply and distribution chains
For development finance institutions, working hand in hand with the private sector, with the objective of improving the accessibility of medicines for populations, requires also taking action on supply chains. In Africa, these chains suffer from fragmentation, with an excessive number of intermediaries, from the “wholesaler-distributor” up to the pharmacy. Furthermore, each intermediary adds their own margin, which can account for up to 50% of the price paid by the final consumer in Kenya and up to 90% of the price in the least developed and landlocked countries, against 2% to 24% for OECD countries. This makes the drugs sold in Sub-Saharan Africa the most expensive in the world.
In addition, these supply chains are built on a “push” model: the distributor readjusts its stock or places an order with a wholesaler when it receives the request from the consumer (patients or healthcare centers), which leads to regular stockouts. This model does not allow restocking to be anticipated and does not give the capacity to conduct hard negotiations over prices with pharmaceutical companies. On the opposite, a “pull” model would allow, with real-time communication between prescriber healthcare centers and distributors and made possible today through new technologies. Patients who do not manage to find the drugs they need, at pharmacy counters and at affordable prices, turn to alternative markets, as a highly fragmented supply chain unquestionably contributes to drug counterfeiting. According to a recent study by the World Health Organization, some 42% of fake drugs around the world are distributed in Africa.
Increased production, the quality of available drugs, affordable prices, improved stock management, the structuring of networks of producers and distributors: development finance institutions can and should incontestably support public and private actors in the African pharmaceutical system. Targeted investments, ensuring stock is well-managed, and the establishment of a system of traceability to guarantee the quality of the products sold to the patient, are essential prerequisites.
 N. Coutinet and P. Abecassis, “The Obstacles to Local Production and Access to Treatment in Africa”, Improving the Quality and Accessibility of African Medicine, Private Sector & Development magazine, PROPARCO, 2017.
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The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.