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The demand for healthcare products in the East African region is expected to continue growing – pushed by the large and growing population, the significant unmet medical need, the growing middle class and increasing government focus on the health of populations and new models of care being designed (such as public-private partnerships and insurance). The countries within the region heavily rely on pharmaceutical imports, and medicine imports into the region have been rising at a much higher pace than the pharmaceutical exports by local firms.
Manufacturing offers a wide range of opportunities in East Africa. The region is currently a net importer of manufactured products such as machinery and transport equipment and healthcare sector specific products including pharmaceuticals and diagnostic devices. While there are negative perceptions with regards to pharmaceutical manufacturing in the region – including a lack of capacity to manufacture advanced formulations due to a skills gap on product development and formulation expertise and poor and unreliable infrastructure – through various manufacturing incentive schemes, the countries in the region are working to promote manufacturing as a way of diversifying their economies.
Manufacturing offers a wide range of opportunities in East Africa. The region is currently a net importer of manufactured products such as machinery and transport equipment and healthcare sector specific products including pharmaceuticals and diagnostic devices. While there are negative perceptions with regards to pharmaceutical manufacturing in the region – including a lack of capacity to manufacture advanced formulations due to a skills gap on product development and formulation expertise and poor and unreliable infrastructure – through various manufacturing incentive schemes, the countries in the region are working to promote manufacturing as a way of diversifying their economies.
The East African Community (EAC)
The first EAC Regional Pharmaceutical Manufacturing Plan of Action (2012-2016) was implemented, and several key milestones have been achieved. The second EAC Regional Pharmaceutical Manufacturing Plan of Action (2017-2027) was finalised and validated in August 2017.
The first EAC Regional Pharmaceutical Manufacturing Plan of Action (2012-2016) was implemented, and several key milestones have been achieved. The second EAC Regional Pharmaceutical Manufacturing Plan of Action (2017-2027) was finalised and validated in August 2017.
The blueprint for the development of the pharmaceutical manufacturing sector in the EAC includes four targets:
1.Reduce imports from 70% to less than 50%.
2.Support expansion of product portfolio to cater for 90% of disease burden.
3.Governments to procure at least 50% from local manufacturers.
4.At least five companies to produce more advanced formulations such as delayed-release formulations, small volume injectables, vaccines, etc.
EAC Country Focus
1.Reduce imports from 70% to less than 50%.
2.Support expansion of product portfolio to cater for 90% of disease burden.
3.Governments to procure at least 50% from local manufacturers.
4.At least five companies to produce more advanced formulations such as delayed-release formulations, small volume injectables, vaccines, etc.
EAC Country Focus
Kenya
Kenya represents the most progress in this area, with an already established pharmaceutical manufacturing industry. It is currently the leader in pharmaceutical manufacturing in the Common Market for Eastern and Southern Africa (COMESA) and meets approximately a quarter of the demand for pharmaceutical products within Kenya. Although this is a higher rate than most African countries, there is still significant room and potential for growth. At the national level, the president has introduced there the Big 4 Agenda, of which two of the goals are affordable healthcare for all and increased manufacturing capacity, so this is an effort that has government support.
Tanzania
Tanzania has a strong history of pharmaceutical manufacturing, but local production has declined significantly since 2005, mostly due to the high price of importing raw materials, a lack of competitive advantage given to local manufacturers and difficulty reaching economies of scale. Because the country has the foundational infrastructure for manufacturing, there is a high potential for growth. In fact, a report done by the Government of Japan and United Nations Development Fund (UNDP) stated that several Tanzanian pharmaceutical manufacturers were operating at as low as 25% capacity because it was not financially viable for them to do more due to the government policies that favoured importation. If the government updates policies to provide advantages to their local companies, they will be able to scale up rapidly.
Rwanda
Rwanda relies almost exclusively on the importation of pharmaceuticals, with only one manufacturing facility operating in the country. The government is working to improve its supply chains, in close partnerships with the private sector, but is aware that a long-term solution will also involve building up local manufacturing capacity for pharmaceuticals.
Burundi
Burundi also has only one manufacturing site in the country and pharmaceuticals are their second-highest import. The Burundi Special Economic Zone, a partnership between the government of Burundi and the private sector, would like to change this reality and grow the pharmaceutical manufacturing sector. They have the vision to not only provide for the population of Burundi but also the entire region[5].
South Sudan
South Sudan, the world’s newest country, has been gripped by significant conflict since its independence in 2011. As a result, they are the country with the lowest capacity level when it comes to manufacturing locally. It is essential to prioritise political stability prior to investing in infrastructure of this nature. However, local manufacturing in other areas of the region could benefit South Sudan significantly, with East African neighbours exporting to them rather than depending on nations further away.
Uganda
Uganda’s pharmaceutical manufacturing meets around 15-20% of demand in the country. The country has several existing policy initiatives in place to further grow its pharmaceutical manufacturing industry; reduced import tariffs on pharmaceutical equipment and a 15% preferential rate in public procurement are two examples[6].
A Focus on Other Markets Outside of the EAC
Similarly, Somalia has long been unstable and has, therefore, not established local pharmaceutical manufacturing capabilities, depending instead on non-governmental organisations and importations from countries like Kenya and Ethiopia.
Ethiopia has a clear vision for industrialisation, which builds off its rapid growth in recent years and its strong track record in attracting foreign direct investment (FDI). Ethiopia is one of the first African countries to develop a national strategy for pharmaceutical manufacturing and has included incentives to attract foreign investors into the pharmaceutical manufacturing space. Examples of these are 8- to 14-year tax holidays, public procurement price preferences for local manufacturers (25-30%), export facilitation, regulatory system support and the promotion of industrial parks. Kilinto Industrial Park (KIP) is a state-of-the-art industrial park that specializes in pharmaceutical manufacturing.