Source: CEPI
From the newsletter
Africa could lose more than $1 trillion over the next two decades by continuing to import medical products and health technologies instead of building them locally, according to a new Africa CDC report. It reframes local pharma manufacturing as one of the continent’s biggest industrial and investment opportunities in the next two decades, if it can own its research.
Africa imports over 94% of its medical products and technologies. The few operational pharma industries across the continent major in formulation and fill and finish stages of manufacturing. This means a high dependence on imported research and active pharma ingredients.
The report argues that little investment in early stage manufacturing research is not just costing Africa money. Africa is losing the entire economic ecosystem attached to pharmaceuticals like factories, research labs, clinical trials, skilled jobs, supply chains, exports and private capital formation.
More details
The report, titled Investing In Health R&D: Africa’s Next Economic Growth Frontier, argues that health research investment should be treated as economic infrastructure rather than public health spending, linking it to industrial growth, job creation, trade competitiveness and scientific capacity. It estimates every $1 invested in health research could generate $137 in economic value, while creating 4.56 million jobs by 2044.
It also highlights African manufacturing and innovation projects already attracting capital, including Rwanda’s partnership with BioNTech, which mobilised more than $500 million in financing. The report says stronger coordination between governments and investors will be needed to scale research ecosystems that will enable clinical trials and increased manufacturing.
The pharmaceutical industry has three main production stages. The first involves making the active pharmaceutical ingredients. The second is formulation and the third is packaging and distribution. In Africa, the weakest link remains the first one. The continent still sits largely at the formulation end of the value chain, with most active pharmaceutical ingredients imported and most higher-value research and upstream chemistry located elsewhere.
The report says Africa’s health R&D expansion will require blended financing models combining public spending, concessional funding, development finance and private capital. Governments and donors are expected to absorb early-stage scientific risk through grants and catalytic financing, while venture capital and private equity should finance commercially scalable clinical development and manufacturing.
It cites Rwanda’s partnership with BioNTech as a model for future investments after mobilising more than $500 million through the European Union grants, European Investment Bank financing, the Coalition for Epidemic Preparedness Innovations support and BioNTech private capital. The report says Africa must also build the “missing middle” needed to attract investors, including technology transfer systems, incubators, translational funding, regulatory coordination and clinical trial infrastructure.
Our take
For the pharmaceutical industry to succeed in Africa, the continent must own early stage research and the development of active pharmaceutical ingredients.
The real economic gains in pharmaceuticals are made upstream, where clinical development and manufacturing technologies are controlled.
Africa largely remains downstream, assembling and packaging products whose science and profits are created elsewhere.