Local Pharma in Africa: Going Nowhere, Slowly? - Julius Mugwagwa

15 April 2014

A recent visit to South Africa and Zimbabwe for field work on the ESRC-funded Innovative Spending in Health project and NEPAD conference on medicines regulation and access confirmed to me that indeed the multi-pronged search for effective solutions to Africa's health care challenges has resulted in unending academic, policy and practice debates on the role that local production and supply of pharmaceutical products can play in availing safe, efficacious, affordable and high-quality products. As players in the health care system face sustained pressure from rising health care costs, changing regulations and an influx of patients demanding the same or even better quality care, one consistent argument is that local production will contribute positively to health system targets, and is thus a good place to spend the 'health dollars'.

There, however, seem to be contending views on how good local manufacturing will really be for public health. In fact, the evidence for this is sparse or at best inconclusive when the various factors embedded in and transcending the health delivery system are taken into consideration. And, as one supply chain specialist noted, while health is a public good, policy makers and the players in the health sector should not lose sight of the fact that right across the health value chain - from research and development, through manufacturing to delivery and use of health products in health centres across the countries - there are a number of immutable economic factors at play which are blind to the 'public good' image of the health sector. These factors constrain or facilitate how health products can be brought to patients, or patients brought to health products. The contention is that regardless of where the products are coming from, what is indispensible is a 'GDP' - a 'good distribution practice'. This, they say, is what will move the impact of local pharmaceutical manufacturing on health system performance, equity, affordability and low-cost access to medicines and other medical products from fiction to fact.

Supply chain specialists also say the reality that it is expensive to manufacture locally should be accepted and that, similar to what countries such as the US and UK realised with some of their manufacturing sectors, relocating manufacturing activities to countries where production costs are lower could be the way to go. Resource-poor African countries would meanwhile concentrate on strengthening their regulatory and governance mechanisms, including dealing with the logistics of supply and delivery. When one considers the evidence from a number of countries in sub-Saharan Africa on how some long-standing pharmaceutical companies are ceasing operations or losing market share, and how easily the void they are leaving is being filled by products from India and China, one wonders, in the words of the supply chain specialist 'if the push for local pharma production will have an impact that goes beyond the few thousand or so jobs of factory workers that are preserved'. Even some of the manufacturers admit that the challenge of keeping up with production costs, especially with outdated equipment and the compounding reality that for a large part of their product range, they have to buy the active pharmaceutical ingredients from their competitors in India and China. African countries need to go somewhere different and fast with their health delivery arrangements, and it may well be a case of innovating at the front end - the logistics and product distribution realm - while, in the meantime, investing in the skills and infrastructure that will allow them to leapfrog over competitors in some sections of the manufacturing and research and development arenas.

IKD member and Innogen Research Fellow Julius Mugwagwa is currently implementing a project investigating innovations in health spending in South Africa and Zimbabwe, with funding from the UK's Economic and Social Research Council (ESRC).