In the study, KPMG has compiled information for selected Sub-Saharan African countries regarding business conditions, regulatory requirements, incentives and existing life sciences clusters that are supportive of investments into manufacturing facilities for pharmaceuticals, biologics and medical devices.
The report was released in December 2022 to address topics relevant to biopharma and medtech players looking for manufacturing locations in Sub-Saharan Africa.
The study was conducted by an international team of KPMG Site Selection and Life Sciences experts located in Sub-Saharan Africa and in Switzerland.
The study was carried out over the period of seven months, with various investment promotion agencies assisting in validating the information and content.
Key findings at a glance
- The African continent currently hosts the lowest number of local manufacturers of life-saving medicines, vaccines and diagnostics worldwide. There are approximately just 340 manufacturers present in Africa, compared to 5,000 in China and 10,500 in India.
- Those manufacturers with a presence are highly concentrated across the North African countries, South Africa, Nigeria and Kenya, leaving the Sub-Saharan region with a lack of resilience and a struggle to meet domestic demand for medicines, diagnostics and devices.
- Several Sub-Saharan national governments and international organizations are strongly supportive of investments in Life Sciences manufacturing and are improving business conditions and offering incentives for Biotech, Pharma and Medtech companies that have expansion plans for the region.
Building strong health ecosystems in Sub-Saharan Africa
Creating and sustaining a resilient healthcare ecosystem is an ambitious undertaking, even for countries in the industrialized world. For low- and middle-income countries (LMICs) – like those of Sub-Saharan Africa – this is even more of a challenge.
Establishing local presence for production is one way how manufacturers of biopharma and medical devices may seek to increase access to medicines and devices in LMICs.
Even localizing just a small part of production processes (such as packaging) in LMICs can significantly contribute to the strengthening of local healthcare ecosystems.
Local production contributes to local (health) systems in the following ways:
- Providing high quality jobs for locally trained scientists, MDs and laboratory workers
- Shifting the perception of healthcare from a “cost factor” to a value driver for economic development
- Improving resilience and limiting import dependency for (generic) medicines
- Incentivizing the local government to strengthen the general business environment, adjust regulations, improve infrastructure, and invest in education to attract investments
- Strengthening local supply networks and improving the availability of essential medicines, vaccines, diagnostics and medical devices
Local production in Sub-Saharan Africa
The African continent currently hosts the lowest number of local manufacturers of life-saving medicines, vaccines and diagnostics worldwide. There are approximately just 340 manufacturers present in Africa, compared to 5,000 in China and 10,500 in India.
Those manufacturers with a presence are highly concentrated across the North African countries, South Africa, Nigeria and Kenya, leaving the Sub-Saharan region with a lack of resilience and a struggle to meet domestic demand for medicines, diagnostics and devices.
Initiatives to support local production in Sub-Saharan Africa
Local production is growing through national efforts and support from regional and international initiatives. KPMG’s report "Site Selection for Life Sciences companies in Sub-Saharan countries" explores how these influence various manufacturing locations in Sub-Saharan Africa.
On the regional level, the African Development Bank, together with industry associations, strongly support the increase of biopharma and medical device manufacturers in the Sub-Saharan region. At the country level, many governments aspire to build and strengthen their domestic medical product industry.
They are offering financial incentives and other governmental support for locally manufactured drugs. As a result, biopharma manufacturers are increasingly considering shifting parts of their production chain closer to the Sub-Saharan African market.
A local presence also helps manufacturers in better understanding the local and regional context, building long-term relationships, and paving the way for successful commercialization of their products.
There are some key factors to consider in order to realize local production. These govern the decision where to establish local manufacturing presence or even launch medicinal products:
- Availability of talents: While many African-based technology companies find sufficient tech talents for developing E-health solutions, the qualified talent pool is still small for those seeking sciences, medical, pharmaceutical or manufacturing expertise. A number of research institutions and universities are offering quality education, but the numbers of graduates do not (yet) match demand.
- Navigating the regulatory environment: With more than 40 different systems, the Sub-Saharan regulatory environment is complex. As a result, foreign manufacturers struggle when it comes to navigating market authorization and regulations with regard to current Good Manufacturing Practice (CGMP). Implementation of the new African Medicines Agency should gradually improve this situation.
- Logistics, trade barriers and bureaucracy: Also here, improvements are underway. For instance, the new African Free Trade Zone to help strengthen intra-African trade.
- Lack of affordability and uncertainty of demand
Other important parameters for biopharma and medtech manufacturers to evaluate the potential of LMICs markets include the robustness of the healthcare system, prevailing procurement partnerships with NGOs/governments, the organization of the local distribution network and pricing and reimbursement dynamics.
Navigating key barriers to access of medicines in emerging markets
Strategies to overcome the aforementioned barriers include:
- Priority clustering of selected emerging markets into actionable categories based on key commercial, regulatory and market access drivers. This requires a mapping of which LMIC markets should be targeted first based on barriers to entry.
- Developing a good understanding of the region-specific barriers that local manufacturers need to overcome; and which local stakeholders they need to engage with.
- Selection of the right partner to provide access to needed capabilities, including the envisaged collaboration model.
- Innovative pricing approaches and procurement partnerships with local governments to make operations in these markets commercially viable and to ensure certainty of demand.
