Momentum builds for local drug production

Africa imports over 70% of its medicines and nearly all (99%) its vaccines. The bulk of supplies are generics - lower-cost alternatives to patented drugs - sourced from India and China. Africa's over-reliance on imported pharmaceuticals exposes it to frequent supply chain shocks that put countless lives at risk. Across the continent, shortages of essential drugs and vaccines at public facilities are often reported in local media. Moreover, patients sometimes have to wait longer for new treatments, even as those in parts of the world with sufficient local production get priority access.

Heavy importation of drugs also inflates final prices in pharmacies and hospitals - due to shipping, tariffs, currency fluctuations and distributor margins. This makes healthcare costs less predictable and more unaffordable in a region where out-pocket-payments dominate and governments are facing increased fiscal strain.

Ramping up local pharmaceutical production can help Africa break this cycle of dependency. However, formidable challenges stand in the way of this, key among them the relative size and sophistication of the industry compared to other regions globally.

Industry still small and underdeveloped

Africa's pharmaceutical industry is modest in size by global standards, with production concentrated in a handful of countries. The continent had roughly 375 manufacturers in 2019, as compared to about 5,000 and 10,500, respectively, in China and India at the time.

North Africa hosts the largest share of pharmaceutical manufacturers in Africa. It had about 270 firms in 2024 - most of them in Egypt. Nigeria dominates West Africa; Kenya leads in East Africa; and South Africa is the main hub for Central and Southern Africa.

In addition to the industry having far fewer firms than other regions, most African producers operate at the lower end of the value chain. They do not manufacture active pharmaceutical ingredients (APIs), the ingredients that produce the intended therapeutic effect in medicines. Instead, they import APIs, mostly from Asia, and carry out local formulation and packaging. This model puts African pharmaceutical manufacturers at a disadvantage as most of the value in the industry lies upstream in API production.

Although South Africa, Egypt and Morocco have made limited attempts at API production, output has not been sufficient to meet continental demand and most African producers still source their APIs from Asia. Significant investments in research and development, biotechnology infrastructure, as well as improvements to human capital, are needed before Africa can move higher up the pharmaceutical value chain.

Compared to drug manufacturing, Africa's footprint in vaccine production is even smaller. A paltry 1% of vaccines used on the continent are produced locally. Senegal's Institut Pasteur de Dakar is among the most established facilities, producing yellow fever vaccines for the continent and global markets. The Biovac Institute in Cape Town is another key producer. It operates under a "fill‑and‑finish" model - the final stage of production before packaging - in partnership with global heavyweights Pfizer and Sanofi.

In North Africa, Egypt hosts state‑owned facilities that manufacture vaccines such as hepatitis B, rabies and routine immunisations. Morocco is also emerging as a hub. French pharmaceutical giant Sanofi last year partnered with Moroccan biotech firm Marbio to produce two vaccines locally at a new plant in Casablanca. The vaccines are being produced exclusively for Morocco's national needs, with no exports allowed at this stage.

While Nigeria and Kenya both have ongoing vaccine manufacturing initiatives, their respective projects have not yet meaningfully progressed. Rwanda, meanwhile, is positioning itself as a pioneer in mRNA vaccine technology. Its vaccine initiative enjoys strong donor backing as well as technical support from Germany's BioNTech, which in 2022 opened a modular mRNA vaccine manufacturing lab in Kigali. Commercial production has, however, not commenced.

Pandemic was a wakeup call

The Covid‑19 pandemic laid bare the dangers of Africa's heavy reliance on foreign pharmaceutical supplies. As the crisis unfolded, countries that dominate global production moved swiftly to protect their own populations, imposing export bans and stockpiling medicines and vaccines. Africa was left at the back of the queue, forced to wait while others secured their doses first.

"Africa faced severe inequities in access to Covid-19 vaccines, medicines and diagnostics. This dependency delayed response and cost lives," says Jean Kaseya, executive director of the Africa Centres for Disease Control and Prevention (Africa CDC).

"Africa must move from only being a beneficiary to becoming an equal co-architect of the global health system, because the continent's 1.5bn citizens cannot depend on external supply chains or emergency goodwill when the next pandemic strikes," he says.

The African Union (AU), with the support of development partners, has in the recent past launched several initiatives to boost local pharmaceutical and vaccine production. These include: the Platform for Harmonised African Health Products Manufacturing (PHAHM); the African Medicines Agency (AMA); and the African Pooled Procurement Mechanism (APPM).

PHAHM brings together governments, manufacturers, partners and investors to align strategies, secure political commitments and promote "Buy African" policies. It supports business case development, investment attraction and ecosystem building.

The AMA acts as a centralised AU regulatory authority for the pharmaceutical industry, harmonising national regulations, streamlining approvals and enforcing quality standards. This will reduce the cost and time of navigating 55 separate regulatory regimes and build trust in African‑made products.

Finally, APPM, under Africa CDC, aggregates demand across member states, strategically prioritising African‑manufactured products. By offering predictable demand signals, long‑term offtake agreements and collective bargaining power, APPM de‑risks investment in expensive facilities and ensures commercial viability for local producers.

"With these tools, Africa CDC aims to guarantee that at least 60% of vaccines, diagnostics and therapeutics used on the continent are produced locally by 2040," Kaseya says.

Business case depends on high volumes

With a strong emphasis on generic drugs, which mainly compete on price, profit margins in Africa's pharmaceutical industry are largely driven by cost discipline and strong volumes. However, most manufacturers are running far below capacity, which drives up costs and caps output.

According to a report published by UN Trade and Development (UNCTAD), pharmaceutical manufacturing facilities in many African countries operate at low utilisation rates, typically between 30% and 60%, compared with more than 70% in developed economies.

"Pharmaceutical production demands significant upfront investment, including in research and development (R&D;), manufacturing facilities, specialised equipment and regulatory compliance. Scaling up production is the key to spreading these fixed costs over larger output volumes, to lower the unit cost and enhance overall competitiveness," notes UNCTAD.

"African pharmaceutical manufacturers face strong pressure from international producers. Their production costs are higher than those in China and in India.

"The scale of operations is smaller, with plant sizes nearly a third of those in India. Productivity per employee is also lower, on par with India, but significantly behind that of China and Brazil," the report, published in 2024, adds.

Despite years of rising demand for medicines, Africa's pharmaceutical plants continue to run below capacity, primarily because of the way the industry is structured. Manufacturers rarely sell directly to consumers, relying instead on hospitals, dispensaries and above all governments, which dominate procurement. When public procurement is fragmented or misaligned with the needs of the industry - as is presently the case in most countries - factories struggle to secure the steady orders needed to operate efficiently.

"Revenue [in Africa's pharmaceutical industry] is unlocked through the aggregation of demand into long-term, guaranteed procurement agreements," notes Stears, an Africa-focused market intelligence firm.

"The economics of the sector are therefore determined less by underlying need and more by the ability to convert fragmented public health demand into long-term, high-volume procurement agreements that sustain utilisation."