Exploring Medical Product Manufacturing and Trade Opportunities in Africa

Africa is a resource-rich continent with substantial untapped opportunities. This is because the Continent has historically been regarded as a primary resource economy that derives its economic status from agricultural and mining activities, minimizing its GDP capabilities.

To drive industrialisation, growth and job creation, African countries have recognized the importance of increasing value-added activities, while also promoting intra-African trade in high-value products such as medicines.

This article briefly explores Africa's potential in the pharmaceutical and medical products market. The African Pharmaceutical and Medical Products Market.

The African Pharmaceutical and Medical Products Market

Africa is the world's second most populated Continent, accounting for just under 18% of the global population. In spite of this, the Continent is accountable for at least 25% of the world's disease burden.

With more than its fair share of communicable and non-communicable diseases, the World Economic Forum estimates that the total demand for pharmaceuticals in Africa is around $18 billion per year. 61% of that demand is serviced through imported products (mainly from China and India).

Concurrently, only about 36% of the demand is serviced from products manufactured within the borders of the individual African countries, leaving only 3% being allocated for intra-Africa trade.

Africa's manufacturing capabilities

Around 40% of Africa's medical manufacturing capabilities are confined to packaging and labelling, with the remaining 40% limited to filling and finishing (Who Owns Whom, 2023).

In recognition of this and the demand available for various health products on the Continent, there is a drive to ramp up Africa's production capabilities as well as strengthen value chains in the supply of medical products.

Africa's Medical Production Ambitions

More recently, African countries have recognized the need to diversify their value chains in order to grow their economies and create job opportunities.

This realization was compounded at the outbreak of the COVID-19 pandemic when the Continent had to rely heavily on international supply chains for a variety of critical supplies.

This constraint prompted the African region to take steps to improve its medical manufacturing capabilities, with the African Union setting a goal for at least 60% of vaccines used on the continent to be manufactured in Africa by 2040 (this against a backdrop of just 1% of the total vaccine demand in Africa presently being produced on the Continent).

It is envisaged that this target will be supported by the single market resultant from the African Continent Free Trade Area Agreement (AfCFTA), same that with a population of 1,4b provides a market for the production and trade of medical products such as vaccines.

Furthermore, the AfCFTA is an effective tool to drive value-add activities: by providing economies of scale for local manufacturing, enhancing collaboration, lowering costs, and increasing competitiveness.

OR Tambo SEZ: An ideal location for pharmaceutical and medical products manufacturing

Underpinned by factors such as a skilled labour force, established infrastructure and a world-class banking and financial services sector, South Africa has long been a location of choice for Multinationals looking to locate in Africa. The country also has an established supply chain, and supportive infrastructural capabilities to foster medical manufacturing expansion.

For instance, research by the African Society for Laboratory Medicine found that while Africa has less than 500 internationally accredited laboratories, 90% of these are based in South Africa.

As part of its industrial focus, the OR Tambo International Airport Special Economic Zone has identified the pharma and medical products sector as one that is suited for location at its Zone.

This is because the Zone's cold storage infrastructure and distribution capabilities - located next to sub-Saharan Africa's busiest and major airport provide a reliable mechanism to maintain the integrity of the medical products from the production base to air freight for export.

In addition, the size of the OR Tambo SEZ Precinct 2 development makes provision for a medical cluster, further enhancing production efficiencies and reducing the cost of production. Equally important, the Zone is located in proximity to institutions of higher learning as well as research institutions, providing a basis for ongoing quality improvement and new product development.

All the above, coupled with South Africa's locational considerations as well as the province of Gauteng's competitive positioning serving as a gateway to sub-Saharan Africa make the OR Tambo SEZ an ideal location for the production, export, and trade of pharmaceutical and medical products.

For more information on the pharmaceutical and medical cluster being developed at OR Tambo International Airport SEZ, visit: www.ortambosez.co.za