Supporting South Africa and Africa’s capacity to manufacture vaccines and other medical products is a complex and challenging task with real public health consequences, needing more co-ordinated and streamlined capabilities and infrastructure, writes Kirti Narsai in Daily Maverick.
She writes:
SA has the infrastructure and capabilities to produce high-quality, safe and effective health products – not only for the local market, but also for export.
It is against this background that the recent tender awarded to India-backed Cipla instead of local vaccine manufacturer Biovac sparked a debate about South Africa’s focus on and support of the local manufacturing industry.
There are real public health consequences to consider and there have been many high-level recommendations made to improve local manufacturing support.
But what are the practical steps that must be taken?
Medicines and vaccines need to be assessed for safety, quality and efficacy. These standards are developed and enforced by the South African Health Products Regulatory Authority, and where there are global procurement mechanisms for certain categories, international standards must be adhered to.
The process can be technically complex and financially prohibitive for local manufacturers.
Several options are available, such as establishing African standards that are easier to comply with. The disadvantage is they may not be widely recognised.
The alternative is to support local manufacturers in compliance with international regulatory standards. This would require both technical and financial support from government to ensure the competitiveness of local manufacturers wanting to compete for global contracts.
Skills erosion
Manufacturing in the healthcare sector is technically complex and there is a shortage of skills in this area. Resourcing of local manufacturing facilities is dependent on market demand and its predictability. There has also been an issue regarding public procurement at local level.
One needs to consider the broader local manufacturing ecosystem, which requires allied skills and industries to function optimally.
For instance, plumbers and electricians are vital to support manufacturing value chains, but this skills base has largely been eroded for various reasons, including the lack of focus on technical colleges.
The World Economic Forum recommends that “public- and private-sector interests need to converge”, which highlights the need for new industrial policy collaboration models, starting with new skills development models.
To tackle this need, innovative ways of training, including vocational training, should be considered.
Most manufacturing in South Africa – and the continent – still relies on imported production inputs, including ingredients and equipment, all subject to currency fluctuations, which can significantly influence the final pricing.
Does BRICS hold the key?
Since most pharmaceutical production inputs come from India and China, will a common currency in BRICS affect the costs from these countries for this continent?
The creation of a common BRICS currency will be discussed at the BRICS Summit in South Africa in August. This is a controversial topic, and believed to be a non-starter in some quarters.
In addition, previous BRICS Summit discussions included commitments to co-operation among members on vaccine development.
However, South Africa would need to capacitate and expand the required human capital base and associated policy frameworks to fully exploit this opportunity.
Locally manufactured products are likely to be more expensive to procure than some imports, making it challenging for local manufacturers to compete.
Broader industrial policy objectives which expand local manufacturing capacity to support employment and economic growth should trump short-term savings on specific tenders, however.
Pooled procurement of common production inputs and removal of any import tariffs will help slash final production costs.
Government policy coordination
The World Economic Forum says “the link between a thriving manufacturing sector and economic growth is a direct, significant one, particularly regarding employment and industries that are linked… manufacturing has the largest multiplier effect of any economic sector.”
The multiplier effect of manufacturing and its contribution to the economy should be prioritised to address the declining manufacturing levels in this country.
The Biovac tender highlights the ongoing tension between public health policy and industrial policy. Co-ordination and collaboration across government departments to align behind broader public policy objectives – even those that don’t consider public health and industrial policy as their primary mandate and core strategic objectives – is vital.
Practical co-ordination and policy implementation will require leadership to drive the overall objectives and also practical implementation approaches.
Healthcare procurement organisations have limited resources and must make decisions appropriate from a public health perspective. However, there is room to consider broader contexts which differentiate between acquisition costs of healthcare commodities vs cost effectiveness, which is a measure of the cost of a medicine, including its health outcomes/clinical benefits.
These are scientific methodologies already used in a limited way in South Africa. When considering locally manufactured medicines, overall economic cost should be factored in under impacts of procurement decisions.
Procurement policy alignment
International procurement mechanisms, like those for key public health commodities such as vaccines, weaken links between health and industrial sectors at a local level. Alignment of objectives from a policy and operational perspective is required to ensure various factors related to public health and industrial policy are considered.
Several issues must be taken into account regarding health product procurement in South Africa. There are significant differences between public- and private-sector requirements, processes, pricing and regulations. Local manufacturers are often not considered where international accreditation requirements are not in place – this is common for certain product categories in the private sector.
Furthermore, the ongoing disconnect between national and provincial procurement processes, requirements and systems, most of which are inconsistent and don’t prioritise support of local manufacturers, put these opportunities out of reach for local manufacturers regardless of international and local regulatory approval status, particularly those with limited resources for engaging decision-makers in provincial and sometimes national health level.
The lack of provincial presence of some manufacturers also excludes them from public procurement processes.
Production capacity
Even though local manufacturing capacity and infrastructure exists in pockets, production capacity is not always fit for purpose or fully used. During the pandemic, many local manufacturers were able to repurpose infrastructure for changing needs.
However, public health emergency demand is unpredictable, so manufacturing capacities and capabilities can become redundant quickly.
Effective collaboration and co-ordination between local manufacturers and government bodies is critical to ensure existing and new manufacturing capacities are fully used to address public health needs.
It is ironic that on the one hand there are stock-outs and on the other, underused manufacturing capacity.
It must be remembered that manufacturing capabilities and public health needs may not converge due to differences in the type of manufacturing for specific products. The more agile the capability, the more adaptable this capacity can be.
Export promotion
Africa accounts for only 3% of the global manufacturing of medicines, despite bearing 24% of the global burden of disease and accounting for 11% of the world’s population. With differing regulatory compliance requirements across African markets and international markets, it has been historically challenging for local manufacturers to export health products elsewhere.
The establishment of the African Medicines Agency should alleviate these challenges.
Government agencies like Trade Invest Africa must implement a practical strategy to promote and support investment into South Africa and export opportunities.
Previous industrial policy approaches took a nationalistic view of pharmaceutical manufacturing. Significant levels of local and international funding support were provided to establish and, in some cases, increase local manufacturing capacities.
However, this focus resulted in duplication and did not necessarily result in improved competitiveness of the sector or decreased import dependence. Decades later, most African countries still depend on imported medicines, vaccines and medical devices. About 60% to 80% of medicines are still imported into Africa.
African entrepreneurs still claim that access to finance, skills and support is lacking. This results in missed opportunities, brain drain of critical skills and ongoing import dependence.
The recently launched African Continental Free Trade Agreement (AfCFTA) calls for the creation of regional value chains. What does this mean?
Country and company competencies and the ability to contribute to manufacturing value chains either directly or indirectly will be critical to optimising efficiencies in value chains and broadening participation of countries and companies without duplication of efforts.
This will reduce overall cost of production through regional contribution to manufacturing value chains through supply of production inputs and/or services.
Making healthcare procurement decisions that will affect large populations is a complex, challenging task.
The factors discussed should be incorporated as far as possible to ensure unintended consequences are avoided or managed.
Infrastructure and capabilities across the continent must be more coordinated to allow streamlined collaborations and support local manufacturing.
Kirti Narsai is Principal Researcher at the Nelson Mandela School of Public Governance at the University of Cape Town, leading research on healthcare value chains in the context of the AfCFTA.
See more from MedicalBrief archives:
No nod yet from South Africa for African Medicines Agency Treaty
SA Cabinet approves signing of African Medicines Agency Treaty
Cipla to produce anti-HIV injection in Benoni, Durban
Why Africa urgently needs a continental medicines regulator
Biovac urges investment in African vaccine-makers