Africa currently has the lowest COVID-19 vaccination rate, with less than 6 per cent of the continent’s adult population having been fully vaccinated compared with over 50 per cent across Europe and North America (see figure below). There are some outliers within Africa, with over 76 per cent of the adult population in Seychelles fully vaccinated, for example, and over 65 per cent in Mauritius and just over 56 per cent in Morocco1. While Egypt, Tunisia, Senegal and South Africa have some capacity to manufacture vaccines, Africa continues to import approximately 99 per cent of all its vaccines, leaving most countries at the mercy of trade restrictions, logistics disruptions and the whims of charitable donors2. This clearly represents a regional supply security issue, not only in the context of COVID-19, but also in terms of access to vaccines against childhood illnesses such as polio and meningitis and other infectious diseases that are prevalent in Africa, including yellow fever.
The immediate shortage of COVID-19 vaccines in Africa could be ameliorated by increases in COVAX supply (e.g. India resuming exports), as well as by additional donations from high-income countries that have excess vaccine doses. The deficit in vaccines could also be eased by addressing supply chain issues, such as input shortages and distribution challenges, and by promoting closer collaboration between multinational pharmaceutical companies and regional manufacturers to increase the production of COVID-19 vaccines locally. But these changes are unlikely to systematically resolve Africa’s excessive reliance on imports of drugs and medicines and of vaccines in general, which is primarily attributable to low production capacity engendered by decades of shortfalls in technology, skills finance and infrastructure. Addressing these problems requires a prioritization of science (in particular biotechnology and biosciences) capabilities together with ongoing production initiatives, to enable African governments to adequately respond to current and future healthcare needs, including pandemics.
The impact of COVID-19 on the global vaccine market
The scope and scale of the COVID-19 pandemic has profoundly altered the dynamics of vaccine production. For one, governments around the world provided financial support and market guarantees to accelerate research, development and production activities, particularly for newer experimental (i.e. mRNA, viral vector) technology platforms. On the demand side, the perceived value of vaccines has indisputably reached a new zenith, both for the general public and for policymakers, with the realization that the ‘normal’ functioning of the economy and society largely depends on vaccine access. It is estimated that the global vaccine market will spike and grow more than 250 per cent in terms of volume and 550 per cent in terms of value by the end of 2021. That is, the global vaccine market could be worth around USD 170 billion by the end of the year relative to USD 30 billion in 2018 (see figure below).
These developments increase the likelihood of future investment in vaccine research and commercialization, not just for COVID-19 but for diseases across the board. So far, however, most of this investment bonanza has been directed towards firms and research institutes with existing capacities and the ability to benefit from economies of scale, including contract manufacturing organizations in the developing world. Scaling up already-functioning industries and established research institutions is undoubtedly easier than building new ones from scratch in times of need such as these. Yet this slightly differs from the challenge most African countries are currently facing, namely: how does one start to build a viable vaccine industry, and how does one ensure that it succeeds?
Building up a vaccine industry
To build a sustainable vaccine manufacturing sector in Africa, local companies need access to technology and know-how, as well as some degree of market certainty to justify investment, whether public or private. Technological readiness (i.e. the ability of recipients to absorb technology) is a crucial enabler of industrial development, and requires the availability of technical skills and knowledge, human resources and investments into scientific capacity.To promote market certainty, past experiences point to a set of specific strategies that should be prioritized in the African context.
First, coordination between supply expansion through large companies and local production initiatives is crucial for ensuring a receptive market for new entrants. Uncoordinated activities on these fronts can lead to direct competition and excess supply, resulting in downward price pressures or even market dumping. Complementary activities, on the other hand, can effectively partition the market and assist local producers to benefit from manufacturing and distribution synergies.
Second, the selection of diversified vaccine technologies will be necessary to ensure the industry’s longer-term sustainability. This is especially crucial as the global supply of COVID-19 vaccines will likely exceed demand by the time the current local production initiatives in Africa become a reality (see figure above). To this end, African firms should strive to supplement COVID-19 vaccine production with vaccine technologies that promote a wider range of production outcomes, bearing in mind the regional epidemiological context. Moving higher up the value chain, shifting from current “fill and finish” activities to more innovation-intensive segments of the vaccine value chain are a logical next step.
Finally, such investments of funds and efforts will need to be underpinned by guaranteed market access. It is highly likely that despite the many cost-cutting advantages of new technologies (such as those conferred by modular manufacturing), the costs associated with production in Africa still leave products less competitive than those produced in India, China or elsewhere. Guaranteed market access, including through national and international vaccine tenders, will ensure that these cost factors do not act as barriers for local firms to achieve economies of scale.
International funding partners, such as development banks and philanthropic foundations, can stimulate the development of an African vaccine industry through investment support, but governments have a crucial role to play in terms of effectively implementing industrial policies and creating a favourable environment for such investments to yield dividends. Specific policies should also include the establishment of dedicated national or regional R&D centres, complemented by centres of excellence in partnership with local universities to promote skills creation.
Governments should also endeavour to facilitate and monitor regulatory harmonization to ensure that innovation and market access encourage the entry of good quality products in practice. Supporting firms to diversify, governments could facilitate knowledge and technology transfers between African companies and others in the Developing Countries Vaccine Manufacturers Network (DCVMN). Finally, co-investing in new ventures can spread the risk of exploratory activities and/or the scaling-up of existing business lines, signalling commitment to the industry.
Overcoming uncertainty
Even if newcomers are likely to enter a highly competitive market with a low financial return on investments, the logistical, health and supply concerns raised in the introduction warrant the establishment of African production centres. Such initiatives would benefit tremendously from international funding, knowledge transfers and favourable partnerships with multinational companies from the USA, EU or the developing world. The reward will be a measure of independence from vaccine nationalism and increased capacity to coordinate and even contribute to vaccine distribution through initiatives such as COVAX, to ensure improved economic and health outcomes overall. There will also likely be positive spillovers into other manufacturing activities, thus reducing reliance on imports and providing a window of opportunity to accelerate industrialization efforts on the continent.
This opinion piece is based on an article published in Global Policy on 23 August 2021.
Disclaimer: The views expressed in this article are those of the authors based on their experience and on prior research and do not necessarily reflect the views of UNIDO (read more).
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