Africa: African Vaccines – Local Manufacturers Are Struggling to Access the Market – What Must Change

Two recent developments in South Africa have underscored the opportunities – and challenges – facing vaccine production on the continent.

One was the visit by the World Health Organisation Director General Dr Tedros Adhanom Ghebreyesus to take stock of Africa's mRNA vaccine hub. The hub was launched in mid-2021 in a bid to make the latest vaccine technology more readily available to developing countries.

The other development highlighted the main problem that African countries continue to have in developing vaccine production capabilities: markets for their products. On this point, the South African government announced that it had awarded a tender for the pneumococcal vaccine, Prevenar/PCV13, to the local agent of Serum Institute of India. The other product, Hexaxim, is now the subject of a re-tender process. Other winning bidders were GSK (Belgium) and Sanofi (France).

There were high expectations that the tender for Prevenar/PCV13 would go to Biovac. This is a local company that's developed the capacity to manufacture the vaccine in South Africa through a technology transfer partnership with Pfizer.

The tender outcome is truly paradoxical given that South Africa has expressed a strong commitment to local production of medicines. The request for bids to supply vaccines for the national programme that included Prevenar/PCV13 went as far as to make a reference to special consideration for locally produced products.

The decision suggests that there's a fragmentation of goals and objectives within the governmental agencies in fostering pharmaceutical production in South Africa. This kind of disconnect can significantly discourage future investments and partnerships, and wreak havoc with expansion plans.

The WHO visit, and the Biovac decision, point to two big challenges: how to support local production of vaccines while meeting national health objectives. And how to create markets for new producers within Africa through national and regional procurement policies.

Market access and local production

The tender decision raises important questions about local production and how its inextricably linked to market access.

Since 2021, vaccine production initiatives in Africa have mostly focused on financing and partnership building, leaving out the central question of market access for products made in African countries.

Market access is crucial for local production of vaccines.

First, competitive production in the vaccine sector depends on scale. The larger the company's production volumes, the cheaper the price. But to achieve scale, local companies need market access.

Second, market access is key for the survival of new entrants. It enables them to cover their working capital and helps with funds for reinvestment in the business for expansion.

But the current procurement systems for vaccines in the region does not leave much room for African companies. Forty out of 54 countries on the continent rely on vaccines procured by Gavi, the global alliance that provides vaccines to eligible low and middle income countries. Gavi-procured vaccines account for almost 85% of all vaccines procured in the region. This leaves little room for supply through other channels where African companies have to compete with all other global companies.

This is problematic. To address the issue the African Union has has called on Gavi to procure 30% of the vaccines from production facilities on the continent.. This is under discussion but it still won't be enough.

If the aim is to enable local vaccine production in Africa, we have to ensure that local producers have access to their national markets. Such market access must be facilitated speedily through national procurement policies.

Procurement

Procurement policies can potentially promote three broad goals:

But balancing these three goals is not easy. Focusing just on the lowest prices may in fact, lead to the elimination of local companies, driving them out of business.

This is why countries that have succeeded in building local vaccine manufacturing had done so by, among other things:

• restricting foreign competition when three or more local companies can produce a product. This happened in Bangladesh;
• procuring from local companies as much as possible, or waiting for local companies to develop capacity to introduce products, as has been the case in Indonesia and Brazil;
• offering preference to local companies in the national procurement process. This is a route that Russia has taken.

A reliance on preferential procurement by local companies can sometimes have negative consequences. It can lead to inefficiencies such as higher product prices, which become the norm due to low competition, with a negative impact on public health objectives.

But these can be avoided by designing procurement policies that support local companies more broadly, with a focus on promoting competition. Prices can also be pegged to any select international reference price to ensure that premiums for local production to accommodate the local suppliers are not too high. Price incentives can also be restricted to limited periods to ensure a shift to competitive production.

What Africa needs

Biovac was set up as a public private partnership in 2003. It has faced many challenges. These include uncertain periods as the exclusive supplier to South Africa's Ministry of Health, and changes in product development trajectories to suit the national protocol choices.

Despite these difficulties, the company has been resilient. Today, it has a workforce of 450, most of whom are highly qualified and skilled scientists. It has over R1 billion (over US$54 million) in foreign direct investments through its partnerships with foreign companies.

But the current basis of all manufacturing activity at the company is the local manufacture of Prevenar/PCV13 and the six-in-one vaccine, Hexaxim. This basis needs to be preserved and nurtured, to enable the company to expand, and to allow the emergence of a vibrant vaccine production sector in the country that can supply to South Africa and the region.

Cutting off the company from supplying to its own local market isn't beneficial for Biovac, and not a good decision for South Africa given the investment that's been made in developing capacity in this sector.

A number of lessons stand out from Biovac's experience.

First, local companies are better off with certainty on access to domestic markets. This can help them plan and expand their production effectively from the start. Tenders offer a good starting point to address this.

Second, product selection in national programmes would do well to take into account local products in the pipeline.

Third, tenders can balance public health with local production if they are structured to promote cost gains in some segments through external supplies that can allow for a small price premium for local companies in other vaccine categories. This would help local companies to stabilise themselves in Africa, which are not equipped to absorb the financial risks of losing out on national tenders.

Africa has come a long way, in the post-COVID era, in boosting the morale around local production investment among local and foreign companies. But countries on the continent still need to carefully consider incentives for local companies, given the harsh international competition and the lack of inroads to markets both in the region and outside for African companies.

It is critically important to work with Gavi to enable procurement from African companies. But it's equally important for self-procuring countries to commit to – and support – local production capacity building efforts. Without this commitment from African governments, the Africa vaccine manufacturing "project" is under serious threat.

Padmashree Gehl Sampath, Global Access in Action Program, Berkman Klein Center, Harvard University

Artmotion S.Africa