Realizing Africa’s pharmaceutical potential

Introduction

When COVID-19 exposed Africa’s pharmaceutical vulnerability—importing 99% of vaccines and 70% of essential medicines—the continent responded with unprecedented resolve. Since the pandemic, Egypt has become the first African country to achieve WHO Maturity Level 3 for medicines regulation, Senegal is building a facility to produce 300 million vaccine doses annually, and Gavi’s African Vaccine Manufacturing Accelerator has mobilized $1.2 billion in pledges. Business opportunities within the African pharmaceutical market are expected to reach $50 billion by 2030 (up from $20.8 billion in 2013) with ambitious plans to locally manufacture 60% of vaccine needs by 2040. For investors seeking both returns and impact, as I explore in my book “Realizing Africa’s Potential: A Journey to Prosperity,” Africa’s pharmaceutical transformation and its far-reaching value chain represent a generational opportunity to build health security infrastructure for 1.5 billion people.

Key trends and investment opportunities

Local manufacturing renaissance: The shift from import dependency to local production is accelerating across multiple segments—although there is still a long way to go: Less than 30% of the African market is currently made up of local production. Africa is home to approximately 690 pharmaceutical facilities, though 85% of these are concentrated in 8 countries,¹ with plants being concentrated in North Africa, which holds 40%. Increasing the local vaccine production rate from less than 1% today to 60% in 2040 is no easy task, however, investors have responded, seizing the first mover advantage and finding lucrative returns.

In 2023, a German vaccine company collaborated with the Rwandan government to inaugurate Africa’s first end-to-end mRNA facility with a $145 million investment to scale its commercial manufacturing capabilities. Senegal is working to produce half of its pharmaceutical products locally by 2035 with the construction of a multi-vaccine production facility that would produce up to 300 million vaccines annually once fully operational.

Local manufacturing is also expanding beyond vaccines to diagnostic testing and injectables. In 2024, the Institut Pasteur de Dakar inaugurated the diaTROPIX diagnostic manufacturing site that increases local production of rapid diagnostic tests from 5 million to 75 million per year. This is key for a continent that already uses half a billion tests annually but had previously been importing them all. In the wake of foreign aid cuts, factories like Codix Bio in Nigeria are filling the gap, producing 147 million tests for HIV, malaria, and tuberculosis, with 70% of its inputs being sourced locally.

Active Pharmaceutical Ingredients (API) manufacturing: Currently, Africa only accounts for 3% of the world’s drug production despite having 26% of the world’s disease burden. API is a critical upstream segment that is becoming a national priority across multiple countries. For example, Emzor Pharmaceuticals in Nigeria has invested $23 million in a planned API production facility. In South Africa, the Council for Scientific and Industrial Research invested in a FuturePHARMA facility to locally produce therapeutics. This shift can cut import costs and open up significant investment opportunities.

Technology transfer and partnerships: Strategic collaborations are accelerating capability development. In Egypt, EVA Pharma is, according to GAVI, “establish[ing] the first digital-to-biologics end-to-end mRNA development and production platform in Africa” which was the result of strategic international collaborations and pledges from a wide range of donors. In Morocco, Cooper Pharma is partnering with Jemincare Pharmaceutical Group, a Chinese company, to co-develop advanced therapeutics. In South Africa, Aspen Pharmacare partnered with the Gates Foundation to receive a $30 million investment to establish local vaccine production.  

Special Economic Zones (SEZ) for pharma: SEZs are emerging as strategic enablers for pharmaceutical manufacturing clusters given their advantages in clustering infrastructure, streamlining regulations, and offering tax incentives and increasing access to regional markets through the AfCFTA. 

Key challenges

Fragmented market and scale constraints: Operational barriers can impede or slow down response times. For example, approval and distribution can be delayed as companies navigate 54 different regulatory environments across the continent. In 2022, for example, the average time for approval of new generics was 1,035 days in Rwanda compared to just 61 days in Tanzania.

Scale constraints are also a challenge, given that African facilities navigate at 30-60% capacity, compared to 70%+ in developed economies, and plant sizes are small (one-third of the size of plants in India). These challenges have so far hindered economies of scale, however the AfCFTA is actively working to remove barriers and harmonize regulatory environments.

Import dependency and cost structures: Africa’s high import dependency and cost structures create supply chain vulnerabilities. Africa’s pharmaceuticals are imported mainly from Asia, while production costs are typically higher on the continent than in China or India.

Infrastructure and capacity gaps: Systemic deficits in infrastructure such as cold chain and logistics or electricity and water supply create challenges for investors. And in terms of labor, Africa only accounts for 3% of the global healthcare workforce, with specific human capital needs in areas like industrial pharmacy, chemistry, biochemistry, and engineering. Without specific investment in upskilling the workforce, the WHO predicts “that Africa will face a shortage of 6.1 million healthcare workers by 2030.”

Winning investment strategies

Vertical integration with regional scale: Investors should target companies building end-to-end capabilities while leveraging regional market access through AfCFTA. Manufacturers progressing from formulation to API production have found success, as have companies positioned in SEZs who can leverage infrastructure advantages. Positioning oneself as an investment that can help manufacturers increase their capacity utilization can also help overcome challenges and open new opportunities via technological innovation.

Public-private partnership models with blended finance: Investors should explore government commitments and development finance as a way to de-risk pharmaceutical manufacturing investments. For example, partnering with initiatives like Gavi’s AVMA ($1.2 billion mobilized) and Afreximbank’s $2 billion facility have helped investors overcome cost, scale, and regulatory barriers.

Technology transfer and strategic alliances: Investors should build local capabilities through partnerships with established global pharmaceutical companies. These partnerships may take the form of joint ventures between African manufacturers and API producers or investments in technology transfer hubs. PATH’s MADE Initiative, which secured $11 million in funding, provides another example in the field of diagnostic manufacturing. Partnerships should be structured with clear intellectual property terms and local capacity-building requirements where possible.

This integrated approach balances growth opportunity with risk management by focusing on vertically integrated models with regional scale, leveraging blended finance mechanisms to reduce investment risk, and building sustainable local capabilities through strategic technology partnerships that address Africa’s unique health needs, while creating commercially viable pharmaceutical businesses needed to seize this $50 billion business opportunity.