Africa must take a shot

Building a Covid-19 vaccine plant requires time, knowledge, capital and co-operation

THE Covid-19 crisis has revived discussions on localising vaccine manufacturing to the African region to reduce dependence on imports.

Most African countries depend on the World Health Organization-sponsored Covax scheme. Covid-19 vaccines are bought from manufacturers by pooling demand, thus enhancing their bargaining power. It also offers discounts for the least-developed countries. However, the scheme is underfunded and competes with national authorities procuring vaccines from the manufacturers, and thus lacking a secure supply.

Moreover, the supply shortage became worse when the Serum Institute of India, previously the main supplier to Covax, focused on domestic needs when the pandemic spread in India.

What is needed to localise vaccine manufacturing in Africa? The main constraints are not patents but time, knowledge transfer and capital. To overcome the constraints, a broad co-operation of many partners is necessary. Several companies have announced their intention to produce Covid-19 vaccines in Africa. These include Aspen in South Africa, and Saidal in Algeria.

Expertise related to other types of vaccines also exists, for example in the Institut de Pasteur de Dakar.

However, most of the plants focus on the final stages of the value chain, filling vials and packaging. Across Africa, competences related to earlier stages of the value chain are limited.

A key challenge for local manufacturers of vaccines – and drugs more generally – is competition from India. Indian companies have developed pharma competences, especially in generic medicines and vaccines, and benefit from a large domestic market.

National health services in developing economies thus face a dilemma: Should they import pharmaceuticals from India, or procure them from local companies that operate at higher costs? As most health-care providers operate under tight budget constraints, they typically opt for imports.

Thus, local companies in Africa would find it challenging to be cost-competitive in the longer run when the worldwide scarcity of Covid19 vaccines is overcome as new plants become operational across the world.

What are the key obstacles an African vaccine hub would have to overcome?

Time: It takes time to design and build a manufacturing plant, to obtain all the regulatory approvals, and to establish quality control processes.

Moreover, manufacturing depends on supply chains for ingredients and materials, which in this industry generally are global. Globally, supply chains for Covid-19 vaccines have been hampered by manufacturing bottlenecks, monopolised supply, patents and export bans. In addition, national trade barriers within the region can increase the costs of sourcing critical inputs.

Knowledge transfer: Building and operating a vaccine plant requires state-of-the-art knowledge – especially for new types of vaccine such as mRNA, including how to build and operate a plant, and how to control its quality. Such knowledge is typically tacit and held by people and teams involved in the research and development. Thus, it needs to be shared by direct interpersonal interaction; it cannot be obtained by reading patents or other public sources.

This contrasts with drugs, for example, that can be reverse-engineered, enabling generic manufacturers to develop and scale-up production without collaboration of the patent holder.

Thus, new manufacturers of vaccines need to acquire and absorb a lot of knowledge, which practically cannot be done (at least not in a timely fashion) without direct collaboration with those who hold the knowledge.

Investment capital: Big investment projects with revenues far in the future need risk capital to finance the construction. The first question any investor will ask is: What is the demand for your product when you are ready to go to market? Operating costs in Africa will probably be higher due to lesser scale of the operation, and more complex logistics. Thus, an investor would be concerned that the plant is not price-competitive in normal situations – that is without the global shortage of vaccines this year.

The concern can be addressed by advance purchase commitments, preferably with up-front payment (that’s how the UK and the US secured their early lead in vaccine supply).

As the likely buyers are mostly state-related agencies, such as national health systems, they would have to sign purchase agreements. Ideally, several national health systems would co-operate to contract one manufacturer in the region to enable scale of the operation.

Intellectual property rights: A waiver or a compulsory licence for key technology, including ingredients and materials, would help lower costs. But it would need to be valid over the operating lifetime of the plant. In other words, a waiver “until the end of the pandemic” is of little help.

Vaccine manufacturing in Africa is feasible and desirable because it helps Africa to respond to future pandemics. To achieve that, a broad regional partnership with substantial up-front commitments is necessary.

Policy makers may help creating such partnerships by simplifying compulsory licensing rules. In contrast, a time-limited patent waiver would achieve little.