Nigeria is expected to become a hub in sub-Saharan Africa for active pharmaceutical ingredients (API) manufacturing by the first quarter of 2024, courtesy of a private-sector investment backed by the European Investment Bank (EIB).
After decades of government’s neglect of a critical shortfall in drug production process and reliance on imports, Emzor Pharmaceutical Industries Limited secured a €13.85 million EIB loan to develop a $23 million plant, which is now nearing completion.
The loan covers up to 60 percent of the project, which will initially focus on four anti-malaria APIs including artemether, lumefantrine, sulfadoxine, and pyrimethamine, Emeka Okoli, chairman of Emzor Pharmaceutical Industries, said during an assessment of the project’s progress.
The focus will extend into three more areas later, creating over 500 jobs, he said.
Construction engineers on site told BusinessDay that the two-phased plant will be ready by February, each fully equipped with the technology and manpower to produce 200 metric tonnes of APIs yearly.
This amount of APIs is equivalent to roughly 200 large shipping containers, enough to produce millions of doses of medicines in a country that currently imports over 90 percent of its APIs.
To put it in perspective, the value of finished imported drugs such as artemether/lumefantrine grew from N6.4 billion in 2018 to N12.1 billion in 2021, according to data from the National Agency for Food and Drug Administration and Control (NAFDAC).
For finished drugs including sulfadoxine and pyrimethamine, Nigeria’s imports grew from N453 million in 2018 to N1.3 billion in 2021.
Producing these APIs locally means there is one less commercial transaction where profit is taken out of the value chain, providing Nigerian drug manufacturers with a competitive market advantage against finished imports mostly from India and China.
At full operating capacity, Okoli sees local production growing significantly cheaper than imports.
“Not only are you saving on your input cost because you are doing it yourself, you are not paying a foreign person profit on that aspect of your production,” he said. “The Nigerian market is more than we can produce. We enter the market completely with imports from India and China as competitors.”
Another advantage that Okoli highlighted is that the API needs of smaller manufacturers that cannot afford to buy large consignments, which are typically the minimum requirement for foreign orders, can be met locally with as little as two tonnes.
Some studies show that for an African API production to sail through, it must be priced similarly to that of Indian and Chinese competitors. The quality must also match or exceed the standards of competitor products in the market.
In the past, pharmaceutical industry leaders have called for Nigeria to prioritise drug security, as successive governments had paid little attention to healthcare.
The high cost of APIs is a major burden for the industry, especially in light of the naira’s devaluation. The high cost of APIs is invariably reflected in the cost of finished pharmaceutical products.
Arthur Delor, investment officer representing the Corporate Finance and Global Activities Department at the EIB, said the aim of investing is to facilitate a development of great impact in a critical area like malaria prevalence, which Nigeria has the largest burden and records of deaths globally.
He is optimistic that strengthening a record supply of APIs in the country will improve manufacturing standards and increase job opportunities.
“We are very excited about this operation and are confident that the development of this facility will bring many benefits to Nigerians and the broader African pharmaceutical sector, as it will contribute to reducing import dependency and ensuring a local and more resilient supply of high-quality competitively priced anti-malarial API,” Delor said.
The estimated value of the pharmaceutical market in Africa is about $30 billion, according to the 2023 edition of the Africa Pharmaceutical Market Outlook.
Nigeria covers a paltry 1.5 percent of the market size, trailing South Africa (3.9 percent), Egypt (2.6 percent), Algeria (1.9 percent), and Morocco (1.6 percent).
This is despite hosting about 150 pharmaceutical manufacturers, the highest in sub-Saharan Africa.
Just 25 percent of drugs available in Nigeria are sourced locally, compared to South Africa where about 80 percent of medicines are sourced locally due to the availability of advanced technical infrastructure and adequate manpower to synthesise some of the APIs required for production.
When the COVID-19 pandemic broke out, the supply chain of key raw materials was disrupted and Nigeria, like many other African countries, had to wait for aid before accessing life-saving vaccines.
Beyond a pandemic, non-communicable diseases such as stroke, chronic obstructive pulmonary disease, lower respiratory infections, and neonatal conditions have become the top five leading causes of death globally, with African countries including Nigeria contributing 24 percent of that burden as of 2019, according to the World Health Organization (WHO).
Industry stakeholders, not just in Nigeria but around Africa, are worried about the trend and are pushing for backward integration in key stages of production like API, hopefully leading to self-sufficiency.
Frankline Keter, chief executive officer of APIFA, a non-profit organisation based in Kenya working to support local producers to invest and expand their operations, said the partnership with Emzor speaks to increasing access to quality and affordable medicines to people on the continent.
“What we are trying to do with Emzor together with the support of EIB is to build another supply chain centre globally. The issue is not just about the self-sustainability of Nigeria but about Africa becoming a centre of the supply chain so that we can take care of our needs in case of any challenges and things can move from here to Asia and Europe as well,” Keter said.
He identified the market created by the African Continental Free Trade Area seeking to allow over 1.2 billion population to trade among themselves as a ground for the project to thrive.
For a start, India’s Mangalam Drugs and Organics Limited are to provide solvents until alternatives can be sourced locally.