How can PPPs transform Africa's pharma logistics sector?

A recent study by MarkNtel Advisors indicates that the African pharmaceutical logistics market is set to undergo substantial expansion. The market is projected to experience a growth rate of around 5.13% CAGR from 2022 to 2027, largely due to increased investments from global pharmaceutical and biopharmaceutical companies. Countries such as South Africa, Nigeria, and Algeria are seeing a rise in local manufacturing, which is driving the demand for advanced logistics services to support the continent's growing pharmaceutical sector.

Despite the promising growth in the pharmaceutical sector, Africa's logistics infrastructure remains a significant challenge. According to the World Bank's Logistics Performance Index (LPI), Sub-Saharan Africa was rated 2.45 out of 5 in 2018, indicating an urgent need for improved logistics networks, especially in the healthcare sector. Currently, the region is unable to meet its domestic pharmaceutical demand through local production, with a vast majority of its pharmaceutical needs being imported, primarily from China and India.

Overview of Africa's pharma sector
The African CDC (Africa Centres for Disease Control and Prevention) and the AfDB (African Development Bank) reported that less than 30% of pharmaceutical products consumed in Africa are manufactured on the continent. Africa imports 99% of its vaccines and 70% to 90% of its medicines and medical devices, said a United Nations Industrial Development Organisation (UNIDO) spokesperson in a recent interview with Logistics Update Africa.

In low-income countries, only 50% of the population has access to the medicines needed for a healthy and productive life. Improving access to medicines and other health products in developing countries requires key factors such as adequate health financing and medicines procurement, resources and functional healthcare systems with well-trained staff and sufficient infrastructure, supportive regulation to facilitate trade and use of generic medicines, an environment conducive to research and development and investment (including intellectual property rights), and local manufacturing of healthcare products to create shorter and more resilient supply chains.

Africa's trade agreements with Europe and North America are aiding its move towards pharmaceutical self-sufficiency, but the COVID-19 pandemic revealed vulnerabilities in the continent's pharmaceutical supply chains. Strengthening infrastructure and logistics is crucial for Africa's pharmaceutical manufacturing capabilities. UNIDO emphasises the need to boost local production for equitable access to essential health products. The pandemic has significantly impacted healthcare awareness, spending, and pharmaceutical logistics, leading to efforts to bring pharmaceutical products closer to the patient to reduce logistics costs and ensure availability.

Clearly, the pandemic has profoundly impacted healthcare awareness, spending and pharmaceutical logistics; this view is consistent across the entire pharma logistics supply chain. In fact, "The pandemic has not only heightened awareness of healthcare but has also strained resources and led to backlogs due to lockdowns and pauses in non-COVID-related treatments. As a result, many pharmaceutical companies are trying to bring their product closer to the patient (to reduce logistics costs and ensure product availability),” said Robin Miles, Vice President of Global Sales Vertical - Healthcare, Kuehne+Nagel, in an interview with Logistics Update Africa.

"One of the biggest challenges (in Africa) is the lack of adequate infrastructure in many countries."

Annette Naude, DHL Global Forwarding Middle East and Africa

Can Africa be the next big pharma hub?

UNIDO emphasises the need for a comprehensive approach to support Africa's self-sufficiency, including human resource development, regulatory systems strengthening, access to affordable capital, business linkages, technology access, and sustainable production methods. Despite the opportunities presented by the African Continental Free Trade Area (AfCFTA), challenges in the pharmaceutical industry persist, such as inadequate distribution and markets, limited competitiveness, lack of standardised regulations, transportation and logistics issues, and counterfeit product dumping.

UNIDO supports African countries by deploying a three-level approach to health industry development, focusing on coordination, regulation, and production. The organisation supports establishing and adapting industrial parks and clusters, attracting investment opportunities and technology transfer. Ethiopia's Industrial Parks Development Programme is a good example, aiming to attract foreign direct investment and promote job creation in manufacturing industries, including the pharmaceutical sector.

UNIDO also contributes to harmonising standards, strengthening laboratories' capacities, and enhancing the capacity of National Regulatory Agencies by supporting the implementation of Good Manufacturing Practices (GMP). Overall, UNIDO aims to develop Africa's local pharmaceutical production, improve access to health products, and reduce the continent's reliance on imports.

However, the continent still faces challenges in becoming a major pharmaceutical manufacturing and exporting hub, including limited access to affordable finance, skills shortages, unfavourable procurement practices, narrow product offerings, outdated manufacturing technology, constrained health budgets, and a preference for imported products. Additionally, the UNIDO spokesperson mentioned that reliance on donor-funded procurement programs and compliance with international standards further constrain local production.

A spokesperson from Sun Pharma, one of the Indian companies with a significant market share in Africa's pharmaceutical sector, mentioned that although the company has several manufacturing sites in African countries such as South Africa, Egypt, and Morocco, a large portion of pharmaceuticals are still imported from India. He also stated that the quality of talent available on the continent, the ability to implement good manufacturing practices (GMP), and the proper training of people are the factors hindering the establishment of large manufacturing sites in Africa.

India is significantly contributing to the growth of Africa's pharmaceutical sector, having exported $3.8 billion worth of pharmaceuticals to Africa in 2023. During the recent CII India Africa Business Conclave, Sunil Barthwal, Commerce Secretary of the Ministry of Commerce and Industry in the Government of India, highlighted the opportunity for collaboration in logistics and capacity-building to further strengthen trade relations and expand Africa's export portfolio.

Africa's major roadblocks
"Given Africa's sheer geographical spread and diversity, the first fundamental challenge is dealing with the differing approaches to customs, regulations, various levels of transport infrastructure and customs procedures, which would affect any shipment moving cross-border," said Miles.

Given Africa's sheer geographical spread and diversity, the first fundamental challenge is dealing with the differing approaches to customs, regulations, various levels of transport infrastructure and customs procedures, which would affect any shipment moving cross-border.

Robin Miles, Kuehne+Nagel

Similarly, Annette Naude, Regional Head of Lice Sciences and Chemicals at DHL Global Forwarding Middle East and Africa said,"One of the biggest challenges is the lack of adequate infrastructure in many countries, the fact that in some regions there are no cold chain facilities dedicated to Life Sciences and also regulatory frameworks, which vastly differ between countries. Many customs clearance processes and Governmental Agency processes are lengthy and with Life Sciences it is always a race against time."

Be it a pharmaceutical company, a logistics solutions provider, or an airline, each player in Africa's pharmaceutical logistics sector complains about the continent's poor infrastructure. In a recent interview with Logistics Update Africa, Grant Kemp, Regional General Manager Africa, ME and CIS (GCC, UAE, Africa, Levant and CIS) at Etihad Cargo, said that Africa's pharma logistics face operational and infrastructural challenges, such as securing permits and fluctuating demand.

The spokesperson of the Indian multinational pharmaceutical company highlighted the challenges of inadequate infrastructure in Africa, particularly in its ports. Port congestion and other issues cause delays, even in the most developed ports such as those in South Africa. He added that the company relies on air freight for 20% of its trade to Africa. However, the lack of direct flights and the need for transhipment complicate air and sea logistics between Asia and Africa, leading to uncertainty and delays in pharmaceutical shipments to the continent.

"The infrastructure in many parts of Africa is still developing, which can hinder the efficiency and reliability of cross-border pharmaceutical deliveries. Proper planning and investment in infrastructure are essential to overcome these obstacles and ensure that the desired service standards are consistently met," added Kemp.

Not only internationally, but also intracontinental shipments are a challenge in Africa. "Delays at border crossings to neighboring countries are a significant problem. Consistency in the required paperwork is frustrating. Costs are escalating due to fuel prices," said the spokesperson of a South African pharmaceutical company.

Africa's pharmaceutical logistics infrastructure, particularly in terms of warehousing and cold-chain logistics, remains relatively underdeveloped, although significant progress has been made in the past two decades. Sun Pharma's spokesperson emphasised the urgent need to improve port infrastructure and infrastructure in countries, particularly in terms of warehousing and logistics.

UNIDO acknowledged the role of funded initiatives, such as HIV/AIDS treatment programs led by organisations like PEPFAR (President's Emergency Plan for AIDS Relief) and the Global Fund, in strengthening health systems and building local capacity for pharmaceutical logistics in Africa. These programs have contributed to the improvement of infrastructure for handling, storing, and distributing medicines across the continent.

The Partnership for Supply Chain Management has enhanced logistics capabilities, and UNIDO advocates for improving cold chain infrastructure and regulatory oversight for medicine distribution. However, further investment and innovation are needed for a resilient pharmaceutical logistics system, especially in regions with limited infrastructure.

Adding to that, Kuehne+Nagel's Miles said, "Envisioning a future with a larger fleet of temperature-controlled vehicles and more GDP and temperature-controlled airport facilities, we can see the potential for significant improvements in healthcare delivery. While many countries are making strides in modernising their technologies and infrastructure, there is still a need for further development to overcome the current challenges in delivering healthcare products across the continent."

Offering solutions to overcome challenges
After gathering input from industry players, it's clear that Africa's pharma supply chain faces operational and infrastructural challenges, such as securing permits and meeting fluctuating demand. However, Sanjeev Gadhia, the Founder and CEO of Astral Aviation, stated in an interview at the Flower and Perishable Logistics Africa 2024 event, "Every crisis is an opportunity." He emphasised every crisis presents not only business opportunities but also opportunities to contribute to and support society.

In recent efforts to address the crisis in the Democratic Republic of the Congo, Astral Aviation, a Kenyan cargo airline, successfully delivered 14 tonnes of emergency supplies for Mpox response with support from the World Health Organisation and Kuehne+Nagel. These supplies, delivered in September 2024, are expected to serve 16,800 people over three months, providing essential care for healthcare workers battling Mpox. Etihad Cargo has also played a significant role in improving healthcare in Africa by delivering over 810 tonnes of critical pharmaceuticals in the past year and a half, including support for the UAE Government's Mpox vaccine distribution across the continent. These efforts highlight the growing importance of air cargo in ensuring timely and secure medicine delivery in Africa.

The UAE-based airline, Etihad Cargo, employs customer-focused strategies such as adaptable charter operations to address operational and logistical challenges in Africa. They also use specialised equipment for temperature-sensitive pharmaceuticals and work closely with local handlers to ensure safe and efficient delivery, even in challenging environments.

Furthermore, Etihad Cargo utilises advanced technologies to maintain the integrity of temperature-sensitive pharmaceuticals during air transport. This includes state-of-the-art cool chain facilities at Zayed International Airport, designed to uphold strict temperature controls throughout shipping. They also use specialised equipment like cool dollies to ensure an uninterrupted cold chain during ground handling.

Etihad Cargo ensures the safe delivery of temperature-sensitive pharmaceuticals through adaptable charter operations and advanced tracking technology. In addition, Miles stated, "We have over 4,000 healthcare professionals globally, giving us access to the expertise and experience needed to ensure operational excellence for our customers and the end users of our products—the patients." Miles also mentioned that they have made significant investments in developing their technological offering to provide full transparency and real-time data to their customers.

"Not only do we receive real-time data at critical points, but we also use predictive analytics based on our extensive shipment history to alert us to potential challenges before they arise. What may seem like the fastest route, for example, may not be the best choice when considering factors such as weather, strikes, and other unseen elements," added Miles.

While looking at the opportunity poerspective, the Etihad spokesperson said the airline that operates flights to various destinations in Africa, such as Nairobi, Johannesburg, Casablanca, Seychelles, and Cairo, is planning to introduce new routes in Kenya by December 2024 to meet the increasing demand.

“The continent’s growing demand for reliable and efficient logistics solutions, particularly for critical pharmaceuticals, presents an opportunity for Etihad Cargo to play a crucial role in enhancing healthcare outcomes across multiple countries.

Grant Kemp, Etihad Cargo

The UAE-based airline is also investing in expanding its fleet and implementing advanced technologies to improve pharmaceutical logistics in Africa. These efforts include advanced tracking, data management, and innovative packaging solutions to enhance reliability and transparency, ensuring the safe and timely delivery of vital medicines across the continent.

Etihad Cargo collaborates with pharmaceutical companies, governments, and stakeholders to develop tailored solutions for transporting temperature-sensitive and high-value medicines in challenging environments in Africa. Now, the question is: How important are public-private partnerships in Africa's pharma logistics?

Importance of public-private partnerships
Public-private partnerships (PPPs) are instrumental in advancing pharmaceutical manufacturing and logistics in Africa. By combining the strengths of both sectors, PPPs drive innovation, investment, and capacity-building. These partnerships leverage public resources and infrastructure with private sector expertise, financing, and technological capabilities. This collaboration is essential for overcoming the challenges faced by Africa's pharmaceutical industry, as stated by the UNIDO spokesperson.

Similarly, DHL's Naude said, "It is important that all stakeholders collaborate. Private public partnership’s have played an important part in successful supply chains and will do so in future as well. We see a lot of private investment in Africa, which will support governments to offer better service delivery and improve healthcare systems."

A key example is the successful PPP in South Africa, which has led to the development of vaccine manufacturing capabilities through Biovac, thereby building local capacity and improving access to vaccines. Furthermore, new vaccine initiatives involving public-private collaborations in countries like Nigeria and Ghana are emerging, strengthening the continent's pharmaceutical production capabilities.

Local manufacturers benefit from partnerships that provide access to advanced technologies and improve supply chain logistics. This helps them meet global quality standards, reduce reliance on imported medicines, and strengthen the healthcare sector.

UNIDO plays a key role in fostering collaborations by connecting governments, private sectors, international and national development organisations, and academia. For example, UNIDO supported the formation of the Southern African Generic Medicines Association (SAGMA) in 2009 and played a crucial role in establishing the Federation of African Pharmaceutical Manufacturer Associations (FAPMA) in 2013. FAPMA serves as a unified voice for pharmaceutical manufacturers across the African continent.

UNIDO is collaborating with stakeholders in the public and private sectors to support the development of Africa's pharmaceutical manufacturing and logistics capabilities. One of their initiatives, funded by the German Federal Ministry for Economic Cooperation and Development, aims to enhance African production of vaccines and essential medicines through technology transfer and investment partnerships. Progress has been made in engaging 11 African manufacturing companies, showing promise for participating in technology transfer projects. Additionally, technical guidelines are being developed to promote best practices for technology transfer and API production.

UNIDO is also working on another project in Senegal to enhance the country's pharmaceutical sector with the support of German GIZ. The project aims to assess companies' readiness, identify training needs, and strengthen local pharmaceutical production to make Senegal a regional hub for pharmaceutical manufacturing. Additionally, the project focuses on identifying priority molecules and conducting feasibility assessments for active pharmaceutical ingredient production in the country.

Despite these initiatives, African pharmaceutical companies express concerns about collaborating with government healthcare providers due to issues such as corruption, bribery, tender fraud, and late or no payments. This lack of confidence in government support poses challenges for the pharmaceutical industry in Africa.

But, this presents a great opportunity for African governments to enhance their reputation and take advantage of the growth in the pharmaceutical sector, ultimately reducing international reliance. According to a spokesperson from Sun Pharma, African governments can play a crucial role as this sector is poised for growth. This could prove highly profitable for many of these companies, creating value for themselves.

Research indicates that not all private companies are concerned about government support. In fact, some private organisations like Wingcopter, a German aerospace company specialising in drones, collaborate with government organisations to facilitate last-mile pharmaceutical delivery in Africa. It also partners with district hospitals to store and collect pharmaceuticals before the last-mile delivery.

The use of drone technology, particularly by companies like Wingcopter, can potentially revolutionise the delivery of medical supplies to remote and underserved communities. By bypassing traditional infrastructure challenges, drones offer a quick, reliable, and cost-effective means of transportation for essential medical supplies. This innovation holds the promise of significantly improving access to healthcare in regions that struggle with logistical and infrastructural limitations.

Drone delivery has rapidly gained traction in Africa's pharmaceutical logistics, helping to overcome significant infrastructure and logistical challenges.

Thomas Dreiling, Wingcopter

 "With the support of governments and international organisations, drone delivery networks can be set up to cover entire countries, ultimately reducing costs significantly. In any case, building the necessary ground-based infrastructure to achieve similar results in access to health for underserved communities would cost billions," Thomas Dreiling, PR & Communications Manager, Wingcopter.

Dreiling added, "The Wingcopter 198 can deliver urgently needed medical supplies within minutes, whereas ground-based transport often requires several hours. We thus reduce patients' waiting times and improve access to healthcare. In Malawi, we have supplied remote villages with medical goods that had been cut off from the outside world because of flooding, ensuring people have access to health services at all."

The Wingcopter 198 drone has a maximum range of 94 kilometres. Even when carrying the maximum payload of 4.7 kilograms, it can cover a distance of over 70 kilometres. Its quick-swap batteries minimise idle time, allowing it to be back in the air within seconds. By setting up a network of battery swap stations, the drone's range could be extended indefinitely. The Wingcopter can also operate in harsh weather conditions, such as heavy wind or rain. In many parts of the world, this makes the Wingcopter superior to conventional delivery methods, especially in terms of speed and reliability.

Africa's pharmaceutical logistics sector faces significant infrastructure challenges, but growing investments, innovative solutions like drone technology, and public-private partnerships offer promising pathways for improvement. Strengthening local manufacturing, cold-chain logistics, and regulatory frameworks is essential for Africa to reduce its dependence on imports and establish itself as a self-sufficient hub for pharmaceutical production and distribution.