To curb drug vulnerabilities, high prices, and shortages in Africa, the International Finance Corporation (IFC), a division of the World Bank, is advocating for improved local manufacturing to increase access to essential medicines.
In a report last weekend, the agency lamented the contradictions in Africa’s pharmaceutical industry, stressing that Africa bears a quarter of the global disease burden yet imports more than 70% of medicines.
The report said that for people with diabetes in South Africa, mothers seeking vaccines in Nigeria, and elderly people in Kenya needing antibiotics, dependence on foreign medicines leaves them and millions of others vulnerable to shortages and high prices that primarily hit middle- and low-income groups.
According to the report, “Africa’s leaders, through the Africa Centers for Disease Control and Prevention (CDC), have set an ambitious goal of achieving vaccine sovereignty by 2040. To do so, local manufacturers will need to produce 73 times as many vaccines as they currently do.”
This is a tall order, but vital to the health and well-being of the continent’s 1.5 billion people, while creating much-needed jobs. “To meet these challenges and achieve this goal, Africa urgently needs innovative partnerships, new financing and policy changes.
“One example shows this in action: The World Bank Group, through its private sector arm, IFC, partnered with Aspen, a global multinational specialty pharmaceutical company, to help expand local pharmaceutical manufacturing capacity and expertise.”
“IFC has arranged €1.1 billion in long-term financing across two syndicated facilities, the first in 2021 to strengthen the continent’s vaccine supply chain in response to COVID-19, and the second in 2024 to expand access to critical medicines in sub-Saharan Africa and strengthen Aspen’s financial resilience and working capital needs.”
The total financing consists of €350 million from IFC’s own account and €750 million in parallel financing mobilized from other development finance institutions (DFIs). ”
The company said the loan contributed to the World Bank Group’s goal of providing quality and affordable health services to 1.5 billion people by 2030 by strengthening local production of essential medicines and vaccines across Africa.
“Even essential medicines are being imported into Africa, which has been a major constraint during the pandemic. The theme of ‘Make in Africa, for Africa’ is very important,” said Ken Osei, IFC Chief Investment Officer. “Local manufacturing is also important from a skills development perspective, and having manufacturing facilities creates more jobs for local communities,” he added.
The report further suggested that the opportunity to expand Africa’s pharmaceutical industry proves why the healthcare sector is critical to the World Bank Group’s agenda of creating jobs in developing countries, where 1.2 billion young people will enter the workforce over the next decade.
“Healthcare is one of a number of high-growth sectors with the greatest potential to create local jobs, along with infrastructure, energy, agriculture, tourism and value-added manufacturing.
“However, several barriers hinder the growth of Africa’s domestic pharmaceutical industry, including market fragmentation, insufficient economies of scale, and the prevalence of counterfeit medicines.
“Other challenges include limited access to intellectual property and patents, insufficient information on localization policies and protection of local manufacturers, lack of skilled labor, weak regulatory framework, and lack of long-term funding,” the company added.
Osei and his team were introduced to Aspen, which had already built a pharmaceutical facility capable of manufacturing the vaccine and was in the process of technology transfer and manufacturing contracts with vaccine manufacturers, the report said.
Mr. Osei and his team proposed that IFC lead a syndication with other DFIs to provide long-term financing to replace existing short-term financing to better support Aspen’s pharmaceutical manufacturing operations.
Additionally, over the past three years, IFC said it has entered into the two aforementioned transactions and brought on board DFI co-investors to help Aspen expand production of vaccines and injectable drugs in Africa.
These investments will help Aspen produce essential medicines, including insulin, for patients. Aspen’s business aligns with many DFI goals.
The company provides high-quality, life-saving essential medicines to more than 115 countries, including 60 low- and middle-income countries with 180 medicines on the World Health Organization’s list of essential medicines.
Aspen’s primary business segments are manufacturing and commercial pharmaceuticals, including injectables, prescription drugs, and over-the-counter drugs. Despite the natural adjustment, this was not a typical IFC loan.
Aspen is an established international company accustomed to syndicated bank financing, where the lead bank acts as the administrator and disbursing agent. When approached by IFC, they were hesitant to work directly with individual financial institutions and did not want the complexity of managing multiple relationships.
There were other hurdles as well. Michael Shuttleworth, Aspen’s group finance director, said DFIs wanted to direct loan proceeds to specific projects aligned with their goals rather than general corporate purposes, a departure from the flexibility of traditional bank syndicates.
In addition, DFI reporting requirements were more stringent than Aspen was previously accustomed to, and we often encountered practical, legal, and regulatory challenges. “The process was more difficult than we originally anticipated,” he says.
To facilitate Aspen’s participation, IFC has agreed to serve as the administrative agent for the DFI debt facility, which is rarely done, and will be responsible for handling the funds between DFI and Aspen.
With this, IFC responded to customer requests to align the DFI debt facility with the streamlined approach used in Aspen’s commercial syndicated facility.
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