The East African Community’s 20th Anniversary celebration in 2019 was largely a joyous affair — over the course of several days, there was music, dancing, street processions and a host of commemorative events.
But the sounds of the brass could not entirely drown out concerns among partner states — a Uganda-Rwanda border standoff, ongoing trade tensions between Kenya and Tanzania, as well as the lingering memory of the tumultuous collapse of the first EAC in 1977.
The East African Community (EAC) is a regional intergovernmental organization of six partner states. The EAC of Uganda, Kenya and Tanzania was initially founded in 1967, only to disband a decade later due to seemingly irreconcilable differences between the member states. But the partnership was reborn in 1999 and since then, membership has expanded to include Rwanda, Burundi and South Sudan.
As one of the fastest growing regional economic blocs in the world, the EAC aims to deepen economic, political, social and cultural integration in order to improve the quality of life for the people of East Africa.
For Uganda — a country still facing the same strain at its borders with Rwanda, in addition to supply chain struggles exacerbated by COVID-19 — a regional approach to industrial improvement is still worth celebrating.
Uganda’s small but evolving pharmaceutical industry is up against numerous challenges, including supply chain disruptions, a heavy reliance on imports for manufacturing inputs and insufficient regulatory capacity.
The country’s growing population is also facing a significant unmet need for essential medicines. The high disease burden is predominantly due to communicable diseases, but in recent years Uganda has also seen an increased prevalence of lifestyle diseases such as hypertension and diabetes.
Regional efforts combined with investments from its own government have offered positive advances for a nascent pharma industry looking to grow.
Dealing with disruption
On the eve of the highly contentious Jan. 14, 2021 presidential elections in Uganda, the internet went dark. In what appears to have started as a squabble with Facebook, the government, citing “national security” reasons, cut off access to social media services. And when mobile users defied government warnings and turned to Virtual Private Network applications, the government shut off the internet countrywide. The internet blackout lasted five days, while the social media ban remained in effect for an entire month.
According to the Uganda Manufacturers Association, this meant that pending orders, confirmations, and deliveries could not be facilitated, and companies lost out on business.
But different industries are better positioned to weather disruption, and according to Nazeem Mohamed, former chief executive officer of Kampala Pharmaceutical Industries (KPI), now serving as an international pharma consultant, the fallouts from political unrest are not unnavigable for Uganda’s pharma industry.
“It was really very minimalistic in terms of disruption. It disrupted a little bit of our supply chain, but it was temporary,” says Mohamed.
KPI is the largest pharma manufacturer in terms of volume in Uganda, manufacturing about 60 essential generic products, including anti-microbials, antimalarials, painkillers and cough syrups.
The much bigger disruptor for local pharma manufacturers in Uganda, says Mohamed, has been — not surprisingly — COVID-19.
As a landlocked country, Uganda relies on the port of Mombasa in Kenya for much of its supplies. Initially, EAC partner states responded to the pandemic by imposing border checks and restrictions, which led to massive traffic jams of supply trucks, in some cases stretching over 30 miles long and stranding truck drivers for days.
Lacking local capacity to manufacture APIs, Uganda is heavily dependent on raw ingredients from India and China.
“During the COVID period, particularly at the beginning, there were lots of bans. The Indian government banned exports of certain raw materials. So that really had a major impact on us. It significantly increased our cost of production and there was a lot of mismatch between what we wanted to make and what raw materials are available,” says Mohamed.
While the long-term solution to alleviating supply chain issues for pharma manufacturers is to build up local production of raw materials and manufacturing inputs, it is a gradual climb. In the short-term, local pharma manufacturers have learned to adapt to the sometimes unpredictable supply chain.
“Compared to more developed markets in Europe or the U.S., there are subtle nuances in the Uganda and East African markets that are unique in terms of supply chains, operating environment, etc. to which companies adjust. Because they know the infrastructure is not always certain, companies normally stock inputs with three to five months’ worth of stock,” says Wesley Ronoh, a regional expert who advises the EAC Secretariat on pharmaceutical sector promotion.
For the past decade, Ronoh has been consulting on a joint project between the German Agency for International Cooperation (GIZ) and the EAC focused on regional integration.
“If you build resilience into your business models, you are able to surmount shocks or unpredictability, whether political or even COVID-related, that are common in the operating environments of developing markets,” he says.
Leveling the playing field
Counterfeit and substandard drugs are a frequently cited problem in Africa. The World Health Organization (WHO) estimates one out of every 10 medical products in low- and middle-income countries, which includes most of Africa, is substandard or fake.
As part of a project focused on strengthening the local production of essential generic drugs, the United Nations Industrial Development Organization (UNIDO) undertook an audit of manufacturers in Kenya using WHO Good Manufacturing Practice (GMP) standards. With support from GIZ, the EAC Secretariat commissioned work on assessment and audits of pharma manufacturing establishments in the rest of the EAC countries, conducted in the summer of 2017, using the same WHO GMP standard.
According to Mohamed, this helped Uganda establish a “quality baseline” for local pharma manufacturers.
“We have a commitment that in the next five years, we will achieve a certain quality level, getting us very close to international levels,” says Mohamed.
But not all companies will be able to make the necessary investments required to upgrade.
“Not every company can do this, because it’s going to cost them,” says Mohamed. “In the last couple of years, there have been two new companies and a third one is under construction. So, the sector is growing, but as quality demands increase, there are also one or two older, smaller companies going out of business,” says Mohamed.
But with the vast majority of pharma products on the Uganda market originating outside its borders, the quality problem disproportionately stems from imports. This makes it even more difficult for local companies investing in quality improvements to remain competitive in the market.
The 2nd EAC Regional Pharmaceutical Manufacturing Plan of Action 2017-2027 was finalized and validated in August 2017. It provides a roadmap to guide the East African Community towards establishing an effective regional pharmaceutical industry that can supply national, regional and international markets with efficacious and quality medicines.
Four goals:
- Decrease dependency on pharma imports from outside EAC from more than 70 percent to less than 50 percent
- Support the expansion of product portfolios of EAC firms to cater to more than 90 percent of disease conditions
- At least 50 percent of purchases by EAC national medicines procurement agencies to be sourced from EAC pharma manufacturers
- At least five companies created to produce more advanced pharmaceutical formulations such as delayed release formulations, small volume injectables and double layered tablets
The National Drug Authority (NDA), Uganda’s drug regulatory authority, does what it can to incentivize quality local products on the market. The agency will often expedite the review of drug registrations from local companies by “putting them on the top of the pile.” The NDA has also instituted a 12 percent verification fee that applies to 32 specific drug products that are imported into Uganda. Local manufacturers who are making those same products are exempt from the fees.
“It’s creating a slightly more level playing field,” says Mohamed.
Regional regulatory improvements
Despite the NDA’s efforts to incentivize local manufacturers, the prevalence of counterfeit and substandard drugs in Uganda has historically been attributed to the agency’s inadequate capacity — shortfalls that have meant not enough staff to inspect drugs coming in through borders as well as insufficient quality control laboratories to test products.
In 2019, the NDA embarked on an $8.4 million construction project for a national quality control laboratory at its offices in the capital city of Kampala, complete with advanced quality control equipment that could promptly detect all imported and locally manufactured substandard drugs.
But for Uganda to make true strides in regulatory capacity, the country needed to think bigger. According to Jennifer Gache, who serves as an industrial development advisor for the EAC Secretariat, regulators have found success by focusing on harmonizing regulations across the EAC.
In 2012, the EAC launched its Medicines Regulatory Harmonization (EAC MRH) initiative, which helps partner states strengthen drug regulatory systems through regional coordination and policy alignment.
“The MRH project has really boosted the capacity of regulators across the EAC region. The region has been working very hard on improving it regulatory systems,” says Gache.
The program aims to decrease the amount of time it takes to register essential medicines to treat priority diseases and reduce duplication of efforts through mutual recognition of decisions made by the national regulatory authorities in partner states.
In 2015, Roche applied to market two oncology drugs — both on the WHO’s list of essential medicines — in the EAC. Through the EAC MRH initiative, Roche was able to apply for a single region-wide joint assessment of the two drugs, rather than having to complete a different registration application for each country in the EAC — ultimately getting needed drugs to patients quicker.
Big picture
Although official figures on the Uganda pharma market are not available, Mohamed estimates that market size has grown from 2014’s $450 million to $500 million and the country has decreased its reliance on imports, currently importing about 75 percent of its drugs.
“A lot has changed, but it’s also happened because of the implementation of the 2nd EAC Regional Pharmaceutical Manufacturing Plan of Action (RPMPOA) that has been undertaken by a team of experts that include Jennifer [Gache] and Wesley [Ronoh] in the East African Community as part of the improvement of regulations and policies, which are then filtered down to Uganda,” Mohamed says.
One of the overarching goals set in the RPMPOA was to decrease dependency on pharmaceutical imports from outside EAC from more than 70 percent to less than 50 percent by 2027.
While Uganda may not be among the EAC countries that reach that goal, Mohamed thinks it can come close.
“The goal we’ve set for ourselves in the RPMPOA is challenging, but it’s good to have challenging goals. I think in the next five years, Uganda will be manufacturing about 40 percent of our own products,” says Mohamed.
So for Uganda, it’s not just about building up the local market — but building it out.
“When you look at Uganda, you aren’t just looking at Uganda’s domestic market — you are looking at an integrated market in East Africa and beyond,” says Ronoh.
