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Across the East African region, the scope for health policy linkages with industry is expanding with new foreign and local investment. Further afield, rising pharmaceutical investment in Ethiopia has included a Sino-Ethiopian joint venture between an Ethiopian distributor and China Associate Group, a company co-owned by a large group of Chinese pharmaceutical companies, and also Middle East investments Gebre-Mariam et al. Local investors in Tanzania have also been actively creating start-ups. Most firms in Tanzania and Kenya remain locally owned, and when interviewed, all were strongly focused on technological upgrading to meet Good Manufacturing Practice GMP standards.

Health sector buyers can encourage and benefit from these rising standards, while also helping to sustain domestic market competition. The interviews identify areas where policies incentivizing industrial development can also incentivize responsiveness to health sector needs, and vice versa, extracting proximity benefits in the form of synergy between sectors. Health sector actors can shape manufacturing suppliers through relational procurement behaviour.

The health sector provides a huge market for industry, so health sector purchasing operates implicitly as industrial policy Chataway et al. The policy challenge is to generate incentives for industrial behaviour that favours health needs, reducing gaps and lead times through geographical and relational proximity while meeting quality hurdles.

Politics of Economic Nationalism in Africa - Part One

Good practice exists in East Africa on working relationally with local suppliers to build responsiveness. Source: Fieldwork; columns may not add to because of rounding. Not all local suppliers are responsive: in , one non-profit wholesaler in Tanzania had experienced some longer local lead times than ordering from India. Experience shows these problems can be overcome by procurement that works knowledgeably and interactively with local manufacturers.

MEDS attributed this performance to relational working.

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MEDS used local tenders, and provided tender information in advance so suppliers could plan. Other procurement bodies are now following this relational procurement path. The Tanzanian government has revised its procedures to permit the Tanzanian public procurement body, Medical Supplies Department MSD , to procure directly from manufacturers, rather than solely through private distributors.

In , MSD described how it was building links with local firms.

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Firms were required to offer short delivery times, and MSD aimed to identify and share future market opportunities with local firms. In Kenya, health sector decentralization reforms devolved public ordering of medicines and supplies to the counties, aiming to improve responsiveness to local needs. Organization reform in KEMSA has also included framework contracts with local manufacturers, speeding up ordering under pre-negotiated terms with more active contract management Yadav The Global Fund procurement system, 3 furthermore, now aims to find and work actively with potential suppliers in Africa, rewarding cost and responsiveness advantages arising from geographical proximity.

The Fund engages with suppliers to identify areas for bringing in production efficiencies and reducing costs, and supports firms with market data. Procurement agencies can also help to direct investment to priority local needs. MSD is also helping to identify opportunities for new investors, and to support new start-ups with small orders. Stated national priorities included more producers of basic antibiotics such as amoxicillin, and beginning local production of laboratory reagents—in constant shortage. The local start-ups in Tanzania in included production facilities for medical supplies such as bandages, dressings and gauze, often in severely short supply, using locally produced inputs such as cotton.

Currently active investments and developed proposals in the East African region also include more high-quality regional sources of ACTs and of antiretroviral medication ARVs for HIV; also local production of key medication for non-communicable diseases NCDs , including hypertension and diabetes, and more regional suppliers of intravenous drips and parenteral preparations.

Procurement that exploits relational proximity can thus provide a market access incentive for competent firms to respond to health sector needs. The health sector needs affordable, good quality, secure supplies of basic items, such as basic antibiotics, pain killers and ORS, and also competent suppliers of more complex items.

Incentivizing both outcomes require well-designed pricing and competition policies. Recent regional experience illustrates some of the conflicts and routes to their resolution. Africa-based manufacturers also suffer inherent cost disadvantages, notably inadequate and costly national infrastructure such as power, water and transport, forcing complementary investments, e. Economies of scale are not large in basic formulations tablets and capsules , but Africa-based manufacturers must import active pharmaceutical ingredients APIs in smaller quantities, generally at higher prices than competing Indian and Chinese firms.

Local manufacturers can frequently meet competition by accepting lower margins than those earned on imports Chaudhuri and West However, import price competition appears to have intensified, notably in basic antibiotics: Tanzanian interviewees in reported amoxicillin imports priced below API import cost.

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It must be associated with active promotion of domestic industrial competition to prevent an upward price spiral. Tanzania has been discussing a potential list of products for local public procurement only. Kenya has a draft Trade Facilitation Act that would allow complaints by local firms alleging dumping by external suppliers. All local manufacturers interviewed were struggling to upgrade their plant, and manufacturing and quality assurance QA processes, to GMP standards; to expand their technical capabilities and product range; and to meet rising regulatory standards.

Technical support such as that provided by German and Japanese assistance can help to exploit industrial protection to achieve rising quality. Grants, investments, and technology transfer can generate step-improvements in technological capabilities and process and product management, and reduce costs.


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A new start-up in Tanzania is working with German equipment suppliers to ensure high standards. The Tanzanian government is increasingly providing land, infrastructural support and access to local longer-term loan capital, as support for new ventures. Incentivizing new investment increases domestic competition and can exert downward pressure on prices. Successful clusters encourage collaboration as well as competition, supporting shared technological knowledge and learning between firms Malmberg and Maskell ; Ernst and Lundvall Global Fund procurement now recognizes that to improve, learn, invest and reduce costs, local firms must sell, and it aims to reduce barriers to global market entry by competent firms in Africa.

Local firms face a disincentive to apply for expensive WHO pre-qualification because they are unlikely to win tenders against Indian competition. Tender success by African suppliers is increasing, including long-lasting insecticide-treated bed nets from A to Z in Arusha, a firm with in-house regional logistics, and ACTs from Cipla Quality Chemicals in Kampala.

For health systems, the journey is towards an efficient, diverse and competitive local supplier base, improving and sustainable over time. Policies to incentivize regulation and higher levels of pharmaceutical skills were identified as core shared health and industrial needs. Strong regulation incentivizes and supports manufacturers to reach GMP standards required for entry to donor-funded markets. Rising standards also generate merited trust in local products by clinicians and patients.

Manufacturers and health system actors interviewed in both research rounds agreed that external support for regulatory improvement at national and East African regional level had reduced sub-standard and counterfeit medicines in the private market, and improved quality. The region, however, lacks key regulatory infrastructure such as high-quality reference laboratories, and needs a stronger scientific and technical base to support regulatory and training institutions.

Regulatory effectiveness is uneven, with Tanzania generally recognized as having the strongest regulator, while Kenyan health sector and manufacturing interviewees were looking for regulatory improvement. Supporting effective independent regulators is a key role for external actors. Skills and training was seen by many as the area most in need of investment. Health systems need more effective supply chain and procurement management, but lack the necessary trained staff Waako et al.

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They also lack competent laboratory technicians. Nationally, medicines policy and health management need clinical pharmacists and pharmacological scientists. These requirements overlap with the needs of industry. Pharmaceutical technicians represent one large cross-sector gap. Industrial laboratories struggle to recruit and retain skilled staff. All manufacturers cited industrial pharmacy and chemical engineering skills needs as well as biochemistry, microbiology, biomedical engineering and other allied sciences.

Across the region, some tertiary institutions are introducing industry attachments, but much more is needed as the technical and scientific base for industrial growth MIT and UNIDO Industrial development creates incentives for mutually beneficial pharmaceutical training. Medicines policy and regulation, several stakeholders argued, must bridge the health—industry divide.


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  • Regulation of a knowledge industry such as pharmaceuticals is underpinned by science, technology and innovation; medicines policy is underpinned by clinical skills; and the two must work together locally. Embedding local health system strengthening in local industrial development challenges silos of thought in global health.

    Nevertheless, the global health field is framed and dominated by commentators, researchers, funders and campaigners based in high income countries, with associated positions of power and privilege Horton ; Shiffman et al. The positionality of the global health field is reflected in its theme of globalization, of porous borders and global threats Macfarlane et al. Diversification of supply to include competent Africa-based firms promises to reduce risk in the medium term, as do increasingly responsive local supply chains.

    A Kenyan interviewee argued in that emergency preparedness is a whole system challenge, including responsive suppliers and the industrial and scientific capabilities to address future challenges. Proximity and health—industrial linkages then move from irrelevance to centrality in local policy concerns. Positionality outside high income contexts thus generates distinctive health needs and priorities, time-scales and perceptions of opportunities and risks and risk management in crafting robust health systems in Africa through building local capabilities.

    A local health framework, focused on exploiting the interrelated health and industrial benefits from proximity, throws into relief the relevance of positionality.