Image Courtesy: Humanwell healthcare
Article: 48/2024
By the end of 2024, Shanghai Fosun Pharmaceutical is expected to complete the first phase of its manufacturing facility in Abidjan, Ivory Coast. The facility has been financed by the International Financial Corporation (IFC) with $54.7 million. Once all three phases of construction are completed, the facility is expected to produce 5 billion tablets annually. Under the Health Silk Road, the health-sector investments under BRI, the Chinese pharmaceutical companies have been able to set up offshore facilities in Africa. The Fosun Pharma is expected to produce over 1000 job opportunities in the area east of Abidjan. China’s Jijia International Medical Technology Corporation signed a deal with Zambia’s Industrial Development Corporation to establish the continent’s first Cholera vaccine production facility in Zambia. With an investment of $37 million, the plant is expected to produce 3 million doses once the first phase is completed. Deals have been signed in other parts of Africa as well, like the Nigerian Drug maker Fidson Healthcare Plc with Jiangsu Aidea Pharma, PharmaBlock Sciences Nanjing Inc inorder to construct a pharmaceutical plant in the Lekki free-trade to enhance Africa’s healthcare system, especially in HIV.
In the last two decades, China and Africa have increased their bilateral relations significantly and China has emerged as Africa’s largest trading partner. Almost 20% of Africa’s exports goes to China and around 16% of the continent’s imports comes from China. The flow of Foreign Direct Investment (FDI) has also increased tremendously over the last twenty years. In 2003, the total FDI of China to Africa was $75 million and it has peaked up to $5 billion in 2022. Africa has also received $3.96 billion cash flow of FDI from China in 2023. The Belt and Road Initiative, launched in 2013, has been the major driver of these investments into Africa, which were directed primarily to transportation, mining and energy infrastructure.
From 2020 onwards, China and Africa seeked to strengthen their economic relations under the frameworks of both BRI and Forum On China - Africa Cooperation (FOCAC), which supports the African Union’s Agenda 2063. This shift resulted in focusing on investments other than the traditional focus areas such as infrastructure and mining. Both parties began to prioritize infrastructure connectivity, financial integration and policy coordination between both sides. However, China’s financial commitment to Africa decreased from $60 billion in 2018 to $51 billion in 2024. This has been attributed mainly to the slowdown in the Chinese economy but the fall in infrastructure financing has also caused this decline. China’s investment in Africa has also been focusing on service and high-tech sectors with increased participation from the private players.
Since the COVID- 19 pandemic and post-pandemic recovery, the new element of Health Silk Road has been mentioned in official documents and diplomatic languages. First introduced in 2015 as a new element of BRI, Health Silk Road is now a major focus of BRI 3.0 which prioritizes the high tech telecommunication sector, health and medical sector. The BRI 3.0 encourages partnership of private owned enterprises (POE) over the state owned enterprises, as the former is considered to be the more efficient and innovative. The new branch of BRI has helped countries like Spain, Italy, Egypt and Tunisia to recover from the repercussions of the pandemic. The Health Silk Road has been used not only as a health care cooperation but also as a tool to broaden the economic and diplomatic strategy of China in Africa. For low-income countries, the HSR largely helped to reduce the fiscal burden as they fought with the pandemic. The Health Silk Road has been instrumental in China’s expanding global influence in Africa which is often neglected by the West.
The conventional infrastructural programs by the BRI initiative were often criticized by the West for pulling the host countries into a debt trap. But these conventional projects have contributed to the economic growth of the host country and have made the way for future collaboration between Africa and China. For example, the Addis-Djibouti railway acted as a supply line for Ethiopia and was able to gain almost 51.38% increase in revenue compared to the previous year. With the base infrastructure being laid, it will be easy for China to further its HSR and digital telecommunication projects.
The new Health Silk Road (HSR) stands out from traditional government aid initiatives in two key ways. First, rather than focusing solely on constructing hospitals and other physical infrastructure, HSR now emphasizes ongoing healthcare services and pharmaceutical supply for African nations, creating potential mutual benefits for both Chinese service providers and local communities. Second, unlike the earlier BRI projects, which were largely led by state-owned enterprises, the new HSR involves a growing participation of privately-owned companies in these ventures. Ethiopia saw the first infrastructure project under the Health Silk Road, a privately funded Chinese hospital, in 2017. China’s Seychelles Afei Holding Co., Ltd., built the Addis Ababa Silk Road General Hospital. As the region has an enormous population but lacks an efficient health care infrastructure and medical and pharmaceutical products and hence they are heavily dependent on imports. This sizable health care market offered by these countries is seized by the Chinese private owned enterprises.
The New South Group based in Guangdong produces dihydroartemisinin, artesunate and other products, started their facility in Africa and plays a major role in treatment against Malaria. Sansheng pharmaceutical Plc in Ethiopia, produces mainly antibiotics and acesodyne. The facility also used to export medicines to neighboring countries like Kenya, Sudan, Tanzania. POE Neusoft Medical Systems Company Ltd works in Tanzania as a medical equipment manufacturing factory with capabilities to produce wise ranging medical products, including MRI and X-Ray machines. The Shanghai based Fosun Pharma is the largest among the Chinese private owned enterprises in Africa and they operate in 35 African countries. These newly established companies have an enormous impact on the African pharmaceutical market. The expected revenue of the pharmaceutical market of Africa in 2024, is $13.4 billion and the pharmaceutical market size was 26.85 billion in 2023, is expected to grow at a rate of 3.4% from 2024 to 2030. Apart from these, Jack Ma and Alibaba group had also dispatched COVID-19 prevention essentials to Africa and other pharmaceutical companies had also joined Alibaba and Jack Ma groups for dispatching medical supplies to Afrcia.
Between 2000 and 2017, China invested over $5.6 billion in 1,448 global health projects, while $1.6 billion was channeled into 1,026 initiatives in Africa. During this period, China became one of the main donors to health systems, especially in Africa, by building infrastructures such as hospitals, providing essential equipment such as CT scanners, and training medical personnel. With this trend, China - Africa partnership in the health sector will only increase in the future. Due to slow down in the economy and to avoid debt trap accusations by the west, China in the recent Forum on China - Africa Cooperation (FOCAC) held in September 2024, President Xi Jinping pledged that China would support the development of pharmaceutical manufacturing and medical equipment industries in Africa. This initiative includes facilitating access to active pharmaceutical ingredients and encouraging co-investment between Chinese and African private sector partners. China’s investments are being welcomed in Africa as the continent grapples with diseases like Malaria, Cholera and HIV. Africa accounts for about 95% of the global Malaria cases. Such medicines produced in Africa for the African population are believed to help the most vulnerable population. The setting up of international pharmaceutical manufacturing facilities in the continent is perceived to boost Africa’s efforts for self-reliance. This act by China to lead pharmaceutical co-investment in Africa is a strategic step in becoming a key player in health and pharmaceutical development in the continent. In upgrading the health outcomes of Belt and Road countries, Beijing's Health Silk Road initiative opens up opportunities for its healthcare industry in building clinics and hospitals, medical equipment, and essential healthcare resources. Africa became an ample opportunity for China as the continent lacks pharmaceutical and medical sector infrastructure, but has a huge market opportunity for the same.
CHALLENGE FOR INDIA
According to the estimates of the Government of India, India ranks 3rd for pharmaceutical production worldwide and 13th by value. India contributes almost 10% of global pharmaceutical production. It is also the largest supplier of low-cost vaccines and accounts for 60% of global vaccine production. India is also the largest supplier of generic medicines with a 20% share of the global supply. India is a leading pharmaceutical exporter, reaching over 200 countries worldwide. It fulfills more than half of Africa's demand for generic medicines, around 40% of the generic market in the United States, and supplies approximately a quarter of all medications in the United Kingdom. The dominance of Indian pharmaceutical sector points towards the comparatively lower price of Indian medical products. As a supplier of affordable low-price drug to the world, India is known as the pharmacy of the world.
Pharmaceuticals play a significant role in India's expansion strategy for trade, especially as the country looks to diversify its export basket by both product mix and destination. India has a long-standing commitment to supporting a large number of low-income countries, particularly in Africa. Pharmaceutical products lead India's exports to Africa, and along with petroleum products, they account for approximately 40% of India's total exports to African markets. There are ten largest export markets for Indian pharmaceuticals in Africa, which are South Africa, Egypt, Morocco, Kenya, Algeria, Ethiopia, Tunisia, Sudan, Tanzania and Nigeria
In the top ten Indian pharma exports to African countries, India tops China in South Africa with an export of worth $625.05 million in 2023, in Ethiopia with $170.57 million over $43.4 million, in Nigeria with $450 million over $177.6 million, in Kenya with $351.34 million over $55.41 million, Morocco with $53.4 million over 42.9 million, in Algeria with $81.4 million over $27.6 million and in Tanzania $266.44 million over $55.2 million. Whereas in Egypt we can see a reverse pattern where China toppers India with pharma exports of $47.7 million over $33.52 million by India. India had also suffered a setback in June 2023, from Gambia after Indian pharma products were brought under scrutiny in light of the death of 66 kids in Gambia after suffering from an acute liver damage due to consumption of Indian cough syrups. This resulted in a decline of 5 percent in Indian pharmaceutical exports to Africa. In Gambia, Indian exports dipped from 8.66 million in 2022 to 6.41 million in 2023 marking a -25% decrease in exports while China’s export decline stood at 22%. While India maintained an increase in exports in South Africa, Kenya and Tanzania, it suffered decline in Nigeria with -13.5%, in Ethiopia with -1.4%, in Uganda with -22% and in Ghana with -17.4%. In the fiscal year 2023, Indian pharmaceutical exports to the African region totaled $3.64 billion, marking a 5.3 percent decrease from $3.85 billion in fiscal year 2022.
While India’s exports list to Africa include petroleum products, vehicle and transport equipment, chemicals, machinery, textiles, agricultural products etc, pharmaceutical products tops the list of exports to every country. While China lags behind India in the pharmaceutical sector, they have been leading India in overall exports in African countries including the country. While India - Africa trade stood at nearly $100 billion, China - Africa trade stood at $283 billion, in 2023. With China and Africa expanding their relations under FOCAC and China looking to invest in sectors other than core infrastructure sectors, cooperation in pharmaceutical and medical sectors are surely to expand.
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