Last week, US drug company, L.E.A.F. Pharmaceuticals LLC, announced that it would embark on medical manufacturing for the regional and continental market with a foot in Rwanda through its locally established franchise.

This is a welcome development.

It will be entering a sector that the Federation of East African Pharmaceutical Manufacturers (FEAPM) says meets only about 30 per cent of medicine demand in the region.

The remaining 70 per cent is catered for by imports, mainly from India.

L.E.A.F. will also be entering a seemingly crowded East African market that boasts around 65 pharmaceutical companies.

However, with so many companies meeting only 30 per cent of the demand, it means there must be challenges, mainly related to capital, production materials and patent issues.

The market share, however, appears to have been shrinking lately. The inaugural EAC Industrial Competitiveness Report 2017, set to be officially launched later this year, states that local firms lost market share in 22 out of the 25 most demanded manufactured goods, which included pharmaceuticals, among others such as cement, iron and steel products, and fertilisers.

The future is bright, nevertheless. Various forecasts on the regional pharmaceutical market suggest an upward trend. FEAPM estimates the regional market at $5 billion and projects it is set to grow by 12.4 per cent over the next five years.

A recent analysis by The New African quoted the African Development Bank saying that "Africa’s pharmaceutical industry is the fastest growing in the world”.

And, according to FEAPM, the EAC has the highest pharmaceutical sales growth compared with other regions in Africa.

AfDB’s projections generally suggest that the pharmaceutical market will be worth $40-$60 billion a year by 2020 on the continent. Currently, imports account for 80 per cent of all pharmaceutical sales on the continent. The opportunity, therefore, exists for the likes of L.E.A.F. to locally invest.

However, even before we look to the continent, there are issues and challenges that must be looked into. This includes for the local pharma who are eager for a larger piece of the regional market.

One of the major challenges is the lack of capital local producers require to not only expand their footprint but invest in improving product quality. There are also regulatory bottlenecks that must be looked into to facilitate better trade and flow of production and supply within the region.

The EAC Treaty provides for developing a common regional medicines policy, which includes the establishment of quality control capacities, good procurement practices, and harmonisation of drug registration procedures.

It is, therefore, imperative that policy formulation and implementation takes precedence to remove the bottlenecks, including in fields such as research and development.

The First International High-Level Multi-Stakeholder Conference held in Arusha, Tanzania, in November 2016, agreed on a declaration on promoting investment in the region’s pharmaceutical sector, spelling out terms aimed at boosting investment in ways that are locally relevant and responsible.

The declaration includes steps to standardise and improve product quality and registration and setting up research centres. It also included adopting domestic laws on intellectual property, as well as actions against counterfeit and substandard medical products, and increasing exports.

All these go to show the interest the sector has been attracting, running for some years. For instance, EAC has so far adopted the Regional Pharmaceutical Manufacturing Plan of Action (EAC-RPMPOA), 2012-2016, the Approximation of National Intellectual Property Legislation, 2013 and the Regional Intellectual Property Policy on the Utilisation of Public Health-Related WTO-TRIPS Flexibilities.

TRIPS is the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights, which contains flexibilities for developing countries in enforcing the agreement.

Everything, however, depends on an enabling environment. The second EAC Common Market Scorecard (CMS) 2016 notes that all Partner States remain largely non-compliant in their services trade liberalisation commitments.

For this reason, the EAC Industrial Competitiveness Report 2017 comes in handy. The study aims to provide a diagnostic means on Industrial Policy and Strategy, even as it monitors progress against EAC and national industrial development targets.

The aim is to provide evidence-based, shared and implementable policy recommendations for the EAC and Partner States’ policy makers, with emphasis on the importance to coordinate economic development activities around a common goal to enhance industrial and manufacturing development.

Twitter: @gituram