The case for investment: Insights from five African manufacturers on local manufacturing of diagnostic tools

August 17, 2023 by Becca Brehm

Bridging the gap between manufacturer needs and investor funding

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Investing in local diagnostics manufacturing in Africa creates opportunities across the board, from production and assembly to research and development. Photo: Revital Healthcare.

The COVID-19 pandemic brought attention to the lack of accessible diagnostics across the world. In Africa, the lack of accessible and affordable diagnostic tools made tracking and containing the coronavirus particularly difficult. Limited access to affordable diagnostic tools is not a problem specific to the COVID-19 pandemic, and in fact, inadequate diagnostic testing still exists in the region.

PATH has been engaging with country partners and local stakeholders to discuss how to best scale up African manufacturing. One solution is to create sustainable financing for manufacturing in the region. Investment in local manufacturing is not a new concept, but often private investment can be shortsighted and does not address the direct needs of local manufacturers.

PATH wanted to bridge the gap between manufacturer needs and investor funding. The team created a local diagnostics company dashboard that highlights more than 150 diagnostics developers globally. From this list of companies, PATH spoke with several local manufacturers to discuss the imperative to promote local manufacturing. Here is what our local manufacturers had to say.

Health care resilience

On the most basic level, increasing local diagnostics manufacturing will lead to a stronger, more accessible, and equitable health care system. Diagnostic tools are a crucial first step in the health care journey. Without diagnostic tools, medical professionals are unable to identify a disease and cannot start treatment, which can lead to loss of life.

“If you can’t diagnose the disease, it’s very difficult to treat it effectively, and this becomes critical when you consider that infectious diseases still account for at least 70 percent of deaths on the continent.”
— Founder of a South African diagnostics development company

By increasing local manufacturing of diagnostics, African health systems can avoid overreliance on international partners and receive a steady supply of diagnostic tools that can be fairly used for all its citizens. This reduces vulnerabilities and enables health systems to maintain essential health care services, even in challenging circumstances. Investing in manufacturing also fosters the development of local expertise, infrastructure, and job creation, thereby enhancing the ability of health systems and strengthening their capacity to respond appropriately in times of upheaval.

Accessibility

Currently, the health system is not equally accessible to all. Access to diagnostic medical care is highly dependent on where a person lives. A general lack of sufficient diagnostic tools means the tools available are being sent to population centers, rather than equally throughout a country.

“Lack of easily accessible diagnostic services ultimately ends up in neglect of testing and treatment, which further increases the risk of diseases spreading or even possible death.”
— Senior management team member of a Kenyan manufacturing company

While urban areas of Africa have reasonable access to health care, rural areas are often not granted the same access. The average working person living in a rural area would have to travel miles to the nearest health center for testing. This is not only expensive but can be time-consuming and cause a laborer to miss out on a day’s wages. People faced with this kind of decision—weighing a day’s living wage against the time it takes to seek out medical care—often choose to neglect testing and treatment, which puts both the person’s health at risk and society’s health at risk if the disease is infectious. Local manufacturing means more diagnostic tools are distributed more equitably, increasing accessibility across the region.

Affordability

Many African countries procure their test kits, reagents, and other materials from international companies. This leads to an over-dependence on these international companies and nongovernmental organizations to procure the necessary materials. The COVID-19 pandemic exposed the fragility of this supply chain. Moreover, importing these products can be very costly for low- and middle-income countries (LMICs).

“Technologic tests tend to be very expensive, particularly for low-income populations … because of a reliance on imports.”
— Co-founder of a diagnostics R&D and custom manufacturing firm

Countries are paying more for diagnostic tools due to inflated pricing and import fees, yet do not have control over quality or time of arrival. The best way to circumvent this cycle—unaffordable diagnostic tools that take a long time to arrive—is to bring the knowledge and manufacturing to the local level. Our local manufacturers consistently noted that small investments in infrastructure would go a very long way. The initial cost of investing in the infrastructure for local manufacturing may seem burdensome, but creating labs and making way for local manufacturing will be more cost-effective in the long run and create a sustainable manufacturing system.

Economic benefits

Investment in local diagnostics manufacturing has the potential to go beyond just benefits to the health care system; it can contribute to economic growth in the region. The establishment of local manufacturing facilities creates job opportunities, fosters technological innovation, and promotes knowledge transfer. It reduces dependency on imported diagnostic products, saves foreign exchange reserves, and creates a more sustainable health care system.

“Firstly, I think it’s infrastructure development; if we have infrastructure, we are able to create jobs and reduce unemployment.”
— Founder of an African diagnostic test development company

Bringing diagnostics manufacturing to the local level brings in local talent and local knowledge of these disease areas. It creates opportunities across the value chain—from production and assembly to research and development—leading to a more sustainable transfer of skills and knowledge to keep African health systems moving smoothly.

Local diseases, treatment, and knowledge

Africans know what diseases impact their countries most. Diagnostics manufacturing jobs are disease specific, meaning each company will be tailored to create diagnostic tools that address a specific disease or set of diseases. Africa is a host to a large number of infectious diseases, such as malaria, tuberculosis, and cholera. Often these diseases, and the way they impact African countries, are unique. African decision-makers know what works best for the people in their respective countries.

“Africa is well-known for poverty, disease, epidemics and it’s the immediate market. Malaria is a big killer in Africa, and it makes sense for an African manufacturer to manufacture malaria diagnostics.”
— CEO of a South African diagnostics development and manufacturing firm

Having diagnostic tools manufactured in-country allows medical providers to be proactive in their defense against ongoing threats of infectious diseases rather than responsive after an outbreak has occurred. People will specialize in learning the skills relevant to diagnosing local diseases and stay in that area. Investing in this skills transfer allows for local capacity-building and autonomous health care systems.

People across the continent of Africa face hurdles when it comes to accessing health care. Diagnostic testing is the cornerstone of health care and can assist in detecting disease, help serve the population, and save lives. To support a healthy population, LMICs must have better, more reliable access to diagnostic testing. Increasing local manufacturing will accomplish this goal and have tangible benefits, including healthier populations and a more sustainable health care system.

Through its Boosting Local Supply Security Initiative (BLiSS) portfolio, PATH is working with partners to identify gaps in the market and opportunities to increase access to diagnostics in LMICs. PATH recently hosted a convening with prospective investors from 14 different organizations, who discussed the importance of local manufacturing and presented investment cases for the local manufacturers we spoke to. Across the board, investors noted that these companies had the passion, drive, and market knowledge to make concrete health impacts in the region.

These manufacturers are strongly rooted in sub-Saharan Africa. They all share a passion for improving the health and livelihood of the people in their country, and because they live, work, and train there, they have learned through experience what works best for them. Universally, our local manufacturers stated that small investments would have a huge impact on their companies’ ability to expand.

Learn how PATH is working to secure investments for local manufacturers and make equitable diagnostic testing a reality.