It won't be long before Coronavirus shuts down local supply chains

Covid-19 is changing our lives. For the first time, I decided that it was important to have a small bottle of sanitiser to clean my hands at several intervals.

By the time I made the decision, I was too late– there wasn’t any sanitiser on the shelves. Since the advent of Covid-19, global supply chains have been hit hard.

It is getting worse in sensitive industries like health. Several countries are curtailing exports of essential drugs in favour of their own citizens in the event that the disease continues to spread.

China’s role in the manufacture of pharmaceuticals is critical, considering the fact that the country produces more than 80 percent of ingredients used in pharmaceutical manufacturing globally.

The few month of production disruption caused by the Coronavirus in China have thrown the manufacturing of pharmaceuticals into a spin.

Kenya’s nascent pharmaceutical industry imports 70 per cent of its ingredients from China and India.

For as long as the virus was restricted to China, ingredients could be sourced from its competitors such as India and Europe.

However, India as of March 3, 2020, issued orders restricting the exports of pharmaceutical ingredients and formulations.

The European Union has also asked member countries to restrict exports of supplies and equipment necessary to combat the coronavirus.

These pronouncements will lead to serious shortage of not only the essential supplies but also of other medicines as a result of disrupted supply chains, especially from China, which dominates the market.

This will lead to predictable behaviour. When people realise a potential supply disruption, they resort to panic buying while others seek to hoard and re-sell at exorbitant prices.

What the policymakers aught to be doing at the moment is not to wait until we are in a crisis.

They must have data at their fingertips. The data must include which drugs will be affected most, what is the consumption patterns of, say, essential cancer drugs and those for diabetes, hypertension, etc.? what are the sources, the lead time as well as distribution channels?

Without the data, we run the risk of making haphazard decisions that may hurt the people in the long run. The Kenya Pharmaceutical Board Chairman, Dr Jackson Kioko, promised that Kenya would ban exports of drugs due to declining stocks.
He did not, however, clarify as to what will trigger a formal ban that other countries have already made.

Studies show that the Kenyan pharmaceuticals market is worth Sh100 billion, 80 per cent of which is prescription drugs.

Although Kenya exports 50 per cent to the COMESA region and 75 per cent to East African Community, most of these exports are re-exports from India and China.

The impact of Kenya banning exports will have far reaching implications in the region. Even if the country doesn’t ban exports, disruptions in China and a ban in India will impact much of Africa.

LESSONS

What are the implications of this emerging scenario? What lessons will Africa learn from the potential crisis?

The impact of total disruptions in the manufacture and distribution of drugs will have far-reaching implications in Africa. It will impact not just the economic growth but also the social and political development in the continent.

Africa has itself to blame from not having muscled enough capacity in the manufacture of pharmaceuticals.

We watched India fight its way to enhance local production of pharmaceuticals and the transfer of related technologies.

The country today is the capital of generics manufacturing and scaling up to research and development and becoming a manufacturing powerhouse.

A 2017 World Health Organization report, Indian Policies to Promote Local Production of Pharmaceutical Products and Protect Public Health, noted:

In the 1960s, Indian policy-makers identified distortions in the domestic pharmaceutical market, and in 1970 decided to eliminate pharmaceutical product patent protection. Local scientists were able to reverse engineer pharmaceutical compounds manufactured in industrialized countries. Local entrepreneurs built manufacturing facilities; refined manufacturing technologies; and produced and sold increasingly large volumes of pharmaceutical products that were subject to patent protection elsewhere.

The emerging coronavirus crisis should be a wake-up call to Africa to re-think its policies that will protect public health in the continent.

During crises, countries think of their citizens first. The rate at which the environment is coming under pressure means that more serious health crisis will emerge. Unless Africa developed her capacities to cope, it will end up failing in protecting her citizens.

In the meantime, the looming shortage of medicines can create problems of our own making like cartels hoarding medicine and hiking the prices.

Although the Kenya National Drug Policy clearly stated that the government will “ensure the constant availability of safe and effective drugs to all segments of the population” the policy is silent on hoarding.

We do not know yet the extent to which Covid-19 will disrupt supply chains but we can plan now to avoid an unnecessary self-inflicted crisis of drug unavailability.

National Emergency Response Committee on Coronavirus should demand data now and if the legal framework is inadequate, let Parliament pass the law to protect citizens at this time of emergency.

The writer is a professor of entrepreneurship at University of Nairobi’s School of Business.