By Virusha Subban, Partner and Head of Indirect Tax, Baker McKenzie Johannesburg
In June 2022, the World Trade Organization (WTO) announced an agreement to waive the intellectual property rights that usually apply in the manufacturing of vaccines, to assist the production of COVID-19 vaccines in developing countries. The measures were proposed to the WTO by the South African and Indian governments, with other developing countries supporting the move. The waiver agreement received unanimous support from WTO member countries. The agreement by multilateral parties indicates the level of global support and potential for partnerships to enable vaccine production in Africa.
The agreement means that governments in developing countries will be able to authorize the production of much needed vaccines or their ingredients, substances and elements, and use patented processes without patent holder permission during the pandemic. According to the World Health Organization, the continent has fully vaccinated just 15% of the adult population.
The agreement has been lauded for its role in boosting the global pharmaceutical supply chain and healthcare sector manufacturing capacity on the continent. In 2020, the African Union African Peer Review Mechanism published a report on Africa’s governance response to COVID-19, which highlighted Africa’s supply chain challenges and overreliance on foreign trade and suggested that the continent boost its manufacturing capacity to build a strong African supply chain that could not be weakened by global blockages.
Africa needs a strong vaccine manufacturing capacity to tackle this and future pandemics. According to the International Finance Corporation (IFC), around 70 to 90 percent of the medicines consumed in Sub-Saharan Africa are imported. The Brooking Institution noted that Africa represents 25% of the global demand for vaccines, but imports 99% of its vaccine doses, with the 1% produced on the continent mostly relegated to the fill and finish steps.
Many WTO members have been actively involved in assisting countries in Africa to upscale their healthcare systems and boost local vaccine production. According to the European Commission, the European Union (EU), its member states, and the European development finance institutions, together known as Team Europe, are Africa’s top partners and the largest providers of Official Development Assistance in Africa. One of the aims of Team Europe has been to assist the continent with its pandemic recovery by investing in resilient healthcare systems and local vaccine production. The EU has provided a total of EUR 100 million in humanitarian assistance to support the rollout of vaccination campaigns in Africa, as well as to help ensure access to vaccines for vulnerable people, including in conflict-affected or hard-to-access areas.
At the Forum on China-Africa Cooperation in 2021, it was announced as part of China’s medical and health program that China would provide one billion doses of COVID vaccines to Africa, with 600 million of those doses being a gift, and 400 million produced by Chinese companies and via joint ventures with African countries.
According to USembassy.gov, the United States (US) and its partners had donated more than 50 million doses of COVID-19 vaccines to African nations by the end of 2021. It was also reported that a US pharmaceutical firm planned to build a vaccine production facility in Africa that could produce up to 500 million doses annually. The US has invested USD 100 billion to strengthen health security in sub-Saharan Africa over the past 20 years.
The UK Government reported on its website that by the end of 2021, GBP 105 million in UK emergency aid has been pledged to vulnerable countries to tackle COVID-19, with a strong focus on Africa. By the end of 2021, 30 million vaccines donated by the UK had reached four continents and provided COVID-19 protection in African countries including Angola, the Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Malawi and Rwanda.
Last year, the IFC, the French Development institution PROPARCO, the German development finance institution DEG and the US International Development Finance Corporation (DFC) finalized a EUR 600 million joint financing package to enable the Aspen Group to produce vaccines in South Africa. A Financial Institutions team from Baker McKenzie advised the Aspen Group on this transaction. The IFC previously noted that this transaction was the largest investment and mobilization in the healthcare sector the organization has led globally to date. The South African-headquartered pharmaceutical company is playing a leading role in producing COVID-19 vaccine treatments and therapies for use across Africa.
Four vaccine initiatives are already underway in South Africa. The South African Government has noted that this WTO agreement will waive IP protections for Covid-19 vaccines to stimulate African industrialization, boost trade potential and unlock manufacturing capacity and innovation across the content. The Minister of Trade and Industry, Ebrahim Patel, said there would now also be an increased focus on promoting African vaccine producers to global procurers.
The WTO agreement will promote investment in the African healthcare and life sciences sector and supporting infrastructure, and ultimately improve reciprocal trade between the continent and its major trading partners. Most importantly, the increased manufacturing capacity for pharmaceutical products will drastically improve the ability of African governments to deliver efficient healthcare solutions for their citizens in the years to come.