Business Case for Investing in African Life Sciences

The Baobab tree, native to African savannas and Madagascar, is known as the ‘tree of life’ which, in many countries, represents a metaphor for the continent.

The tree lives continuously for centuries, sustaining entire communities through its nutritious fruit and the ecosystems it supports.

Large companies that have emerged in Africa’s transformational economic boom, are regarded as playing a similar role in their local economies, contributing disproportionately to their nations’ employment, productivity, innovation, and tax revenues.

Just as the baobab tree creates conditions for smaller plants to thrive, large companies have created new networks of suppliers, distributors, and service providers that are driving broad-based economic development across the continent.

Africa now has around 400 companies with annual revenues north of $1billion, but it needs more. In sectors like medical technology, biotech and pharmaceuticals, the gap between what exists and what is needed is particularly acute.

Opportunities to do business there have never been greater but for many Western companies, misperceptions about its size and an enduring perception of the continent as a charity case contribute to a costly reluctance.

Companies that fail to recognise this transformation risk not only missing one of the 21st century’s great growth opportunities but also ceding the field to more agile competitors.

The demographic and epidemiological shift

Africa’s population has surpassed 1.5billion and is projected to reach 2.5billion by 2050, increasing the continent’s share of the global population from 10% in 1960 to nearly 28% by mid-century.

By 2030, half of the continent’s population will live in urban areas. This urban concentration creates attractive markets for sophisticated goods and services, including advanced healthcare.

By 2030, the continent’s healthcare market alone is estimated to reach $259billion – a figure that should command the attention of any global health company. Yet Western executives consistently underestimate this potential.

Arguably, the most significant transformation affecting African healthcare is the dramatic epidemiological shift toward non-communicable diseases (NCDs).

Diabetes, cardiovascular disease, cancer, and chronic respiratory conditions are rapidly rising, driven by urbanisation, changing diets, and increased life expectancy.

The productivity losses from NCDs in Africa now exceed $1trillion, creating an urgent mandate for both governments and the private sector to invest in long-term management rather than emergency interventions.

Consider diabetes alone, the International Diabetes Federation estimates that the number of Africans living with diabetes will rise from 19million in 2019, to 47million by 2045, a 150% increase.

Managing this epidemic requires insulin, glucose monitoring systems, diagnostic equipment, patient education platforms, and specialised healthcare providers.

These are not ‘charity’ products, they are sophisticated medical technologies for which millions of Africans are willing and increasingly able to pay.

Diagnostics will play a central role in this transition. Managing chronic diseases such as diabetes, cardiovascular disease and cancer requires large-scale deployment of laboratory testing, point-of-care diagnostics and digital monitoring systems. For medical technology companies, this represents not only a clinical necessity but a major commercial opportunity.

The response from Western companies has been lukewarm at best. As the United Nations Industrial Development Organisation (UNIDO) pointed out in its comprehensive guidelines on pharmaceutical manufacturing in Africa, the continent currently imports approximately 95% of its pharmaceutical products.

This dependency persists despite 10 countries alone, Egypt, Ghana, Kenya, Morocco, Nigeria, Rwanda, Senegal, South Africa, Tanzania, and Tunisia, representing an estimated 75% of the total African pharmaceutical market.

The manufacturing paradox

The Covid pandemic laid bare the dangers of Africa’s pharmaceutical dependency. As wealthy nations hoarded vaccines and restricted exports of essential medicines, African countries found themselves vulnerable in ways that were both medically dangerous and politically untenable.

The response has been a continent-wide push for local pharmaceutical manufacturing, supported by initiatives like the African Vaccine Manufacturing Accelerator (AVMA), launched by Gavi, which is incentivising private investment in local production capacity.

The targets are ambitious. The Partnership for African Vaccine Manufacturing aims for 60% of local demand to be produced on the continent by 2040 – up from less than 1% today.

The African pharmaceutical market is projected to grow at compound annual growth rate (CAGR) of between six and eight per cent by 2029.

Biotech startups raised over $500million in 2023 alone, signalling that the sector is shifting from a niche to an investment frontier.

Several countries are emerging as manufacturing hubs. Senegal, under its ‘Emerging Senegal Plan’, aims to domestically manufacture 50% of its pharmaceutical products by 2035.

 It is one of six African Union member states (along with Egypt, Kenya, Nigeria, South Africa, and Tunisia) receiving mRNA technology for local vaccine production through the WHO technology transfer hub programme.

The Institut Pasteur de Dakar, in partnership with the Mastercard Foundation and with €75million in financing from the European Investment Bank, is constructing a vaccine manufacturing facility expected to produce up to 300million doses annually.

South Africa, Egypt, Kenya, Nigeria, and Morocco are similarly positioning themselves as regional pharmaceutical hubs, with Saudi Arabia and the UAE in the broader region showing significant investment through initiatives like Vision 2030.

Fifty-Four Markets, Not One

One of the biggest mistakes Western companies make is to treat Africa as a single market. The continent comprises 54 countries with vastly different regulatory regimes, income levels, disease profiles, and healthcare infrastructures.

A strategy that works in South Africa, with its sophisticated private healthcare system and regulatory authority, would not work in Nigeria, where the market is larger but infrastructure more challenging and distribution more complex.

Western companies seeking investment opportunities must be prepared to navigate an array of different national regulatory authorities, each with its own requirements, timelines, and standards.

As of December 2024, only eight African national regulatory authorities, Egypt, Ghana, Nigeria, Rwanda, Senegal, South Africa, Tanzania, and Zimbabwe, achieved WHO maturity level 3, indicating a stable, well-functioning regulatory system. The remainder are at earlier stages of development, with varying capacity and resources.

This complexity is not a reason to avoid Africa, but rather to approach it strategically. The most successful companies will be those that identify priority markets based on clear criteria, regulatory maturity, market size, infrastructure quality, and strategic position within regional economic communities.

The business case

Another significant barrier to Western pharmaceutical investment in Africa is what might be called the ‘charity mindset’ – an assumption that African healthcare is primarily a matter of humanitarian aid rather than commercial opportunity.

This manifests in product strategies focused on ‘essential’ medicines, rather than innovative therapies, in pricing models based on ability to pay rather than value delivered, and in distribution approaches that rely on donor programmes rather than commercial channels.

Such an approach does a disservice to both African patients and Western companies. African patients deserve access to the same innovative medicines and technologies available elsewhere; they are not well-served by a system that treats them as second-class consumers.

The companies that succeed in Africa over the next two decades will not be those that treat the continent as a philanthropic afterthought but rather firms that approach it as one of the last major growth frontiers in global healthcare.

As African life-science sectors expand, one constraint increasingly cited by investors is access to experienced leadership teams capable of scaling manufacturing, navigating regulatory frameworks and building international commercial partnerships.

The choice for Western life sciences companies is straightforward – engage seriously with Africa’s emerging markets today, or watch others build the relationships, manufacturing capacity and regulatory expertise that will define the industry tomorrow.

*Ivor Campbell is chief executive of Snedden Campbell, a specialist recruitment consultant for the global medical technology industry.

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