Rwanda is making strides toward becoming a significant player in the global pharmaceutical industry, with its Social Security Board (RSSB) embarking on a third attempt to invest in the sector. This initiative involves deploying pension funds into a high-potential yet uncertain industry, demonstrating Rwanda’s commitment to achieving both economic growth and improved healthcare outcomes.
The Rwanda Social Security Board (RSSB) recently marked a significant milestone by moving closer to realizing its third attempt to invest in pharmaceuticals. This comes after the first two efforts ended unsuccessfully. However, this time around, there is renewed confidence that the outcome will align with the country’s expectations for profit and development.
RSSB and Akagera Medicines Africa’s Breakthrough
This week, Akagera Medicines Africa, a pharmaceutical firm in which RSSB holds a majority stake, took a significant leap forward by securing its first-ever commercial financing deal with the European Investment Bank (EIB). The €2 million ($2.17 million) funding, sourced through the EIB’s Global Gateway Initiative, will aid Akagera in accelerating the research, development, and production of vaccines aimed at treating infectious diseases such as HIV, Lassa Fever, and Ebola.
The financing agreement with the EIB is a critical turning point for Akagera. Unlike previous funding initiatives involving partnerships and grants, such as those from the Bill and Melinda Gates Foundation and the U.S. National Institute of Health, this deal moves Akagera closer to becoming a fully commercial entity. The EIB funds are expected to enable Akagera to develop technical expertise, expand infrastructure, and move more swiftly toward its goal of becoming a prominent clinical company. Michael Fairbanks, CEO of Akagera, emphasized that the financial backing would help Akagera become a “clinical company” and expedite its journey toward building specialized infrastructure in Africa to support vaccine development.
Rwanda’s Vision for Pharmaceutical Growth
The Rwandan government, through its investments in Akagera, aims to play a vital role in Africa’s burgeoning biotech industry. Rwanda envisions becoming a biotechnology hub on the continent, advancing both the economic and healthcare sectors. RSSB’s Chief Investment Officer, Philippe Watrin, highlighted that Akagera Medicines is expected to achieve full commercial viability by 2027 or 2028. The firm will focus on selling mRNA vaccines, a cutting-edge technology that played a significant role during the COVID-19 pandemic, as well as other drugs currently under development.
This investment strategy aligns with Rwanda’s broader goal of transitioning to a knowledge-based economy. The country’s leadership has set its sights on becoming a center for scientific and technological advancements in healthcare, contributing to global health security while also generating socio-economic returns for its population.
RSSB’s Past Investment Challenges in Pharmaceuticals
While this third investment represents renewed hope, RSSB’s earlier ventures into the pharmaceutical sector were far from successful. The organization first invested $16 million in La Rama Pharmaceuticals, a start-up venture that ultimately failed to deliver the anticipated returns. This misstep subjected RSSB to public criticism for what some saw as poor investment decisions.
RSSB’s second attempt was even more contentious. Between 2017 and 2018, the social security body invested $40 million in U.S.-based Leaf Pharmaceuticals. However, this deal led to legal trouble, with RSSB filing a lawsuit against Leaf Pharmaceuticals in the Court of Chancery of Delaware. RSSB alleged that Leaf had falsely represented ownership of certain patents, resulting in financial losses. The case remains unresolved, casting a shadow over RSSB’s previous forays into the pharmaceutical industry.
Despite these challenges, RSSB remains undeterred and is more confident that its investment in Akagera Medicines Africa will yield the desired outcomes. According to Watrin, RSSB has taken numerous steps to ensure this investment is well-positioned for profitability. While he did not disclose the specifics of these measures, Watrin emphasized that the EIB’s involvement in the financing deal was a form of external validation that boosted confidence in Akagera’s future success.
The Role of the European Investment Bank and Global Gateway Initiative
The EIB’s Global Gateway Initiative plays a crucial role in Akagera’s current strategy. The initiative is designed to facilitate impact investments in emerging markets, focusing on both equity and debt transactions. For Akagera, the €2 million funding from this program will be instrumental in accelerating vaccine research and development. Additionally, the funds will help Akagera build the necessary technical expertise and infrastructure to compete in the global pharmaceutical market.
The significance of the EIB’s involvement cannot be understated. Not only does the EIB bring financial resources, but its participation also enhances Akagera’s credibility on the international stage. The EIB is renowned for its impact-driven investments and has a long history of supporting healthcare initiatives in emerging markets. For Rwanda, partnering with such a reputable international institution signals the country’s serious commitment to positioning itself as a key player in Africa’s pharmaceutical sector.
Differentiating from Regional Peers
RSSB’s investment strategy stands in stark contrast to that of its regional peers. Pension funds across East Africa typically focus on more traditional asset classes such as government securities, corporate bonds, and equities. Many of these funds have not ventured into specific industries like pharmaceuticals due to the high risks and uncertainties involved. In contrast, RSSB is willing to embrace these risks, driven by Rwanda’s vision of becoming a biotech hub.
Currently, about 60% of RSSB’s assets are invested in fixed-income securities. However, its equity investments are structured to deliver both financial returns and socio-economic benefits for Rwandans. This dual approach allows RSSB to align its investment strategy with the country’s national development goals, ensuring that investments contribute to the broader public good.
Rwanda’s Pharmaceutical Ambitions on the Global Stage
Rwanda’s broader ambitions in the pharmaceutical sector extend beyond Akagera Medicines. The country aims to become a regional hub for pharmaceutical manufacturing and distribution, a goal that has been pursued through various public-private partnerships and international collaborations. Rwanda’s government has prioritized investment in biotechnology as a way to diversify its economy and position itself as a leader in healthcare innovation in Africa.
The global pharmaceutical market is vast and highly competitive, but there are significant opportunities for emerging players, particularly in the production of vaccines and treatments for diseases that disproportionately affect developing countries. With its strategic investments, Rwanda hopes to capture a share of this market while contributing to global health outcomes.
Conclusion: A Promising Future for Akagera and Rwanda
RSSB’s third bid in the pharmaceutical industry represents a bold and ambitious move by Rwanda to position itself as a leader in Africa’s biotech sector. Despite the failures of previous investments, there is optimism that Akagera Medicines Africa, with the backing of the European Investment Bank and other partners, will achieve commercial success.
The global pharmaceutical industry offers vast opportunities, but also significant risks. However, with Rwanda’s strategic vision and the increasing demand for vaccines and medicines in both Africa and beyond, Akagera is well-positioned to capitalize on these opportunities. Rwanda’s investment in this sector reflects not only a desire for economic growth but also a commitment to improving healthcare for its population and contributing to global health security.
By 2027-2028, Akagera Medicines Africa could emerge as a leading player in the global pharmaceutical market, fulfilling Rwanda’s ambitions of becoming a biotech hub and transitioning to a knowledge-based economy. For RSSB, this represents not only an investment in a burgeoning industry but also a step toward fulfilling Rwanda’s long-term economic and health goals.
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Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
23rd October, 2024
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