GSK commits $165M toward 5 more plants in Africa

GlaxoSmithKline CEO Andrew Witty

GlaxoSmithKline ($GSK) already has manufacturing operations in three African countries but says that is not enough as it makes a major new commitment to the continent. It will spend £100 million on a handful of plants as part of a campaign to help African countries build the facilities and know-how to manufacture the drugs they need at costs they can bear.

GSK CEO Andrew Witty announced on Monday that the U.K. drugmaker is looking to partner with countries and will invest about $166.5 million in as many as 5 new facilities focused on secondary manufacturing to help them produce medicines like antibiotics and HIV meds. It is scouting sites in Rwanda, Ghana and Ethiopia. GSK already has manufacturing plants in Nigeria, Kenya and South Africa.

It is also looking for ways to simplify its supply chain, using regional hubs to reduce shortages and get more GSK products into those areas that are often tough to reach. It said it sees these steps as ways to help Africa reduce its reliance on imported medicines, improve its supply chain security and cut costs for production and delivery over time.

New-generation drug plants need trained workers, and so GSK is also putting up money to pay for 25 academic chairs in African universities to boost education in everything from engineering to public health. These investments are part of a £130 million ($216.4 million), 5-year buildup that also includes money for R&D and for training community health workers. It expects to add 500 jobs to the 1,500 workers it currently has there. "Our long-term goal is to equip Africa to discover, develop and produce the medicines required for Africa," Witty told the 5th EU-Africa Business Forum in Belgium.

Other drugmakers are also putting bets on Africa, a region they see as having significant upside potential to go along with its significant challenges. Sanofi ($SNY) last year said it would spend €70 million ($95 million) to build a third manufacturing facility in Algeria that at full capacity will be able to turn out 100 million units a year. It also opened a €20 million, 12,000-square-meter distribution center in Morocco. Middle East-based Hikma is partnering with MIDROC Pharmaceuticals, and the two will spend about $22.3 million to build a manufacturing plant and distribution facility in Ethiopia which is expected to be operating by 2017.

- here's the announcement