Executive Summary

GAVI's September 2025 Board Retreat confronted an unprecedented challenge: achieving the same vaccine equity outcomes with $2.1 billion less procurement budget. With 70% of the $3 billion funding gap targeting vaccine procurement, GAVI must deliver $500 million in "theoretical savings" from price reductions and lower-cost products that have not yet materialized.

This analysis demonstrates why incremental market adjustments cannot structurally deliver these savings at the required scale, and how African vaccine manufacturing - enabled by regulatory harmonization, coordinated through proven pooled procurement mechanisms, and supported by government procurement preferences - provides the most robust, accelerated, and self-sustaining pathway to transform GAVI's theoretical savings into market reality.

GAVI's Impossible Equation: Lower Prices with Reduced Budgets

GAVI's Market Shaping Strategy 6.0 acknowledges a fundamental contradiction: the Alliance needs lower vaccine prices to bridge its funding gap, but reduced procurement budgets undermine manufacturers' incentives to offer competitive pricing. The introduction of vaccine envelopes—fixed-value allocations that shift pricing decisions to countries—attempts to solve this by making affordability a country concern.

However, this mechanism only succeeds if genuinely competitive alternatives exist. Africa's vaccine import dependency exemplifies this challenge: the continent imports 99% of its vaccines while contributing only 3% to global production, creating artificial scarcity that established manufacturers exploit for pricing power.

Why Incremental Market Fixes Cannot Deliver $500 Million in Savings

Before examining transformational solutions, it's essential to understand why traditional market shaping approaches cannot bridge GAVI's funding gap at the required scale and timeline.

The Mathematics of Market Manipulation vs. Market Creation

GAVI's $500 million savings target represents approximately 15-20% of its annual vaccine procurement budget. Achieving this through donor-led price negotiations would require:

• Sustained 15-20% price reductions across GAVI's entire vaccine portfolio
• Voluntary commitments from incumbent suppliers to maintain these reductions long-term
• Competitive pressure sufficient to prevent price recovery once negotiations conclude

Structural Limitations of Donor Price Negotiations

Historical evidence demonstrates why voluntary price negotiations deliver diminishing returns:

1. Market Concentration Enables Price Recovery

With limited suppliers controlling key vaccines, manufacturers can simply recover negotiated discounts through future tender cycles or alternative markets.

2. Dependency Creates Negotiation Weakness

Africa's 99% import dependency means countries have no credible alternatives during price negotiations. Manufacturers understand this fundamental asymmetry.

3. Scale Mismatch

Even aggressive 5-10% price cuts across GAVI's portfolio cannot mathematically reach $500 million in sustained savings without competitive alternatives forcing structural repricing.

4. Time Horizon Incompatibility

Voluntary commitments typically last 2-3 years, while GAVI needs sustainable savings through 2030 and beyond.

The Artificial Scarcity Problem

Africa's exclusion from vaccine production creates what economists call "artificial scarcity" - supply constraints that exist not due to resource limitations, but due to market structure. During COVID-19, this dynamic was starkly visible: Africa received less than 4% of doses despite representing 17% of global population, not because vaccines couldn't be produced, but because production was geographically concentrated in higher-income markets.

This scarcity enables pricing power that no amount of donor negotiation can sustainably overcome. The fundamental issue isn't negotiation tactics - it's the absence of genuine competitive alternatives.

Why Market Creation Succeeds Where Market Manipulation Fails

In contrast to negotiated price reductions, local manufacturing creates structural competitive pressure through:

• Genuine Alternative Supply: Manufacturers cannot ignore competitors with real production capacity and market access
• Eliminated Import Dependencies: Local production removes the negotiation asymmetry created by 99% import dependency
• Sustainable Cost Advantages: 15-30% reductions through eliminated duties, reduced transportation, and currency hedging
• Scale Economics: Regional market integration creates sufficient demand to support multiple competitive suppliers

African Vaccine Manufacturing: The Supply Diversification Solution

Local vaccine manufacturing addresses GAVI's crisis through fundamental market mechanisms rather than voluntary price commitments. African manufacturing delivers the $500 million target through three reinforcing dynamics:

Direct Cost Reductions (15-30%)

• Eliminated import duties and taxes
• Reduced transportation and cold chain costs
• Currency hedging against exchange rate volatility
• Localized supply chain efficiencies

Competitive Market Pressure

• Forces incumbent suppliers to rationalize pricing strategies
• Creates sustainable downward pressure across all vaccine categories
• Establishes credible alternatives for future procurement negotiations

Market Diversification Benefits

• Reduces supply concentration risk that enables pricing power
• Creates multiple sourcing options for procurement entities
• Enables regional specialization and competitive differentiation

The COVID-19 pandemic demonstrated both the risks of concentrated supply and rapid scale-up potential. Africa's exclusion highlighted import-dependent vulnerability, while mRNA vaccine development showed how quickly new production capacity can achieve market impact when supported by appropriate demand guarantees and regulatory frameworks.

Regulatory Harmonization: The Enabling Infrastructure

• Effective vaccine manufacturing requires regulatory systems that ensure quality while enabling market access. Africa's regulatory landscape has transformed significantly, with eight countries now operating at WHO ML3 standards (Egypt, Ghana, Kenya, Morocco, Nigeria, Rwanda, South Africa, Tanzania). The African Medicines Agency provides continental coordination mechanisms that can accelerate mutual recognition agreements.
• Regulatory harmonization serves two critical functions for market creation:
• Expands Market Access: Mutual recognition among ML3 countries immediately creates regional markets sufficient to support competitive manufacturing
• Reduces Regulatory Risk: Predictable approval pathways encourage investment in local production capacity

Pooled Procurement: Coordinating Demand for Market Impact

Pooled procurement mechanisms demonstrated effectiveness during COVID-19 response through initiatives like AVAT (African Vaccine Acquisition Task Team). These mechanisms can coordinate demand across multiple countries to:

• Guarantee minimum purchase volumes that support competitive pricing
• Leverage collective negotiating power to secure advantageous terms
• Create predictable demand signals that encourage manufacturing investment
• Enforce ministerial commitments to purchase African-made vaccines

The African Pooled Procurement Mechanism (APPM) provides the institutional framework to scale these successes across routine immunization, building on demonstrated capabilities and existing relationships.

Government Procurement Preferences: Ensuring Market Uptake

• Government procurement preferences create the demand certainty necessary for manufacturing investment. Over 40 African health ministers have committed to purchasing locally-made vaccines, but implementation requires systematic coordination through:
• Regional procurement frameworks that prioritize African suppliers
• Technical assistance for procurement entities to navigate quality assessments
• Financing mechanisms that support government purchase commitments
• Performance monitoring to ensure preference implementation

Implementation Pathway: Emergency Market Development

GAVI 6.0's timeline requires treating this as emergency market development. The theoretical savings gap must be closed by 2030, requiring African manufacturing capacity delivering competitive products within five years. Prefabricated manufacturing systems provide acceleration needed, achieving WHO prequalification within 18-24 months compared to 3-5 years for traditional development.

GAVI's African Vaccine Manufacturing Accelerator (AVMA) provides $1 billion in demand guarantees, but effectiveness depends on coordinated regulatory harmonization, pooled procurement mechanisms, and government procurement preferences. Regional integration through AfCFTA creates the market foundation for sustainable operations with specialized country roles.

Measuring Success: From Theoretical to Actual Savings

Success requires market performance indicators demonstrating actual progress toward GAVI's $500 million theoretical savings target:

Affordability Metrics:

• Price reductions achieved for key vaccines compared to traditional suppliers
• Total procurement savings delivered against the $500 million target
• Cost competitiveness of African-manufactured products in international tenders

Market Health Indicators:

• Number of qualified African suppliers competing for GAVI tenders
• Government adoption rates of African-manufactured vaccines
• Regional trade volumes in locally-produced vaccines

The Strategic Choice: Market Transformation or Managed Decline

GAVI 6.0's fiscal constraints force a fundamental choice. Continuing traditional approaches with 30% less procurement budget will inevitably reduce access and undermine equity objectives. The donor-dependent model has reached its structural limits, as demonstrated by the mathematical impossibility of achieving $500 million in sustained savings through negotiation alone.

African vaccine manufacturing, enabled by regulatory harmonization, coordinated through pooled procurement, and supported by government procurement preferences, offers market transformation that delivers sustainable affordability through competition rather than dependence on voluntary price reductions and donor subsidy escalation.

This represents the most robust, accelerated, and self-sustaining pathway to vaccine equity - one that creates rather than manipulates markets, builds rather than depends on goodwill, and establishes sustainable competitive dynamics rather than temporary price concessions.

Conclusion: From Theoretical Savings to Market Reality

GAVI's $500 million theoretical savings target represents more than a budget gap—it's a test of whether donor-dependent vaccine access models can evolve to meet 21st-century fiscal realities. The analysis demonstrates conclusively why incremental market adjustments cannot deliver savings at this scale, while African vaccine manufacturing provides the structural market changes necessary to make theoretical savings actual reality.

The foundation exists: eight African countries operate at WHO ML3 standards, the African Medicines Agency provides continental coordination, AVAT demonstrated effective procurement, and 40+ health ministers committed to purchasing African-made vaccines. The remaining question is whether global health leaders will