Cuba's economy is concentrated in very few products, and many of those products have a high ubiquity meaning they are exported by lots of other countries. In 2019, cigars, sugar, and rum accounted for 47% of Cuba's total exports. Although the diversification opportunities for Cuba are limited, the country has a bright opening in the pharmaceutical industry.
A country's wealth is intimately connected to knowledge. The Economic Complexity Index (ECI) makes it possible to measure the concentration and diffusion of knowledge. Since 2006, Cuba's ECI has been declining and is now only higher than Haiti and Nicaragua in North America.
At its peak in 2006, Cuba's ECI was the result of a more diverse economy, with exports that included medicine, medical apparatus, and nickel. What happened with these industries?
Cuba has developed a relatively sophisticated pharmaceutical sectored medical instruments (1), initially to produce medicines for its population and, more recently, to trade with other countries. For example, in 2005, a small lab at the University of Havana won the World Intellectual Property Organization (WIPO) Gold Medal Award for developing the world's first synthetic vaccine against influenza type B. Another example is a vaccine for lung cancer developed by the Center for Molecular Immunology, Cuba's first biopharmaceutical product to earn the FDA permission to conduct clinical trials in the US.
However, due to the US trade embargo, Cuba's pharmaceutical and medical instruments exports have struggled to find new markets and depend on few trade partners. For example, Cuba's pharmaceutical exports vanished as Venezuela's economy collapsed.
One of Cuba's major exports is nickel concentrate. After the collapse of the Soviet Union, Cuba exported its nickel to Canada. Specifically, to a Canadian company, Sherritt International. However, as the nickel comes from mines appropriated during the Cuban Revolution, and the US could not import any products made with nickel concentrate from Cuba, Sherritt International was penalized. In 2018, for example, Tesla's battery maker, Panasonic, suspended its cobalt supplier, Sherritt International, over concerns that part of its cobalt comes from Cuba (2). At first, China substituted part of those markets, but it has imported less during the past few years.
In the same year (2006), Cuba's oil imports from Venezuela at subsidized prices dropped. This event was particularly problematic, as the state-owned oil company Cuba Petroleos has four refineries in the country, and the biggest one process only Venezuelan crude oil (3).
The diversification opportunities of Cuba are limited but there is a shining opportunity in the pharmaceutical industry. Cuba has a complex pharmaceutical industry that produces medicines and medical equipment. This industry supplies goods and technologies that comply with international quality standards (4), including prophylactic and therapeutic vaccines, innovative biopharmaceutical products for cancer, cardiovascular disease (CVD), neurology, generic drugs, and natural and traditional medicines.
In addition, the country has invested in developing a homegrown scientific and technical expertise focused on pharmaceutical research and development (R&D), with 2438 patents registered outside Cuba and more than 2640 patent registration applications pending worldwide. Despite its harmful effects, the U.S. embargo on Cuba pushed the country to research, develop and produce its pharmaceutical products (5). The complexity of this industry has allowed Cuba to become part of the select group of countries (6) that make vaccines with more than 90% efficacy - Novavax in Germany, Pfizer-BioNTech and Moderna in the United States, and Sputnik V in Russia. Cuba's Covid-19 vaccine Soberana 2, made by the state-run biopharmaceutical corporation BioCubaFarma and proven 91.2% efficacy in late-stage clinical trials, will provide the country an opportunity to show its talents to the World.
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(1) Tancer RS. The pharmaceutical industry in Cuba. Clin Ther. 1995 Jul-Aug;17(4):791-8. doi: 10.1016/0149-2918(95)80056-5. PMID: 8565042. https://pubmed.ncbi.nlm.nih.gov/8565042/
(2) Pratima Desai, Makiko Yamazaki, Reuters. https://www.reuters.com/article/us-tesla-cuba-cobalt-exclusive/exclusive-teslas-battery-maker-suspends-cobalt-supplier-amid-sanctions-concern-idUSKBN1K92Q9
(3) U.S. Energy Information Administration, July 2016 https://www.eia.gov/international/analysis/country/CUB
(4) Biopharma Dealmakers (Biopharm Deal) ISSN 2730-6283 https://www.nature.com/articles/d43747-020-00522-5
(5) IHS Markit, 18 September 2012 https://ihsmarkit.com/research-analysis/cubas-advances-in-biotech-a-developing-country-with-a-highly-developed-biotech-sector.html
(6) Marc Frank, Reuters July 8, 2021 https://www.reuters.com/business/healthcare-pharmaceuticals/cuba-says-second-covid-vaccine-soberana-2-boasts-912-efficacy-2021-07-09/