The South African pharmaceutical industry, like many developing countries, faces many significant developments and new challenges. Some of these challenges and developments include the growth of generic medicine and the proposed National Health Insurance (NHI) scheme which is set to have major implications for the pharmaceuticals industry.
In addition, increased regulation and legislation, such as single exit price, the dispensing fee, the Consumer Protection Act and the Medicines and Related Substances Control Act will continue to impact on the marketing, distribution and packaging of pharmaceuticals.
However, a recent research study by RNCOS indicates that the South African pharmaceuticals industry is set to grow at an approximate Compound Annual Growth Rate (CAGR) of 22% during 2010-2013. Despite drug inflation and the recession, the new research report, “South African Healthcare Market Analysis”, indicates robust growth for this period.
In a separate research report by market analysts GBI Research, they predict that the South African pharmaceutical market will grow at a CAGR of 9.2 per cent from US$3.8 billion in 2011 to $7 billion in 2018.
Once dismissed as low-profit, the country’s pharmaceutical market is now regarded by many as having great potential and is drawing the attention of some key industry players. The optimistic outlook can be attributed to heavy investment in the private sector.
The extensive research report by RNCOS identified several factors including the growing burden of disease and increased public healthcare spending for advancing the use of high-priced drugs.
In the coming years, a large number of drugs will lose their patents, which is expected to create higher demand for primary healthcare drugs such as generics, antibiotics and over-the-counter drugs. Likewise, the GBI research report identified lucrative government contracts for HIV/AIDS, tuberculosis and diabetes medication as key drivers for the industry.
South Africa has the highest proportion of people with HIV/AIDS in the world. 2010 figures indicate that over 5 million residents have the virus and 40% of deaths in 2010 were HIV/AIDS-related. The government receives international support for antiretroviral (ARV) supply and other initiatives to help people living with the disease from organisations such as the Global Fund, the President’s Emergency Plan For AIDS Relief (PEPFAR) and the EU. The result is lucrative government contracts awarded to companies that provide appropriate treatments for the HIV/AIDS pandemic, Tuberculosis and other diseases.
While pharmaceuticals are a big component, medical equipment is also required to provide treatment for a range of chronic illnesses that are becoming more widespread. For example, diabetes is hereditary but also a result of poor diet and requires a glucometer to test blood sugar levels and a needle and syringe to administer insulin. Attributed to air pollution and other causes, asthma is another chronic illness on the rise, which requires an inhaler and nebulizer in the more severe cases.
The two reports parallel each other by providing insight into the role of the government as a regulator. Currently, the government is in the process of structuring the South African Health Products Regulatory Authority (SAHPRA) which will replace the Medicines Control Council (MCC). SAHPRA, the new regulatory body, will be responsible for speeding up the drug registration process. SAHPRA will have more power and a greater range of responsibilities such as the approval and licensing of pharmaceuticals and medical devices, as well as carrying out evaluations for safety and efficiency.
This is hailed as a move in the right direction by many including the Southern African Clinicians Society, who previously condemned the MMC’s lengthy registration process for making it difficult to introduce cheaper generic drugs. This was highlighted as a major obstacle to Fixed Dose Combinations (FDCs) for HIV/AIDS treatment.
Despite all these challenges, the South African healthcare industry is in the initial stages of development and has immense growth potential. The forecast is based on the high demand for hospital services and healthcare professionals and South Africa’s dependence on imported pharmaceuticals. This sets the stage for the private sector to build infrastructure and manufacturing facilities. Based on current market trends, industrial developments and competitive landscapes, the South African pharmaceuticals industry, and healthcare as a whole, has a bright future ahead.