The South African pharmaceutical market was worth over $2bn in 2008. Nearly 75% of pharmaceutical demand in South Africa is met by imports and hence the market value is heavily dependent on currency fluctuations. During 2007-08, the market posted double-digit growth in local currency terms, while declining in US dollar value. Overall sales from the market is expected to pass $3bn in 2012. Factors contributing to growth include the upcoming overhaul of the pharmaceutical regulatory system and healthcare delivery mechanism as well as growth of certain therapy areas in the country.
In general, the replacement of the Medicines Control Council (MCC) with the South African Health Products Regulatory Authority (SAHPRA) and the establishment of a universal healthcare scheme namely the National Health Insurance (NHI) will benefit all companies similarly. The arrival of SAHPRA is being viewed positively by industry organizations as this will lead to expediting drug approvals that translates to faster commercialization and speedier returns on investments. The establishment of a universal healthcare buyer and provider promises increased drug delivery and utilization in the country. However, ramifications in pharmaceutical pricing will threaten margins as bargaining power of a central financier will be significantly higher than the existing fragmented consumer base.
Key features of this report
• Socioeconomic, demographic and epidemiological analysis – Assessment of socioeconomic and demographic features of South Africa. The report also evaluates healthcare delivery parameters in the region.
• Regulatory policy analysis – Insights into the government policy environment relating to pharmaceutical regulation, pricing and reimbursement, and its impact on the industry.
• Sales distribution analysis – Comprehensive analysis of sales distribution in the South African market based on therapeutic classes, brands and companies. The report also analyses the distribution of sales between local players and MNCs operating in the country.
• Market competition/fragmentation analysis – Analysis of market concentration/fragmentation in line with general anti-trust protocols.
• Key events, issues and trends in the South African pharmaceutical market – Impact of key events, issues and trends on the market and Business Insights recommendations to identify resultant opportunities and threats.
Scope of this report
• Quantify disease burden of various communicable and non-communicable pathophysiologic disorders
• Gain a comprehensive understanding of the regulatory, pricing and reimbursement policies and their impact on the industry
• Discover therapy areas with the greatest franchise growth potential and understand the growth drivers.
• Measure the impact of key events, issues and trends in the regulatory landscape, healthcare delivery and therapy areas and be advised with ideas to navigate through the changing environment.
• Forecast sales of all therapy areas through 2014.
Key Market Issues
• Replacement of the MCC by SAHPRA: 2010 will witness the landmark replacement of the MCC with a new authority called the SAHPRA. The SAHPRA is designed to overcome much of the downsides of the MCC. Expedited product approvals and consequent rise in sales is expected.
• The CD4 count criteria for ARV raised from <200 to <350 cells/mm3: The recently announced ‘Comprehensive Plan for the Treatment, Management and Care of HIV and AIDS’ underlines the necessity for extending ARVs to HIV/AIDS patients with <350 cells/mm3. With the implementation of this milestone policy change the South African government intends to ensure ARV availability to over 80% of affected individuals and reduce rate of new infections by 50% by 2011. This presents significant opportunity for ARV manufacturers as volume requirements will nearly quadruple during this period.
• Proposed establishment of the National Health Insurance (NHI): The establishment of a universal health insurance scheme brings to notice opportunities as well threats to the pharmaceutical industry. Opportunities include increased drug utilization and better reimbursement options for expensive medications, while threats include increased pricing pressure.
• GSK grants license of its pharmaceutical business in South Africa to Aspen: GSK granted Aspen licenses to its business in South Africa in return for a stake in the latter. The deal will significantly expand Aspen’s products portfolio, while forming a part of GSK’s global strategy to expand its presence in emerging markets.
Key findings from this report
• The South African pharmaceutical market was worth more than $2bn in 2008. The market depends heavily on imports and hence earnings are quite volatile due to currency fluctuations. Although the market posted a decline in USD terms, growth in local currency was in double digits.
• The proposed establishment of a universal healthcare system poses certain threats to the pharmaceutical industry such as the greater bargaining power of a central funding body, more price regulations and rise in generic utilization.
• South Africa is awaiting a landmark regulatory overhaul in 2010. The replacement of its central regulator, the Medicines Control Council, with a newly designed South African Health Products Regulatory Authority is set to boost pharmaceutical growth.
• Anti-infectives formed the largest therapy area in the country, while antineoplastics formed the fastest growing. The South African ARV tender is the largest of the kind globally and accounts for approximately 10% of the overall market. Recent budget announcements indicate that the value and volume of the tender is set to rise dramatically in the coming years. Positioning with respect to share in the ARV tender significantly affects competitive landscape.
Key questions answered
• What will be the major growth indications/disorders and the accompanying growth drivers in the South African market over 2008–14?
• How do government polices on pharmaceutical regulation, pricing and reimbursement impact the industry?
• What are the implications of the replacement of the MCC with SAHPRA?
• What factors will affect approval and distribution of the third ARV tender due in May-June 2010?
• How will the establishment of the National Health Insurance influence the market?
• What are the current market trends across major therapy segments in South Africa?
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