The pharmaceutical market of South Africa

With over 10% of the entire population infected, South Africa is among the nations with the highest rates of HIV/AIDS in the world. This creates great potential for growth in the antiretroviral (ARV) drug market, boosted as government looks into distributing more of these drugs through the public system. The government has also proposed a National Health Insurance (NHI) policy to provide healthcare for all South Africans. This is expected to become law in 2011, with all institutional and organizational structures necessary to implement NHI put in place by March 2012. The NHI will require compulsory contributions from all citizens, with the exceptions of the poor and unemployed.

The South African Department of Health reviews pharmaceutical prices on a regular basis and most recently has increased them by 13.2%, a move welcomed by the Pharmaceutical Industry Association of South Africa (PIASA), saying that the increase helped combat increasing margin pressures experienced in 2008 mainly due to imported raw materials against a weakening local currency. Although the government wants to back the local industry with protectionist measures, it could be tempted to import more drugs from countries like India and China, which can provide a higher volume of drugs than local companies for the same price.

The South African pharmaceutical market is set to grow at a constant rate over the coming years. According to industry estimates, generics have overtaken branded pharmaceuticals in terms of market volume and show no signs of stopping, particularly when considering that the demand for cheaper essential drugs, including ARV drugs, is set to grow. Local manufacturers, notably Aspen Pharmacare and Adcock Ingram, almost exclusively produce generics. Aspen completed the acquisition of the pharmaceutical division of an Australian company in January 2011. In September 2010, Ranbaxy opened a new manufacturing facility in Johannesburg in an effort to become a more significant provider to the state.