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South Africa Pharmaceuticals and Healthcare Report Q1 2008
Business Monitor International, Feb 2008, Pages: 84
The South Africa Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on South Africa’s pharmaceuticals and healthcare industry.
South Africa’s US$3.34bn pharmaceutical market continues to display dynamism to match its rapid expansion. The market should reach US$5.82bn by 2012 representing a CAGR of 11.8%. Rising demand for pharmaceuticals is expected to be driven by strong economic growth - GDP should itself experience a CAGR of 9.6% over the forecast period - as well as a high infectious disease burden and the growing prevalence of non-communicable diseases.
Despite forecasts of strong increases in drug consumption, we caution that it will be the generics sector that sees the greatest expansion as cost containment measures by the government are set to favour the cheapest treatments. Authorities plan to draw up a new National Health Reference Price List for 2008 for health costs in the private sector, which will increase transparency. Many in the industry see this as a way for the government to exert a downward pressure on pharmaceutical prices. However, observers increasingly concur that something needs to be done to control the rises seen in private health insurance costs that are placing it ever further out of reach of the majority of the population.
The face of the local manufacturing industry is changing fast. Enaleni offloaded the bulk of its consumer health arm at the beginning of November 2007. Tiger Brands hopes to have its pharmaceutical interest Adcock Ingram sold, or spun off as is currently looking more likely, by March 2008. Meanwhile, South Africa’s largest drugmaker Aspen signed a wide ranging strategic partnership with India’s Strides
Arcolab in Q408 part of which will see it expand into Latin America through a share in Strides Latina. All three players now have antiretroviral (ARV) ranges after Adcock launched its products in early 2007. Consequently, the government HIV/AIDS drug tender in April 2008 should be hotly contested this time around.
Anglo-Swedish multinational AstraZeneca sold off its packaging plant in Alrode. AstraZenecas exit has been on the cards for some time - ever since it started to phase out manufacturing in 2000 - however, we see the move as stemming from the drugmaker’s own troubles rather than as representing a wider symptom of problems in the market.
For Q108, the author has overhauled its Business Environment Ratings methodology. The new system ranks South Africa’s business environment sixth out of 14 markets surveyed in the Middle East and Africa (MEA) region. South Africa scores strongly due to its large market size in regional terms and favourable growth forecast. However, it is held back by slow population growth and an unfavourable regulatory environment when compared with some Middle Eastern markets.
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