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South Africa Pharmaceuticals and Healthcare Report Q3 2008
Business Monitor International, June 2008, Pages: 96
South Africa Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on South Africa's pharmaceuticals and healthcare industry.
South Africa’s pharmaceutical and healthcare markets are going through a period of regulatory upheaval. On the approvals front, a new South African Health Products Regulatory authority has been proposed to replace the Medicines Control Council (MCC); on the pricing front, the government has drafted plans to more strictly regulate private hospital prices; and on the business environment front, the South African Healthcare Charter sets out guidelines for Black Economic Empowerment (BEE). Despite the upheavals, South Africa’s pharmaceutical market remains one of the most promising in Africa. BMI estimates that the market was worth US$3.03bn in 2007 and it should reach US$4.41bn by 2012. The drug market should continue to grow head of inflation despite controls limiting pharmaceutical price rises, indicating that there will be significant volume growth in the market.
This view is reflected in our updated Business Environment Rankings for Q308. South Africa remains in third position out of 13 countries surveyed in the Middle East & Africa thanks to its large market and strong growth prospects. South Africa’s score is held back by a slow approvals process. Under the present system it can take 24-36 months to register a pharmaceutical. However, the proposed regulatory overhaul aims to cut this to 12 months for a new chemical entity (NCE).
The local pharmaceutical industry is relatively strong in spite of regulatory challenges and competition from multinationals. Parent company Tiger Brands continues to hold plans to spin off its pharmaceutical interest Adcock Ingram through a separate listing on the Johannesburg stock exchange (JSE). However, this has been delayed by Adcock Ingram’s naming in an investigation by the Competition Commission into allegations of price fixing in government hospital tenders.
The results of South Africa’s new HIV/AIDS drug tender are due to be announced in Q308. The main criteria for winning a slice of the contract remains price. However, a local manufacturing presence and black empowerment policy will also play a part in the decision.
Healthcare funding remains a key issue in South Africa. Despite significant increases in the Department of Health’s budget (expected to be 10% a year to 2010), the affordability of the fight against HIV/AIDS remains a concern. Meanwhile, private healthcare costs are expected to be more strictly regulated as the government looks to encourage more people into the private health insurance market.
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