The pharmaceutical sector is of strategic importance to South Africa, mainly because of the country’s growing need for a guaranteed supply of medicines to treat illnesses such as HIV/AIDS and tuberculosis, according to a major new report.
Supplies of these medicines produced in China and India are unlikely to be sustainable for South Africa because of the growing need for them in the manufacturing countries, says the report, which was commissioned from consultancy Genesis Analytics by the Presidency.
The South African drug industry has been in difficulty for more than a decade, and without changes in public policy, it will probably continue to weaken, warn the report’s authors, Nick Segal and Christopher Maloney, although they add that there is potential for growth, particularly in the infectious disease market.
Problems currently facing the sector include inefficiencies at the Medicines Control Council, which regulates the industry, difficulty in recruiting skilled staff and uncertainties created by government policies which include, in the private sector, controls on mark-ups and international benchmarking of drug prices, plus setting generic drug prices at 40% below those of the branded originators. The authors are highly critical of these pricing policies, stating that “we have found no evidence to support the idea that the pricing proposals will reduce private sector prices so much that people in the public sector will be able to afford to move to the private sector.”
94 pharmaceutical companies are registered in South Africa, but only 10 of them have manufacturing facilities in the country, says the report. 35 production plants in the sector have closed since 1994, and those firms which do produce medicines locally have to import the majority of their raw materials from overseas. The industry’s trade imbalance stood at $830 million in 2005, with imports growing just 9% during 2005-6, says the report which, according to the journal Business Report, was commissioned by the government after it was revealed that medicine imports now represent the fifth-largest contributor to South Africa’s balance of payments deficit. By Lynne Taylor