The Pharmaceutical Industry in South Africa 2023

Challenges

Growing concentration of wholesale and retail pharmacy supply. Low regulated medicine price increases in the context of high international inflation. Poor economic growth constraining consumer spending on healthcare. Reduced government budgets for medicines restricting local opportunities in the face of cheaper international competition. South Africa’s dependence on imported active ingredients. Sustaining local vaccine manufacturing in the face of declining demand.

Introduction

More than 80% of South African pharmaceutical manufacturing and distribution revenue is from the private sector. State purchases of pharmaceuticals are declining, and manufacturers’ margins are under pressure due to low regulated price increases for scheduled pharmaceuticals in a high inflation environment. In the retail sector Clicks and Dis-Chem have wholesale volume advantages and an ever-increasing footprint. Consumer spending patterns have forced consolidation in the retail sector, the growth of private label sales, growth in convenience formats, and diversification into new services and products. There has been a flurry of investments in localising vaccine raw material and finished dose manufacturing, although the sustainability of these initiatives is far from secure.

Opportunities

Cannabis cultivation, processing and medical product manufacturing. Rapid growth in generic sales making medicine more affordable. Strong R&D and advanced manufacturing capabilities may attract investment-.

Outlook

The pharmaceutical industry is well developed and supported by strong R&D and advanced manufacturing capabilities, including biotechnology manufacturing facilities. The Department of Health’s affordable medicines programme has been instrumental in lowering scheduled pharmaceutical prices, particularly in the public sector. Investments in vaccine manufacture have begun to address South Africa’s exposure to vulnerabilities and dependence on active pharmaceutical ingredient and vaccine imports. These investments have strengthened South Africa’s position as the hub for sub-Saharan African pharmaceutical research, development, and supply. However, vaccine demand has dropped and doses are being donated to African countries. Margin pressure is expected to grow as the economy remains poor and restraints on consumer spending intensify. The implementation of the National Health Insurance is likely to put further pressure on manufacturers and wholesalers to reduce medicine prices.

Report Coverage

This report on the pharmaceutical industry in South Africa provides comprehensive information on the manufacturing, wholesale and retail subsectors, price regulation, medical cannabis, market shares, notable multinational and local players and corporate actions. There are profiles of 128 companies including local dominant players Aspen Pharmacare and Adcock Ingram, multinationals such as Bayer, GlaxoSmithKline and Pfizer and retailers Clicks and Dis-Chem and other players such as Nativa.

Trends

A shift from reactive medicine to preventative healthcare resulting in demand for immunity-building vitamins, tonics, minerals and supplements. Focus on research and development, particularly drugs and therapies targeting COVID-19, HIV/Aids, TB, malaria, cancer, and chronic diseases. Growing pressure on pharmaceutical companies to improve access to healthcare by making medicines more affordable. Increased focus on localisation, including local sourcing of inputs and the development of local manufacturing capacity. Recovery of demand as elective surgery and procedures and illnesses such as flu return to pre-pandemic patterns. Small community pharmacies are finding it difficult to compete with large retail businesses.