The Republic of South Africa has a diverse and complex pharmaceutical market. A
look into the healthcare structure unveils the fact that healthcare has been limited or
practically non-existent during the apartheid regime in South Africa. Majority of the
people had no access to healthcare until the 1990’s. The South African healthcare
system is still in its nascent stage and has huge scope for improvement. Modernised
healthcare facilities were reserved for the white population and the black and rural
communities are slowly developing the healthcare infrastructure. However, the
healthcare structure in South Africa is faced by formidable challenges.

Challenges

It is quite alarming to note that almost 50 percent of the population in South Africa
does have access to the most basic drugs. The most challenging situation exists in
this geographical area where HIV/AIDS is an epidemic and the antiretroviral therapy
(ART) is not accessible due to high pricing. It has been estimated that 5.5 million
people are affected with AIDS by the end of 2005 and the prevalence rate is 18.8%
compared to the global prevalence rate of 1.0%. Almost 1.0 million HIV patients are
in need of ART and this poses the greatest unmet needs prevailing in South Africa.
HIV/AIDS is likely to have a profound impact on the South African education, health
and economic development. This challenge seeks immediate attention and is gaining
political and economic importance on a global scale.

Another challenge facing the healthcare sector in South Africa is the budgetary price
cuts in the public health sector. The government focus on improving the primary care
in South Africa led to the steep budget cuts in public hospital sector. The healthcare
in South Africa has a large public sector and a small private sector. However, the
private sector is gaining momentum and the government is faced with the onus of
integrating these two sectors to ensure societal benefits.

In addition there is a dearth of qualified healthcare professionals to serve the public.
The qualified healthcare professionals migrate to various other countries for financial
benefits. Also, most of them are foreign nationals and the educational system in
South Africa face potential skill crisis. Such a scenario is holding back the growth of
the South African healthcare system. The government has to take up immediate
measures to improve the educational system as the economic growth and
productivity of South Africa runs the risk of stagnation.

The South African pharmaceutical industry is dotted with complex pricing and
reimbursement policies. The Single Exit Price system governs the industry where
imposed price ceilings and annual price revision constrain the growth of the
pharmaceutical products. Flat pricing diminishes the chance of potential growth of
the pharmaceutical products and deters manufacturers from introducing newer
therapeutics.

The Progress…

The South African government has taken notice of the most neglected public
healthcare system and has started to pitch in certain reformation activities. The
department of health is steering the country towards excellent primary healthcare
system ensuring private medical care throughout the country. In addition free
immunisation for tuberculosis, tetanus, hepatitis B, measles and other illnesses has
been provided to the children, especially in rural areas. As a major step towards
meeting the requirement of ART, budget of $1.00 billion was allocated towards ART
over a period of 3 years. Progress has been made in redressing the ART accessibility
challenge. By the end of 2005, 21% of the population who require ART have been
able to access the ART.

The Pricing Committee has proposed International price benchmarking of
pharmaceutical products to ensure that South Africans do not pay higher price for
drugs than their counterparts in other countries. Strict pricing regulations have
spurred the growth of the over the counter (OTC) drugs and generics. The generics
market is booming. The chemists and the pharmacists channel is on a losing battle to
the grocery outlets in the OTC market. The trend in South Africa is moving towards
chain pharmacies. New Clicks- South Africa’s largest pharmacy chain is setting the
trend for others like Shoprite and Pick ‘n’ Pay. The revolution in the healthcare sector
is beginning to spread its wings on the South African insurance sector. Private
medical insurance is garnering significance and the discounts provided by this
insurance are a major driver for the vitamins and dietary supplements market.

The future

A multitude of complex and interacting economic, social and political factors play a
crucial role in South African healthcare industry. The reformations are in the infant
stages and the pharmaceutical industry is likely to experience a boost in the coming
years. In addition, global monetary funding towards improvement of healthcare in
South Africa builds hope among the pharmaceutical participants. The OTC drug
market and the generic drug market are likely to maintain their dominance at least
till the end of this decade.

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