Executive Summary

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South Africa has one of the most developed pharmaceutical markets in the Middle East and Africa (MEA) region – only Turkey's market is larger. Pharmaceutical spending was US$3.08bn in 2006, and BMI forecasts this will rise to US$4.62bn by 2011.

Market growth will be hampered by a series of cost-containment measures introduced by the government. Authorities plans to draw up a National Health Reference Price List, which will increase transparency in the private health sector. However, many in the industry see this as a way for the government to exert downward pressure on pharmaceutical prices.

Demand for antiretrovirals (ARVs) will remain high due to the country's position at the centre of Africa's HIV/AIDS pandemic. However, funding for drugs will remain a problem, since the majority of patients have low incomes, so are reliant on state-healthcare.

The government is due to announce a new ARV tender in Q108, something that has already seen local manufacturers jockeying for position. Rapidly growing Enaleni Pharmaceuticals will be hoping for a large slice of the contract. As will Adcock Ingram – in the process of being decoupled from the Tiger Brands Group – which launched its own range of branded-generic ARVs earlier this year.

South Africa became the first developing country to join the Pharmaceutical Inspection Convention and Co-operation Scheme (PIC/S) in July, which sets out stringent good manufacturing practice (GMP) guidelines. Most multinationals operating in South Africa already comply with the scheme. However, a number of local drug makers, including Enaleni are not yet up to standard. Enaleni chose to close its main manufacturing plant for two months between July and September to speed up the upgrade.

South Africa remains in joint sixth position in BMI's updated MEA Business Environment Rankings for Q307. The country benefits from a relatively stable political climate and large market size. However, its limited potential for growth, and strong domestic manufacturing sector, which includes Aspen Pharmacare, one of the world's top-20 generic manufacturers, serve to hold down the market's score.

Contents

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Chapter 1 - Executive Summary

South Africa Economic SWOT

South Africa Business Environment SWOT

Chapter 2 - South Africa: Business Environment Ranking

Table: Business Environment Ranking: Middle East & Africa

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - South Africa: Market Summary

Chapter 4 - Regulatory Regime

Intellectual Property Environment

Pricing & Reimbursement Issues

Chapter 5 - Industry Developments

Healthcare Sector

HIV/AIDS

Tuberculosis

Pharmaceutical Sector

Table: PIASA Membership

Company Developments

Table: Results Of South Africa HIV/AIDS Drug Tender, March 2005

Chapter 6 - Industry Forecast Scenario

Overall Market Forecast

Table: South Africa Drug Market Forecast Indicators

Key Growth Factors – Industry

Table: Health Expenditure Indicators

Prescription & OTC Market Forecasts

Table: South Africa Prescription Drug Market Forecast Indicators

Table: South Africa OTC Drug Market Forecast Indicators 2004-2010

Generics Market Forecast

Table: Generic & Branded Drugs Forecasts

Export/Import Forecasts

Table: South Africa Export & Import Trade Forecast Indicators

Key Risks To BMI’s Forecast Scenario

Chapter 7 - Competitive Landscape

Profiles: Leading Foreign Companies

GlaxoSmithKline

Sanofi-Aventis

Pfizer

Bayer

Roche

Profiles: Leading Indigenous Manufacturers

Aspen Pharmacare

Adcock Ingram

Chapter 8 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Chapter 10 - Country Snapshot: South Africa Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Competitive Landscape for Middle East & Africa Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of Middle Eastern and African Pharmaceutical & Healthcare Sources

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BMI's Middle Eastern & African Pharmaceutical & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceutical & healthcare industry associations, chambers of commerce and company reports. Information sources include: