BMI View: South Africa's disease profile will be a central factor supporting pharmaceutical market growth , with the longstanding HIV/AIDS epidemic ensur ing this therapeutic area remains a key area of commercial interest . In addition, the rising chronic disease burden , combined with government incentives to improve access to treatment, will support a greater multinational presence over the long term. Although treatments targeting these non-communicable conditions will contribute more to overall pharmaceutical sales, South Africa's healthcare system will remain underdeveloped in key respects - thereby preventing a large-scale uptick in multinational drugmaker interest.
Headline Expenditure Projections
Pharmaceuticals: ZAR45.5bn (USD3.56bn) in 2015 to ZAR46.9bn (USD3.18bn) in 2016; +3.3% in local currency terms and -10.6% in US dollar terms. Forecast decreased from last quarter.
Healthcare: ZAR359.0bn (USD28.1bn) in 2015 to ZAR385.7bn (USD26.2bn) in 2016; +7.4% in local currency terms and -7.0% in US dollar terms. Forecast decreased slightly from last quarter.
|f = BMI forecast. Source: National sources, BMI|
|Pharmaceutical sales, USDbn||3.334||3.561||3.182||3.240||3.372||3.572||3.855|
|Pharmaceutical sales, % of GDP||0.95||1.14||1.10||1.06||1.03||1.00||0.98|
|Pharmaceutical sales, % of health expenditure||10.8||12.7||12.2||11.7||11.4||11.2||11.0|
|Health spending, USDbn||30.786||28.124||26.151||27.632||29.500||31.923||35.026|
South Africa has strong longer-term commercial potential because of its sizeable population and economic development. However, the impact of currency depreciation and a worsening economic outlook have hurt its short-term growth prospects. In Q117, South Africa's moved to 6th position in the matrix (compared to 9 th in the previous quarter), with a score of 52.6 out of 100.
In September 2016, AstraZeneca completed its commercialisation agreement with Aspen Global (Aspen Pharmacare) for rights to AstraZeneca's global anaesthetics portfolio outside of the US. The agreement covers seven established medicines: Diprivan (propofol), EMLA (lidocaine+prilocaine) and five local anaesthetics with combined yearly revenue of USD592mn. The agreement includes an upfront payment of USD520mn, USD250 in product sales-related payments and double digit percentage royalties on sales.
South Africa's ministry of health has set a new target date of April 2017 for the transition to the South African Health Products Regulatory Agency (SAHPRA), which replaces the Medicines Control Council (MCC). The impending establishment of SAHPRA will reduce drug approval times in the country and give a boost to the local pharmaceutical industry.
By the end of 2016, the South African ministry of health is expected to roll out a new tuberculosis (TB) treatment programme that will allow South Africans to access the latest drug-resistant TB treatment. The department is currently in talks with Japanese drugmaker Otsuka Pharmaceutical to negotiate access to its TB drug Deltyba (delamanid). In total, the ministry has allocated ZAR740mn (USD45.97mn) for expanding the TB programme in the country.
BMI Economic View
South Africa will continue to move toward fiscal consolidation in the coming quarters, though sluggish growth and a challenging political environment will ensure this occurs at a more moderate pace than government estimates in the Medium Term Budget Policy Statement suggest. In the absence of key structural reforms, we believe that a downgrade of the country's foreign currency debt to junk status is still a significant risk.
BMI Political View
The November 26, a no confidence motion brought against President Jacob Zuma at the National Executive Committee (NEC) highlights the deep level of discord within the ruling African National Congress (ANC), and further reinforces our view that political unrest is likely to remain elevated in the run-up to the party's December 2017 National Elective Conference.
The South Africa Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's South Africa Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the South Africa pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for South Africa, to test other views - a key input for successful budgeting and strategic business planning in the South African pharmaceutical and healthcare market.
- Target business opportunities and risks in the South African pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in South Africa.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.