BMI View: Improvements to South Africa's pharmaceutical distribution procedures will improve the population's access to essential medicines. Moreover, advancements to the country's drug monitoring capabilities will make the country a more attractive destination for local manufacturing over the long term. While South Africa is taking steps to address the distribution of counterfeit medicines, the widespread prevalence of substandard drugs will remain a risk to our outlook for the country.
Headline Expenditure Projections
Pharmaceuticals: ZAR43.41bn (USD3.40bn) in 2015 to ZAR47.48bn (USD3.08bn) in 2016; +9.4% in local currency terms and -9.3% in US dollar terms. Forecast in US dollar terms revised slightly upwards from last quarter.
Healthcare: ZAR359.6bn (USD28.2bn) in 2015 to ZAR387.0bn (USD25.1bn) in 2016; +7.6% in local currency terms and -10.8% in US dollar terms. Forecast in US dollar terms revised slightly upwards from last quarter.
|f = BMI forecast. Source: National Sources, BMI|
|Pharmaceutical sales, USDbn||3.670||3.400||3.080||3.300||3.530||3.740||4.160|
|Pharmaceutical sales, % of GDP||1.05||1.09||1.11||1.13||1.14||1.15||1.16|
|Pharmaceutical sales, % of health expenditure||11.9||12.1||12.3||12.5||12.6||12.7||12.9|
|Health spending, USDbn||30.790||28.170||25.130||26.520||27.990||29.380||32.370|
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 Q416, South Africa's stepped up from 11th to 9th position in the matrix compared to the previous quarter, with a score of 49.9 out of 100.
In June 2016, AstraZeneca entered into a commercialisation agreement with Aspen Global (Aspen Pharmacare) for rights to AstraZeneca's global anaesthetics portfolio outside the US. Under the terms of the agreement, which covers seven established medicines, Aspen will acquire the commercialisation rights for an up-front consideration of USD520mn, milestone and royalty payments.
In September 2016, GlaxoSmithKline announced a series of agreements with Aspen Pharmacare, under which GlaxoSmithKline will divest its anaesthesia portfolio to Aspen for GBP180mn (USD237.4mn) plus milestones of up to GPB100mn (USD131.9mn). In addition, GlaxoSmithKline and Aspen have terminated their collaboration in Sub-Saharan Africa and for Aspen to exercise its option to acquire GSK's remaining thrombosis business in certain retained markets.
In April 2016, Johnson & Johnson officially launched its global public health (GPH) strategy at the opening of its on-the-ground GPH operations in Cape Town, South Africa. Through this global strategy, Johnson & Johnson will mobilise its global public health capabilities and resources behind a unified, multidisciplinary effort. The company's GPH strategy will include early stage disease-specific research, product development, manufacturing and distribution, and education and training resources through its philanthropic efforts.
BMI Economic View
We now expect that the South African Reserve Bank will keep the policy rate on hold in 2016 as a shift toward loose monetary policy in the developed world bolsters the rand and tempers imported price pressures. This will allow the bank to adopt a more accommodative monetary policy stance in the face of persistent sluggish economic growth.
BMI Political View
The re-emergence of rumours that Finance Minister Pravin Gordhan could be arrested suggests increased risk to South Africa's fiscal consolidation efforts and heightens the potential for a credit ratings downgrade. The elevated political uncertainty also suggests that after the rand and South African yields have already begun to reverse course following a sizeable rally in recent months, we could see a further sell off.
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.