BMI View: A compulsory licence for Aluvia in South Africa remains unlikely given that country's reluctance to resort to such measures. The request puts pressure on AbbVie to address supply issues, but more importantly reminds South Africa's g overnment that expectations over the stalled efforts to amend the country's patent laws remain high. The g overnment has made assurances that movement will be seen in Q116; failure to do so will risk a political storm.
Headline Expenditure Projections
Pharmaceuticals: ZAR39.79bn (USD3.67bn) in 2014 to ZAR43.41bn (USD3.44bn) in 2015; +9.1% in local currency terms and -6.2% in US dollar terms. Forecast in US dollar terms revised slightly downwards from last quarter.
Healthcare: ZAR325.2bn (USD29.98bn) in 2014 to ZAR351.06bn (USD27.82bn) in 2015; +8.0% in local currency terms and -7.2% in US dollar terms. Forecast in US dollar terms revised slightly downwards from last quarter.
|f = BMI forecast. Source: National Sources, BMI|
|Pharmaceutical sales, USDbn||3.765||3.668||3.440||3.192||3.334||3.475||3.612|
|Pharmaceutical sales, % of GDP||1.03||1.05||1.06||1.07||1.07||1.08||1.08|
|Pharmaceutical sales, % of health expenditure||12.0||12.2||12.4||12.4||12.5||12.5||12.5|
|Health spending, USDbn||31.332||29.978||27.818||25.654||26.701||27.744||28.791|
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 Q116, South Africa dropped from seventh to ninth position in the matrix compared to previous quarter, with a score of 49.0 out of 100.
Key Trends And Developments
South African pharmaceutical company Adcock Ingram has posted a 6.5% year-on-year (y-o-y) increase in turnover to ZAR5,528mn (USD420.43mn) in FY14/15, ended September 30, while gross margin increased to 38% compared with 33% y-o-y and headline earnings rose to ZAR270.4mn (USD20.56mn) compared with a loss of ZAR170mn (USD12.92mn) in FY13/14.
In an Interpol co-ordinated operation, South African police have reportedly closed three counterfeit drugs plants and seized 150 tonnes of fake medicines during the week ended September 19 during the operation, named Giboia II, which involved thousands of police and customs officials in Angola, Malawi, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
Endo International has completed its acquisition of a broad portfolio of branded and generic injectables and established products focusing on pain, anti-infectives, cardiovascular and other specialty therapeutics from a subsidiary of Aspen Holdings (Aspen Pharmacare); Endo announced the acquisition plans in May under the terms that Aspen Holding would receive a one-time payment of around USD130mn.
BMI Economic View
The South Africa Reserve Bank (SARB) chose to hike rates by 25 basis points (25bp) at its last meeting of 2015 and we expect another 25bp hike in Q1 2016. In Q1, food inflation will add to unsupportive oil price base effects to cause a breach of the top of the inflation target band and more importantly, dislodge inflation expectations.
BMI Political View
The November 13 terror attacks in Paris will prompt greater international cooperation against Islamic State. They will also raise security higher up the agenda in Western states and their allies, which will be a further blow against the functioning of the EU's Schengen area, and they may force the West to cooperate more closely with Russia. However, a large-scale ground offensive against Islamic State is unlikely in the near term. Moreover, the war against Islamist extremism is likely to last at least another 10-20 years.
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.