New Market Research Report: South Africa Pharmaceuticals & Healthcare Report Q2 2013

From: Fast Market Research, Inc.
Published: Mon May 06 2013

The Ministry of Health announced this quarter it would increase 2013 drug manufacturing prices by a maximum of 5.8% in the private sector. This is below expectations, and in addition to the continued depreciation of the Rand, should be seen as an opportunity for local drugmakers to shift focus towards increasing exports to emerging markets in order to drive long-term revenues. Although the government favours local drugmakers in tender allocations, increasing generic drug competition and downward pressure on drug prices, due to the influx of Indian and Chinese drugmakers, will see key players like Aspen Pharmacare struggle to maintain local market share.

Headline Expenditure Projections

* Pharmaceuticals: ZAR30.45bn (US$3.84bn) in 2012 to ZAR34.01bn (US$3.78bn) in 2013; +11.7% in local currency and -1.5% in US dollar terms. Forecast slightly higher than Q113 due to revision of historical numbers.
* Healthcare: ZAR271.40bn (US$33.07bn) in 2012 to ZAR295.28bn (US$32.86bn) in 2013; +8.8% in local currency terms and -0.6% in US dollar terms. Forecast slightly lower than Q113 due to revision of historical numbers.

Full Report Details at

Risk/Reward Rating

South Africa's Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is the case for all other countries in BMI's proprietary system, which ranks pharmaceutical markets according to their attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. South Africa has a RRR score of 55.5 out of 100, making it the sixth-most attractive pharmaceutical market in the Middle East and Africa.

Recent Developments

March 2013

The University of Cape Town (UCT)'s Drug Discovery and Development Centre (H3-D) entered an agreement with the Novartis' Institutes for BioMedical Research (NIBR). The collaboration aims to develop a Food and Drug Administration (FDA)-level clinical study site in Cape Town to carry out proofof- concept studies of new leads developed at H3-D. Under the agreement, H3-D will source lead compounds from Novartis for the development of medicines for tuberculosis (TB). It will also conduct joint programmes on malaria research with the Singapore-based Novartis Institute of Tropical Diseases.

February 2013

Indian drugmaker Cipla bid US$500mn, or ZAR10 (US$1.08) per share to acquire the remaining stake in South African partner Cipla Medpro. Prior to this bid, Cipla had paid ZAR8.55 (US$0.92) per share for a 51% stake in Cipla Medpro. Shareholders are scheduled to decide on the latest acquisition offer during a meeting on April 30 2013.

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