Global Dose: Focus on South Africa

Oct. 12, 2020
Africa's high-tech hub of pharma manufacturing

Nearly two decades ago, a dark cloud lifted over South Africa’s relationship with the global pharma industry. 

The drama started in 1998 when 39 pharma companies waged a legal battle with the South African government over a new law that would allow the country to import generic versions of branded antiretrovirals (ARVs) — the drug cocktails responsible for prolonging the lives of patients with HIV. The drugmakers argued that the law infringed on patent rights, and according to The New York Times, closed factories, canceled investments in South Africa, and sued the country’s government. 

But three years later, after a global public outcry and accusations that the industry was keeping South Africans from gaining affordable access to the HIV medications, the coalition of pharma companies agreed to drop the suit. When the news broke, government supporters uncorked champagne bottles and danced through the courtroom.

The decision was a turning point — not just for South Africa’s patients, but also for its pharma and health care industries. Although South Africa remains at the epicenter of the global HIV pandemic, its ongoing struggles with the virus and its push to treat the millions of patients living within its borders have also helped pave the way to the country becoming a high-tech hub of pharmaceutical distribution and manufacturing. 

Embracing innovation

Six months after the landmark patent dispute with the drug industry was resolved, South Africa’s home-grown generic drugmaker, Aspen Pharmacare, was permitted to begin producing ARVs from patents licensed from GlaxoSmithKline, the world’s most dominate producer of anti-AIDS medications at the time. Aspen was already the region’s largest generic drugmaker, but thanks to the deals to produce ARVs, the company expanded its reach. 

In 2018, Aspen’s billionaire CEO, Stephen Saad, told CNNMoney that the company delivers daily ARV treatments to 1 million patients and that its efforts to provide ARVs in South Africa is probably Aspen’s “greatest achievement.” 

Today, Aspen boasts a broad portfolio of branded and generic drugs that it produces at 23 manufacturing facilities, and according to Saad, is the No. 1 producer of anaesthetics outside of the U.S. Aspen is among the world’s top 20 generic drug producers and is widely heralded as one of South Africa’s greatest business success stories. 

All told, the pharmaceuticals industry in South Africa comprises more than 200 pharma companies, and is valued at about $3 billion, according to Keeran Ramnarian, a partner/director at PwC. 

South Africa’s pharma industry has yet to make much of a splash on the global market and the majority of drugs exported from larger South African pharma companies, such as Aspen, stay within the African continent. Instead, much of South Africa’s pharma products are sold to the government who distributes them through the country’s local health care plan. 

“Government contracts control the manufacturing landscape,” Ramnarian says. 

Although many multinational companies distribute medicines in South Africa’s pharma market, the local production scene is dominated by generics and mostly focused on the country’s more prominent killers: HIV/AIDS, tuberculosis (TB), and hepatitis A and B, as well as common medications for influenza, pain and other everyday ailments. 

Because there are only two facilities that can produce active pharmaceutical ingredients (APIs), according to McKinsey & Company, local manufacturers rely heavily on API imports to produce finished formulations. All together, about 80-90 percent of the pharmaceuticals on the market are imported, Ramnarian says. 

But while this all might sound like the makings of a low-margin, low-tech industry, Ramnarian says that South Africa’s pharma facilities look a lot more like those in advanced regions than the plants you might expect to find in the developing world. 

On the cutting edge

“Most of the South African pharma companies operate high-tech manufacturing facilities,” Ramnarian says. “Many of these facilities are comparable to modernized facilities in more developed countries with advanced IT platforms, procurement, quality control and communication platforms between service providers.”

In fact, writers at Chemistry World opined last year that because the Southern African Development Community, a regional economic community comprised of 16 member states, has identified flow chemistry as a critical development area, the country could become the next hub for high-tech continuous processing — provided that pharma manufacturers in South Africa continue to cross the digital divide.

The impact of ARVs on HIV in South Africa

South Africa has the largest ARV program in the world, which has had a dramatic impact on the quality of life for patients living with HIV

People living with HIV in South Africa = 7.7 million
Population infected with HIV (aged 15-49)  = 19 percent
Government funding invested in HIV programs = $1.54 billion in 2017 
Portion of HIV patients taking ARVs = 62 percent
Life expectancy in 2010 = 56 years
Life expectancy in 2018 = 63 years

Innovative pharma-based solutions have found their way into patient care settings as well. A PBS NewsHour report from 2016 showed how these advancements were on display inside a Johannesburg clinic called Right to Care. Facing a workload of 15,000 patients a month, the clinic invested in becoming “the most efficient clinic in South Africa,” according to its CEO. Inside, a robotically controlled pharmacy was set up to dispense medications, while ATM-like machines were created to help HIV patients access needed drugs wherever they are in the country. 

“We embrace technology as a nation,” Ramnarian says.

At pharma plants, Ramnarian says that the emphasis on modern technologies has also helped many improve their regulatory standing.

“There are several facilities here that are FDA-approved and that meet GMP standards for the World Health Organization,” he says. 

In 2016, Deloitte also reported that 90 percent of the Africa’s roughly 500 internationally accredited laboratories were located in South Africa, which demonstrates the country’s robust and advanced life sciences R&D infrastructure. 

Despite these strengths, the country’s pharma industry is being confronted with many challenges. 

Bolstering regulations

About two years ago, South Africa swapped out its old drug regulatory agency with a new and improved version called the South African Health Product Regulatory Authority (SAHPRA). Like the U.S. Food and Drug Administration, the mission of SAHPRA involves three pillars of oversight: safety, efficacy and quality. But one of the prime goals with SAHPRA was to create a more streamlined entity that could tackle the country’s enormous backlog of drug applications. 

According SAHPRA, the agency inherited a whopping 16,000 drug applications still waiting for approval from the country’s previous regulator. While some of the applications date back to 1992, about half of them were submitted in the last five years. They also run the gamut of critical, high-priority drugs including treatments for HIV, cancer and TB. 

Naturally, there’s a large impetus to get these drugs through regulatory channels and into the hands of the waiting public, and the pharma industry has been putting pressure on South Africa’s government to deliver these treatments to patients more quickly. 

To meet this challenge, SAHPRA has reportedly set two concrete goals: reduce the regulatory decision timeframe from its average of 1,422 calendar days in 2017 to 275 working days; and clear its backlog within two years. 

 Part of SAHPRA’s strategy involves eliminating applications that are no longer relevant and/or have no commercial interest to its applicants — and in May 2019, the agency reported that it had removed about 3,000 applications that fit that criteria. SAHPRA has also improved its collaboration with other regulatory bodies to leverage their data and evaluations on certain drugs to create an “abridged review” model that streamlines applications. 

Yet, a major roadblock is hovering over SAHPRA’s ability to hit these targets. 

The human factor 

In 2018, SAHPRA reported that it had 178 full-time employees — not enough to speed its regulatory review process. Since 2019, the agency has been on a major hiring drive, seeking to increase its staff to over 450 full-time employees over the next five years. Rather than relying on external reviewers as South Africa’s previous drug regulator had, SAHPRA is hoping to build its internal staff capacity to create more efficient capabilities. In October 2019, SAHPRA reported that its “Backlog Clearance Team” had been onboarded and trained, and that the agency is meeting key milestones on its quest to catch up with drug application reviews.

But the agency has also admitted that it is facing challenges with attracting and recruiting new internal evaluators. Ramnarian says that the skills-shortage situation is a problem being faced by South Africa’s pharma industry as a whole. 

“This is something that is being continuously addressed,” Ramnarian says. “A lot of pharma companies here are investing in training to upscale resources. And there are initiatives at universities offering pharmaceutical degrees. So, there are a lot of public/private initiatives happening to make sure we keep these skills in the country.” 

So far, one of the only multinational companies with a significant manufacturing presence in South Africa is Sanofi, which Ramnarian says has facilities that are just as technologically advanced as other leading-edge plants around the world. And as the country works to improve its pharma expertise and regulatory framework, Ramnarian says that South Africa could become a more sought-after destination for other Big Pharma companies looking to establish manufacturing operations. 

“Companies are attracted to South Africa because we do have a strong infrastructure and a sound regulatory environment,” he says. 

Changes ahead

Given the importance of health care in South Africa, the market potential for pharma is high. Last year, Chemistry World reported that South Africa has the world’s fifth-highest per capita expenditure on pharma — and growth has been steady, especially in the generics segment.

“In the last few years, growth in pharma has been between 5-10 percent — higher than normal inflationary growth,” Ramnarian says. “This is especially true in generics. And as more products are registered, the market will grow even further.” 

Beyond generics, South Africa’s pharma market is also seeing potential growth in emerging therapeutic areas such as heart disease and diabetes. 

With the country’s legacy of apartheid, which set deep divisions in the societal standing of its citizens, the South African government under president Cyril Ramaphosa is also in the process of creating health care policies that will guarantee more equal access to drugs. Ramnarian says that the goal is to implement these health care initiatives within the next five to 10 years, and that the government is already becoming an increasingly larger purchaser of pharma products.

“Pharma companies support this initiative because it will boost their sales,” Ramnarian says. 

Overall, the country has moved far beyond its troubled past with the pharma industry and sees the vital part drugmakers play in improving their way of life. 

“The pharma industry is very key to the economy as a whole,” Ramnarian says. “There is a lot that needs to be done in terms of improving health care and getting drugs to the masses. Pharma plays a big role in that.”

Top image courtesy of Jacques Nel via

About the Author

Meagan Parrish | Senior Editor