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South African pharma –a powerful destination for multinational investment
South Africa’s pharma industry is at the forefront of scientific advancement and constantly provides the country with innovative medical treatments. Industry players also invest in the latest research and development and support employment and skills transfer initiatives. These are just some of the reasons why South Africa is perfectly positioned to become a regional hub for pharmaceutical development in Africa.1
Bada Pharasi, CEO of the Innovative Pharmaceutical Association of South Africa (IPASA), explains: “Innovative multinational pharmaceutical companies (MNCs) are increasingly looking at South Africa as a regional hub for managing pan-African commercial operations and centralising functions across the territory. By encouraging this high of IPASA value-adding sector to base its regional headquarters here, the socio-economic benefits will be disproportionately greater than the local South African market value, with enhanced employment, knowledge transfer and investment value.”
Compared to other Sub-Saharan African countries, the relatively good infrastructure and business-friendly environment of South Africa have resulted in a significant and increasing number of MNCs viewing our country as a reliable base from which to support other African member states in need. This ensures enhanced access to the pipeline of innovative therapies of MNCs, benefitting more patients across the country and contributing additional GDP.2
A CRITICAL KNOWLEDGE BASE
“A sizable portion of the regional revenues generated by MNCs are being led from operations within South Africa by senior and regional management roles, which would otherwise be based in other countries,” Pharasi explains.
Innovative pharma MNCs are increasing their spend and sponsorship on healthcare programmes, which target other member states from within our country. They do this by investing in existing skills and partner with local specialists and the scientific community to train and up-skill experts in those other countries.2
Between 2016 and 2021, the number of healthcare programmes conducted from South Africa which targeted other countries, grew by 10.2% annually.2
MEDICAL INNOVATION SAVES LIVES
“Pharmaceutical member companies of IPASA are constantly working on innovative medicines to treat illnesses,” comments Pharasi, adding that although some illnesses currently have no cure, advanced medical treatment is improving and extending the lives of patients, while new treatments are being developed all the time.
The association’s member companies are also developing therapies to prevent a variety of conditions previously considered untreatable, including infectious diseases, various forms of cancer and neurological disorders.
Medicines developed by innovative pharma benefit millions of South Africans on a daily basis. For example, the country’s mortality rates for HIV/AIDS and TB fell by 59.2% and 55.7% between 2007 and 2017.3 Currently, at least 60 new medicines are in the research and development pipeline to treat TB.3
Chronic leukaemia treatment has also seen increased survival rates thanks to the drug that was created to treat chronic myeloid leukaemia (CML). It was later found that this drug was even more beneficial when treatment commenced immediately. With further research, the drug was then shown to be useful in treating other forms of cancer. Patients are now living close to normal life spans and cancer death rates have declined by 27%. Approximately 73% of survival gains in cancer are attributable to new treatments, including medicines.3
In South Africa, non-communicable diseases (NCDs) are responsible for 43% of deaths. Of this, a third of the deceased were people under the age of 60 and many of the cases were related to cardiovascular disease. There are currently over 4 100 new medicines for NCDs in the local researchbased pharmaceutical pipeline, including medicines to treat heart disease, strokes, cancer and more.3
Did you know?
Products from SA’s innovative multinational pharma companies generate substantial revenues for manufacturers, distributors and other suppliers. Since 2016, these revenues have grown annually by 3.6% on average. By the end of this year, these pharma companies will have generated over R20.6bn in revenue for their manufacturing and distribution partners and other direct business partners.
POSITIVELY IMPACTING MANUFACTURING AND INVESTMENT
• Local production among innovative pharma companies is valued at over R17.9bn with investment at R1.3bn, growing at a CAGR of 42.5%.
• These manufacturers make a direct contribution of over R5.4bn to the South African state budget and develop R20.6bn+ in revenue for third party suppliers to the industry.
• Innovative pharma companies in SA generate R56bn of direct manufacturing and importation costs and R11.1bn of indirect costs.
• Investment in knowledge transfer projects by IPASA member respondents is estimated at R82bn. Overall, operational expenditures made by the respondent multinational pharma companies between 2016 and 2021 amounted to R154.5bn+1. Source: Longitudinal Study Commissioned by IPASA, March 2020
NOVEL IDEAS INCREASE ACCESS TO MEDICINES
IPASA member companies are also responsible for bringing innovative, quality medicines to the South African market, through their exploration and development efforts.
For example, Novartis introduced Novartis Access, which is a portfolio of affordable medicines to treat chronic diseases in lower-income countries. In a first-of-its-kind portfolio approach within the healthcare industry, Novartis is increasing the availability of 15 medicines to treat cardiovascular diseases, diabetes, respiratory illnesses and breast cancer, by making them more affordable.
Another example is that of MSD, a healthcare and pharmaceuticals group, which has a vision to eradicate cervical cancer. The company is evolving from just treating cancer to implementing a more preventative approach. This development is of great significance, considering that almost one-third of deaths in Sub-Saharan Africa are due to cervical cancer and yet only 14% of the world’s women live in the region.5 MSD has active programmes treating cervical cancer across 13 of the 35 countries in which it operates, yet these have been disrupted by the pandemic.
In terms of augmenting global efforts in the fight against COVID-19, MSD is focusing on an investigation for an antiviral drug. The drug would not replace vaccinations – instead it would work hand in hand with them. It’s currently in the phase three clinical trial stage for the treatment of non-hospitalised patients with confirmed COVID-19.5
INVESTMENT, SALES AND R&D
“MNCs spend a high percentage of revenue on R&D compared to other sectors. This R&D delivers social and health benefits as well as financial stimulus for the country’s economy,” notes Pharasi. “South Africa’s volume and proportion of clinical research activity sets the country apart from its peers in the Middle East and Africa, as a more scientifically developed economy and society. This makes South Africa a favourable destination for investment, education and access to innovative health solutions and improves our country’s ‘soft power’ within Africa and in the global pharmaceutical community.”
Apart from providing innovative medical treatment to South Africa and the African continent, it is clear that MNCs play a vital role in our country’s economy and are essential to the provision of sustainable and inclusive economic growth.6 •
REFERENCES:
1. Footprint Study March 2020. Impact of Innovative Multinational Pharmaceutical Companies Operating in South Africa – Longitudinal Study Commissioned by IPASA
2. Ibid
3. Ibid
4. Financial Mail 2021. Profile: Zwelethu Bashman is Fighting Covid and Cancer, by Patrick Wadula
5. Ibid
6. Footprint Study March 2020. Impact of Innovative Multinational Pharmaceutical Companies Operating in South Africa – Longitudinal Study Commissioned by IPASA
IPASA – https://ipasa.co.za
