
10 JUNE 2019
The pharmaceutical industry in South Africa is privately owned. By inference the state outsources its responsibility to ensure health security to a few individuals who own this multinational companies. The organisation of the pharmaceutical industry in South Africa has budgetary implications because without proper state intervention in this sector prices of medicine remain exorbitant. The ownership of the pharmaceutical sector affects availability, price and access to medicine.
A report of the portfolio committee on economic development titled the DTI’s involvement in the state’s procurement of ARV’s indicates an approximate of 45 billion rand as the market value of the pharmaceutical sector in South Africa in 2014/15. Evident from the report the sector contributes less than 1% to the GDP and creates just under 10 000 jobs relatively low. The question then should be how does private ownership of pharmaceutical industry benefit the country?
It is naive of any government to think private pharmaceutical companies have the best interest of the health of the people at heart. The industry is profit driven like any business its primary role is to maximise returns. In June 2017 the competition commission indicated that Aspen and Pfizer were being investigated for allegedly charging excessive prices for cancer medicines, while Roche and its US-based biotechnology component, Genentech, was suspect to price fixing of breast cancer medication, which included Herceptin and Herclon, this was in contravention of the Competition Act.
These companies obviously informed by the monopoly they enjoy in supplying drugs priced cancer treatment to the value of R 500 000 per year. The pricing was obviously insane but however highlights the view that pharmaceutical companies maximise profit at the expense of people’s health. Our people are too poor to excess such unaffordable and probably the most effective medicine for their health care needs. The government even though it bares the cost of medicine for the population’s health care needs in public facilities, it remains an unsustainable approach. In 2019/2020 of the total R1.83trillion, R222.6billion was allocated to health care with the bigger portion of this budget expended on human resources and the procurement of pharmaceutical products. In 2012 the state expended R25billion on medicine majority of which are imports and this figure has obviously increased significantly as a consequence of escalating prevalence of diseases and a growing population.
Cuba a developing country has a state-owned pharmaceutical industry which is responsible for the development, production and distribution of medicine across the country. Only drugs which are not found in the country are imported. The country’s pharmaceutical industry produces in response to immediate health needs of its people, unlike South Africa were commercial interest prevail. The Cuban pharmaceutical industry is complemented by a well oiled research component which has to-date made ground breaking inventions. This includes the invention of human leukocyte interferon Alfa in 1981, Meningitis B vaccine in response to an epidemic at a time when there was no meningitis vaccine in the world. The sector has managed to stay afloat because government created the necessary conditions for the development, production and marketing of new products.
South Africa must create state-owned pharmaceutical capacity which will be capable of responding to the health care needs of the population. This Company must focus on the production of essential drugs. According the World Health Organisation these are medicines that satisfy the health care needs of the population. These medicines in the context of South Africa would include antiretrovirals commonly known as ARVs, medicine for non communicable diseases such as hypertension and other commonly utilised medicine in the public sector.
Ketlaphela pharmaceuticals is a failing state project to establish a state owned initiative which would supply essential medicine. It acknowledges in its founding values ” Ketlaphela was created in response to the cabinet’s directive for the country to have its own State owned pharmaceutical company. Increasing local manufacturing to decrease reliance and risks associated with high level of imports for this important sector has been a priority for government that ultimately led to the call for the Ketlaphela Project”. In 2012 then minister of trade and industry Rob Davies together with Naledi Pandor then minister of science and technology committed to a pharmaceutical plant in Gauteng Phelindaba allocating R1.5billion in financial resources raised from different stakeholders. It is important to note there has been no progress thus far both in establishing the plant itself and the state owned pharmaceutical company.
The hindrance to establishing pharmaceutical company in most cases is the upfront investment required, intellectual property laws and the South African Health Regulatory Authority’s incapacity resulting in prolonged registration periods for new products. The failure of government in establishing a state owned entity in this case cannot be attributed to any of the above challenges. It is within the purview of a decisive convicted leadership to intervene and accelerate the process in the best interest of the general population.
The procurement of pharmaceutical products from a state owned company will amongst other things save billions of Rands, create sustainable employment, ensure supply of cost effective medicine, reduce the risk associated with importing medicine and most importantly ensure the government is self reliant in meeting the health demands of it’s people.

