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With its massive pharmaceutical export market, South Africa represents a significant opportunity for investors looking to break into the African continent

South Africa is the region’s leading economy and gateway to the continent, accessing a combined population of up to a billion people, and it is expected that by 2019 South African exports of pharmaceutical products will increase to reach R7.1bn.South Africa presents a huge untapped opportunity for investors seeing the African continent poised for growth.

Domestic pharmaceutical manufacturers focus almost exclusively on producing generic products. In 2015, the generics medication market was estimated at R11.7bn, compared with the originators’ market valued at R16bn. These numbers present immense opportunities for foreign companies that want to invest in South Africa and the African continent.

 With South Africa uniquely positioned within Africa, South Africa becomes the gateway to this opportunity to manufacture and export into the markets. Strategically, it sits at the tip of Africa, making it a key investment location, both for opportunities that lie within its borders and as a gateway to the rest of the region.

 The South African pharmaceutical sector is the largest drug market in Africa, with the fifth highest expenditure on pharmaceuticals per capita. The total market value in 2015 was estimated at R44.0bn, with R34.2bn (86.7%) attributable to the private healthcare market and R6.8bn (13.3%) to the public sector.

Furthermore, the African continent has become the main destination for South African exports of pharmaceutical products and it is expected that more multinational corporations will continue using South Africa as a platform to explore the opportunities in the African market. 

The country’s export basket largely comprises medicament mixtures (mostly API), making up 70% of the total pharmaceutical exports in 2015, followed by medicament mixtures not for dosage at 11,3%. Medicament mixtures not for dosage have grown faster (40,7%) than other export categories, while exports of pharmaceutical goods, specified sterile products, sutures, luminarias have declined by a wide margin especially in 2015

Notably, South Africa is the only country in the SADC that meets the Good Manufacturing Practice standards of the World Health Organization. Furthermore, the SADC free trade area ensures the country of tariff free exports.

A number of leading companies already have their facilities in South Africa based in Cape Town, KwaZulu Natal and Gauteng among the provinces in which the investments are located. There are a number of pharmaceutical companies also expanding their operations to meet the demands of the South African public and private sector in providing accessible and affordable healthcare in South Africa and continentally in the region as well. 

Some of the leading companies that have a presence in the South African market are Aspen, Adcock Ingram, Roche, Novartis, Pfizer to name a few. A number of key factors have influenced their decision to locate their manufacturing facilities in South Africa and they include: Pharmaceuticals is a key priority for the SA market and the continent as a region; a number of free trade agreements including the Tripartite Free Trade Area that opens access to a large consumer market; world class infrastructure; exciting innovation, research and development capabilities and an established manufacturing base. There are a number of instruments also in place to support the industrialisation and manufacturing including tax breaks, Research and development incentives (Support for Industrial Innovation and the Technology for Human Resource Development and Industry Development) as well as the Special Economic Zones in KwaZulu Natal, Western Cape and Gauteng. These Special economic zones also offer various incentives to reduce the cost of doing business in the sector. There are also a number of incentives offered when partnerships are created and technology transfers take place with the local entrepreneurs focusing on building the capacity and capabilities of the people of South Africa with a requisite focus on empowerment.

The KwaZulu Natal Special Economic Zone is also developing a Pharmaceutical cluster that provides integrated infrastructure and services that enable ease of doing business for investors in the trade zone, which is equipped with shared utilities and also allows them to be more competitive, access the markets domestically and internationally. There is also a stream of scientific talent in the three regions which are endowed with the requisite skills and capabilities focused on the research leading to cutting-edge technology and breakthroughs. The Dube Trade Port has around 10 pharmaceutical companies with an estimated R5bn in investment being negotiated.

Processes and procedures are further being streamlined including introducing institutions to address the skills shortage and current backlog of registrations of medicines is expected. Accelerating the SAHPRA implementation to clear the backlog as soon as possible and to create a seamless and efficient process will be crucial to stimulating growth in the industry. 

It is clear that the African continent offers huge potential in the pharmaceutical sector and the One Stop Shop is ready to support your investment into the country and the continent. Through the establishment of the One Stop Shop, which is the focal point of contact in government for all investors to coordinate and facilitate with the relevant government departments involved in the regulatory, registration, permits and licencing. 

Invest SA, a division of the Department of Trade and Industry (the dti), providing a one stop shop services to investors. The Division provides investment promotion, facilitation and after care which is geared towards fast tracking projects and reducing government red tape. 

Invest SA facilitate the increase in the quality and quantity of foreign and domestic direct investment by providing an investment recruitment, problem solving and information service in order to retain and expand investment in South Africa and into Africa. 

Invest SA actively markets, promotes and facilitates investment in key high yielding growth sectors of the South African economy.

WHAT SERVICES DO WE OFFER?

Investment information 

We offer specialist advisory services
in the following areas:

• Economic Environment 

• Regulatory Environment 

• Legal Environment and Compliance 

• Industrial Development and Financial Support 

• Investment Guides

Investment facilitation

• Inter-governmental co-ordination and facilitation 

• Licensing, company registrations and work  permits

• Municipal facilitation 

• Incentives Facilitation 

• Location Analysis and Facilitation 

• Critical Infrastructure and utilities 

• Broad Based Black Economic Empowerment (BB-BEE)

• Introduction to financial institutions and funding opportunities 

• Priority sectors, designation and localisation 

• Site visits and business to business programmes, partnerships with stakeholders

• Company verifications

• Enterprise Development and Supplier Development 

• ‘Introduction to raw materials suppliers

• Advice on customs clearing 

• Investment promotion and international investment missions 

• Facilitation by the dti representatives stationed world wide 

After-care services 

• Advice on recruitment, talent and skills

• Advice on lifestyle amenities e.g.\ Location of housing, schools, etc.

• Policy Advocacy

• Investor Surveys

• Business Forums 

• Retention and Expansion Services

Contact details 

The dti call centre 

0861 843 384

Email : investsa@thedti.gov.za

Post: Private Bag X84, Pretoria, 0001

South Africa 

Tel: +27123941691 / 5935

Web: www.thedti.gov.za

This article is sourced from fDi Magazine
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