Changing Face Of South Africa's Pharma Market

Total pharmaceutical sales in South Africa were worth approximately 3.4 billion rand ($1 billion) in 1993, and the market is forecast to grow to 3.8 billion rand for 1994. This total is made up of 91% prescription drug sales and 9% non-prescription, according to a recent report from UK-based Enigma Market Research (see also Marketletter August 15).

Enigma notes that the market is shared by almost 460 companies supplying some 6,000 products. These firms include multinationals and locally-owned concerns, some manufacturers and others which are only distributors. For most multinationals operating there, the South African market, though small compared to their total, is one of the more profitable ones.

Pharmaceutical product sales at present are generated by: the "state tender" system - involving all medicines dispensed through government and local authority hospitals, characterized by large volume turnover at a low price per unit; and the private sector - including prescription medicines dispensed by pharmacies and doctors and over-the-counter medicines purchased from pharmacies and general stores. Much of the prescription cost is subject to a third-party payment system through medical aid schemes, and the sector is characterized by lower volume but higher prices and profits.