South Africa - Country Commercial Guide
Healthcare: Medical Devices and Pharmaceuticals

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-09-11

Overview

Saddled with a triple  disease burden – communicable (HIV/AIDS, TB), rising non-communicable (diabetes, cardiovascular disease, hypertension, cancer), and trauma (interpersonal violence, such as gunshot- and stab wounds)  - South Africa’s healthcare operates under  two systems: the public system, which caters to around 85  percent of the population, constituting roughly 48  percent of total healthcare expenditure with funding from the state (approximately nine  percent of GDP); and private healthcare, which looks after 15  percent of the population who can afford medical insurance. Both sectors offer a range of services from primary to more specialized healthcare, but more advanced, high-tech products and elective procedures are more commonly found in the private sector.

South Africa is moving toward universal healthcare through a proposed National Health Insurance (NHI) scheme. Through NHI, the government will likely become the main procurer of health goods and services, as well as investing in the public healthcare system to improve infrastructure and access. NHI is being phased in with full implementation envisaged by 2026, but this will depend on funding and political will, among other constraints. The COVID pandemic will also have an impact on a timely NHI roll-out.

The healthcare market in South Africa is highly complex and fragmented in terms of real purchasing power. Entry usually requires appointing a reputable and experienced distributor.

The public sector is the biggest purchaser of healthcare equipment and supplies, particularly for primary healthcare.  Purchasing is devolved to each of the nine provinces that in turn publish their own tender notices, but the National Department of Health also issues tenders for national supply. Severe funding constraints make it difficult for public hospitals to maintain or purchase equipment. For now, the best prospects for advanced technology and equipment remain in the private sector. Hospitals in this sector are dominated by the big four hospital groups – Netcare Limited, Life Healthcare Group, Mediclinic Southern Africa, and the National Hospital Network. There are also a number of independent private hospitals. Around 78 medical schemes are in play in South Africa, 20 of which are open and the rest restricted. Discovery Health remains the largest open medical aid scheme, with an estimated 1.342 million members and 2.795 million beneficiaries (Council for Medical Schemes 2019/2020).

 All healthcare-related products must be registered with and evaluated by the South African Health Products Regulatory Authority (SAHPRA). All entities involved in the manufacture, distribution, import and export of healthcare products must be licensed by SAHPRA. Only authorized representatives resident in South Africa may apply for registration of products with SAHPRA.

Medical Devices

Overview

 

2019

2020 (estimated)

2021 (projected)estimated

2022 (projected)

Total Market Size

1.27

1.07

1.021

1.02

Imports

1.143

0.963

0.918

0.9

Imports from US

0.285

0.240

0.229

0.21

Exports

0.127

0.107

0.102

0.1

Exchange Rate $1

14.58

16.44

 

 

 

Unit: $billion

Data Source: Above figures are unofficial estimates obtained from industry sources, including Fitch Solutions.

In the near term, growth in the medical device market remains subdued due to the economic recession, which the COVID-19 pandemic has exacerbated. Whilst the value has increased in local currency, it has decreased in dollar terms, reflecting the currency fluctuations of the South African Rand.  An increase in government spending to upgrade public health facilities and systems as part of their NHI implementation program may catalyze some growth in this sector, though the recent, significant budgetary shortfalls and the pandemic fallout will likely negatively impact government spending. Private sector investment will also continue, albeit at a cautious pace, as many increasingly are coming under considerable cost pressures. The United States continues to dominate this market sector, with other major suppliers from the EU (Germany, France, Switzerland, other EU member states) and Asia (China, India, South Korea, and Japan).

Consumables: This sector includes bandages and dressings, suturing materials, syringes, needles, catheters, etc. Currently estimated at $240 million (2019, Fitch Solutions), this market will grow around 1.7 percent in 2020. There is some local manufacturing, but over 90 percent is imported. Major suppliers are the United States, China, India, and Mexico.

Diagnostic Imaging: Valued at an estimated $192 million (2019, Fitch Solutions), Germany and the United States are the leading suppliers in this market (20 percent market share each). Other players include Japan, China, Netherlands, and the UK. Despite the underdeveloped nature of this market, there is great need for MRI and PET scanners, radiotherapy products, and other diagnostic imaging products in the public sector.  Still, growth will remain muted due to depressed market conditions and unfavorable currency fluctuations.

Orthopedics and Prosthetics: Valued at $ 164 million (Fitch Solutions), practically all products in this sector are imported, mainly from the United States (40 percent) and Switzerland.

Dental: projected growth in this market will be muted, 2.9 percent in dollar terms from 2019 – 2024. The dental market is currently valued at around $37 million (Fitch Solutions). Although treatment often focuses on the curative, there is recognition that more needs to be done in preventive care. The market is very small for high-end elective procedures due to the associated costs and limited insurance coverage. Over 90 percent of products in this market is imported, mainly from the United States and Germany (30 percent each). Smaller suppliers include Switzerland and China. There are some local manufacturers that supply dental instruments, supplies, and implants.

Patient Aids: Worth approximately $163 million in 2019 (Fitch Solutions), this category includes portable aids, such as hearing aids and pacemakers, and therapeutic appliances like respiratory apparatus and mechano-therapy. More than 95 percent of this market is imported. The United States supplies around 25 percent and other main suppliers include China, Germany, and Switzerland. Growth will be dampened by current economic conditions.

South Africa does little local manufacturing, mostly confined to assembly and lower end products (there are exceptions). There are government incentives in place to encourage this sector, which is likely to increase in the future. Exports are mainly to other countries in Sub-Saharan Africa.

​​​​​​​Pharmaceuticals

Overview

 

 

2019

2020 (estimated)

2021 (projected))

2022 (projected)

Prescription Sales

 

2,97

2.57

2.70

2,75

Innovator Drugs

 

1.71

1.45

1.50

1.59

Generics

 

1.26

1.11

1.20

1.22

OTC

 

0.37

0.32

0.33

0.34

Exchange Rate $1

 

14.58

16.44

 

 

Unit: $billion

Above figures are unofficial estimates and from various industry resources, including Fitch Solutions

South Africa remains the largest pharmaceutical market in Sub-Saharan Africa. Total pharmaceutical expenditure was estimated to be $4.1 billion in 2019 and $3.6 billion in 2020 (2019, Fitch Solutions). Its prescription drug market is valued at approximately $3.0 billion (2019, Fitch Solutions), which equates to 88.7 percent of the total market in value terms but will drop in value due to prevailing market conditions.

Should the National Health Insurance plan materialize, there could be rising demand for prescription generic drugs, improved healthcare infrastructure and access, as well as increased local pharmaceutical production of generics. Demand and spend in this sector, particularly as it relates to high value medicines, will likely be tempered, or entirely impeded by the economic recession and COVID-19 pandemic. There will continue to be emphasis placed on HIV/AIDS and TB treatment but over the long-term focus will also shift towards rising chronic disease burden – diabetes, cardiovascular disease, hypertension, and cancer treatments.

The market for innovator/patented drugs is estimated at around $1.7 billion (2019, Fitch Solutions), equating to 51 percent of pharmaceutical sales and around 58 percent of prescription drug sales. Growth in this sector will be slower due to the associated high costs. Most innovator drugs are imported with main supply from India, Germany, United States, and France.

Generic drugs, valued at $1.3 billion (2019, Fitch Solutions), are likely to see strong growth, both in terms of volume and spend, due to high demand and purchasing preferences (public sector), but also because of increased local production driven by government incentives and policies favoring local content.

Over-the-counter-medicines represent the smallest segment of the market ($378 million). This segment is extremely competitive and much of it is driven by local production.  South Africa does not produce any Active Pharmaceutical Ingredients (APIs).

All medicines, regardless of category (including dietary supplements), are subject to registration and evaluation by the South African Health Products Regulatory Authority (SAHPRA) which is guided by the Medicines And Related Substances Act, 1965:  https://www.sahpra.org.za/wp-content/uploads/2020/02/Government_Gazette_Medicines_and_Devices_Act_Jun_2017-1.pdf . Labeling compliance is also addressed in the Act.

One of the outcomes of the COVID-19 pandemic and the resulting shortfall in vaccines for Africa is the recognition that South Africa needs to develop its own production hub to manufacture vaccines to mitigate the supply challenges posed by future pandemics. In mid-2021, the WHO announced that it is setting up an mRNA site in South Africa, which will produce COVID vaccines for the region. 

Digital Health

The South African government has indicated that digital healthcare technologies will form an integral part of NHI in that it will strengthen healthcare systems, provide better access for patients, and improve health outcomes. To this end, they have published a National Digital Health Strategy for South Africa 2019-2024, prioritizing

  • The development of a complete electronic record for patients (some form of this already exists)
  • Digitization of healthcare systems business processes
  • An integrated platform and architecture (open source/open architecture) for health sector information to ensure interoperability of existing patient-based information systems
  • Growing health to promote coverage for target population groups.
  • Developing and growing digital health knowledge for implementers and users

High data costs, low connectivity density and inadequate ICT infrastructure will need to improve significantly for the successful implementation of the strategy. Adequate funding for this initiative will be key to its proper and timely implementation.  Due to the high number of mobile phones, and increasingly, smart phones, several health initiatives, like MomConnect at http://www.health.gov.za/momconnect/ – a public/private partnership, have proven very successful.

Opportunities   

The underdeveloped market offers potential for growth but faces considerable restraints including serious funding issues, poor infrastructure, staff shortages (particularly in the public sector), and difficulties in accessing the market due to the considerable delay in SAHPRA’s approval process. The COVID-19 pandemic and prevailing economic recession have only exacerbated these obstacles.  Opportunities will exist for:

Cost effective and innovative detection and treatment for cancer and other non-communicable diseases (NCD)

  • Cost effective and innovative surgical equipment
  • Advanced surgical technologies, robot-assisted surgeries to improve outcomes and address skills shortage (likely more in the private sector)
  • Developing local manufacturing for medical devices and medicines (Public- Private Partnerships)
  • Vertical integration of larger healthcare providers to control costs of their supply chain by owning more of it (mergers, acquisitions, partnerships) and using technology: IoMT (Internet of Medical Things), SaMD (Software as Medical Device), Cybersecurity, data analytics, digitization, and compliance

Resources                                                                                                                 

  • National Department of Health (NDoH)
  • South Africa Health Products Regulatory Authority (SAPHRA)
  • South African Medical Devices Industry Association (SAMED)
  • Radiological Society of South Africa
  • South African Orthopaedic Association
  • South African Spine Society

Major Shows

Africa Health Exhibition  (online)

For more information, the U.S. Commercial Service in Johannesburg, South Africa, can be contacted via e-mail at:

Felicity.Nagel@trade.gov

Phone: +27 11 290 3332; Fax: +27 11 884 0253, or visit our website:

https://www.trade.gov/south-africa/