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: 2020-10-01

Overview

Saddled with a high disease burden - (HIV/AIDS, TB and rising non-communicable disease like diabetes, cardiovascular disease, hypertension, and cancer) - South Africa’s healthcare includes two systems. The public system, catering to around 85 percent of the population, constitutes roughly 48 percent of total healthcare expenditure with funding from the state (approximately nine percent of GDP). Private healthcare, on the other hand, 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 in the shape of the National Health Insurance (NHI). 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. It is envisaged that NHI will begin a phased implementation by 2026, but this will be dependent on funding and political will, among other constraints.

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 major 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 three hospital groups – Netcare Limited, Life Healthcare Group, and Mediclinic Southern Africa.

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 can apply for registration of products with SAHPRA.

Medical Devices

Overview

 

2018

2019

(estimated)

2020

(projected)

2021

(projected)

Total Market Size

1.38

1.27

1.07

1.021

Imports

1.21

1.143

0.963

0.918

Imports from US

0.302

0.285

0.240

0.229

Exports

0.178

0.127

0.107

0.102

Exchange Rate $1

14.14

14.58

 

 

Unit: $billion

Data Source: Above figures are unofficial estimates obtained from Fitch Solutions and other industry sources.

In the near term, growth in the medical device market will be modest due to the economic recession, which the COVID-19 pandemic has recently exacerbated. Should the government pursue earnestly an NHI scheme, an increase in government spending to upgrade public health facilities and systems could catalyze some growth in this sector, though the recent, significant budgetary shortfalls will likely negatively impact government spending. Private sector investment will also continue, albeit at a cautious pace. The United States continues to dominate this market sector, with other major suppliers from the EU (Germany, France, Switzerland, EU) and Asia (China 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 the area of 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

 

2018

2019

(estimated)

2020

(projected)

2021

(projected)

Prescription Sales

3.03

2,97

2.57

2.70

Innovator Drugs

1.77

1.71

1.45

1.50

Generics

1.26

1.26

1.11

1.20

OTC

0.39

0.37

0.32

0.33

Exchange Rate $1

14.14

14.58

 

 

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. 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, 196:  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.

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

More information on the strategy can be found at: http://www.health.gov.za/index.php/2014-08-15-12-54-26?download=3651:national-digital-health-strategy-for-south-africa-2019-2024

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 http://www.health.gov.za/index.php/mom-connect  – 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

Web Resources                                                              

National Department of Health (NDoH)

http://www.health.gov.za/

 

South Africa Health Products Regulatory Authority (SAPHRA)

http://www.sahpra.org.za/

 

South African Medical Devices Industry Association (SAMED)

http://www.samed.org.za

 

Radiological Society of South Africa

http://www.rssa.co.za

 

South African Orthopedic Association

http://www.saoa.org.za

 

South African Spine Society

http://www.saspine.org

 

Major Shows

Africa Health Exhibition  2021

Dates to be confirmed

Gallagher Convention Center, Johannesburg

www.africahealthexhibition.com

 

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:

http://export.gov/southafrica/index.asp.