BUSINESS

Local pharmaceutical manufacturing

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There is no questioning the importance of local manufacturers and their contribution to our country’s economy. With the recent widely-reported instability of the South African economy, many sectors of manufacturing have been adversely affected, including the pharmaceutical industry.

There is no questioning the importance of local manufacturers and their contribution to our country’s economy. With the recent widely-reported instability of the South African economy, many sectors of manufacturing have been adversely affected, including the pharmaceutical industry.

Nardus Alberts, founder and CEO of South Africa’s largest contract pharmaceutical manufacturer, Wrapsa, explains that in the last twenty years a large proportion of the major global pharmaceutical corporations have pulled out of South Africa and moved their plants elsewhere. “Part of the reason for this is that the South African market is relatively small. Originally, corporations moved in to SA because they saw it as a launch-pad to reach the rest of the African markets,” Alberts explains.

Today, other countries with strengthening economies, such as Nigeria, are getting that business. “About thirty plants have closed down here in recent years for various reasons. “South African labour has also become some of the most expensive in the world, when compared to the proportion of expenses vs. productivity. We are strongly competed against by other countries, such as China and India.

That being said, there is still a definite need in South Africa for good quality local contract manufacturers.

“Although most major pharmaceutical companies own their own facilities, there is still a significant need for contract manufacturing services in SA. As we already have the correct machinery, tooling and infrastructure, it is more cost effective for pharmaceutical companies or new brands to utilise the services of a contracted manufacturer, rather than to start up a brand new plant.

“According to a 2007 report from the Department of Trade and Industry (DTI), there were 94 pharmaceutical operators in South Africa at that time, a large part of which use contract services. Only ten of those companies own their own production facility, which is testament to the frequency of which contracted manufacturers are used," Alberts says.

Pharmaceutical manufacturing equipment can alo be very expensive, and none of this specialised machinery is produced here. “The high cost of setting up is further impacted by the weakening Rand, and importing can become an inefficient use of funds - especially considering that South Africa has more than the required capacity and infrastructure for pharmaceutical production,” says Alberts. Over the past thirty years, Wrapsa have built up an impressive portfolio of equipment in their 13 000m² Centurion-based pharmaceuticals manufacturing facility, and are able to produce everything from aerosols and gels to tablets and syrups. Due to their extensive capabilities and flexible nature, Wrapsa currently holds about 60% of South Africa’s contract pharmaceutical manufacturing business.

“We have invested heavily in our technology, and continue to do so to this very day as new techniques and technologies are constantly being developed. It’s important to keep abreast of these trends.”

According to Alberts, another major factor that is impacting the South African pharmaceutical industry is the extremely long lead-time required here – often five to six years – to get a product registered. “This is purely a result of the ineptitude of the Department of Health (DOH). However, we are hoping this situation will change soon,” Alberts says.

There seems to be a plan in the pipeline to remove the Medicines Control Council (MCC) from the DOH so that it is a stand-alone, independent industry regulatory body. Essentially, the MCC would be paid by applicants to carry out their services, such as inspections and registering of products.

“Our overly long lead time can be hugely damaging. Many pharmaceutical companies just choose to pull out of SA rather than go through the lengthy processes,” Alberts continues. It is clear that this is a situation that needs to change drastically.

Alberts also explains that about 60% of the current pharmaceutical market in volume is made up of generics, which is set to increase as more branded products come out of their patent periods. “This is great news for the consumer, as the same medication will be available at a much lower cost to the man on the street. It is important to note that, generics are never inferior to their branded counterparts; they are in fact the exact same thing as the original.”

The pharmaceutical industry contributes to about 2% of the South African GDP, and the sector turns over R 38.1 billion a year – R 2.5 billion of which are exports. The total pharmaceutical industry employs about 9 500 people. “What many are afraid is going to happen to our country’s motor and other manufacturing industries has already happened to the pharmaceutical industry. Every time a plant closes here, jobs are lost. Such is the damage of striking and the resulting instability in our economic landscape,” says Alberts. “For a country with 30% unemployment, it is tragic to see these losses occur. For us to attract these investors back – across all sectors, it is crucial for us to gain some stability,” he concludes.

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