The Future of Pharma in South Africa: Between Crisis and Cure

CPC/Qualicare IPA has formally lodged a complaint against the Health Professions Council of South Africa (HPCSA) regarding ongoing delays and inconsistencies in the processing of Continuing Professional Development (CPD) points for medical practitioners.

The complaint, submitted by Dr. Tony Behrman, CEO of CPC/Qualicare, outlines serious concerns over the failure of the HPCSA CPD department to accurately credit CPD points for educational activities hosted by CPC/Qualicare over the past year. These activities were fully accredited by the University of Stellenbosch and supported by complete attendance records and accreditation documentation. “Only some of the doctors who attended our educational sessions have been credited with the correct points, others not at all”, said Dr. Behrman.

“This has caused unnecessary distress among practitioners who are now at risk of non- compliance due to administrative delays.”

Despite multiple submissions and follow-ups, the issue remained unresolved for weeks. The initial complaint was sent on 26 June 2025, and a formal reply from the HPCSA was only received on 25 August 2025, nearly two months later. In the delayed response, Head of Division: Professional Practice at HPCSA, acknowledged the backlog and confirmed that all pending submissions had been cleared. He also noted that practitioner suspensions were postponed accommodating administrative challenges and that system improvements were underway.

While CPC/Qualicare appreciates the eventual resolution, the extended waiting period for a formal reply has raised concerns about the responsiveness and efficiency of the CPD department. “We urge the HPCSA to improve its communication and processing systems to ensure that practitioners are not unfairly penalized due to internal delays,” added Dr. Behrman.

South Africa's pharmaceutical sector is a complex and contradictory market which is regarded as the most advanced and sophisticated in sub-Saharan Africa. It also operates within a domestic economy grappling with significant volatility and structural constraints.1 This report, tailored for a professional audience, provides an overview of how the broader economic environment is shaping the industry and highlights the key factors influencing production, access, investment, and growth. The central thesis is that the market is facing profound transformation, moving from a long-standing dual-tiered system to a single envisaged public-health-centric model. The confluence of macroeconomic headwinds and radical policy shifts, most notably the National Health Insurance (NHI) Act and parallel intellectual property (IP) reforms, is creating both a high-stakes environment and significant opportunities for agile players.

THE MACROECONOMIC HEADWINDS: A FOUNDATION OF INSTABILITY

The South African pharmaceutical sector operates against a backdrop of challenging macroeconomic conditions that directly influence it’s operational viability and growth.

SUBDUED ECONOMIC GROWTH:

The national economy has shown a pattern of sluggish performance, with real gross domestic product (GDP) expanding by a marginal 0.1% in the first quarter of 2025.2 While a surge in the agriculture sector narrowly averted a contraction, key industrial sectors like manufacturing and mining were the largest negative contributors to growth.2 This tepid growth creates fiscal limitations for the government, constraining it’s ability to fund public health initiatives.4 In fact, while public health spending is projected to increase at an average annual rate of 4.3% from 2023/24 to 2026/27, this is partially offset by Cabinet-approved reductions, resulting in a net overall decrease over the medium term.5

THE POLICY TSUNAMI: A SYSTEMIC OVERHAUL

The pharmaceutical industry is not only shaped by economic forces but is also undergoing a radical transformation driven by a series of landmark policy changes:

THE NATIONAL HEALTH INSURANCE (NHI) ACT:

The presidential assent of the NHI Act in May 2024, subject to the outcome of 9 current court applications against the NHI, could signal a monumental shift toward a single-payer system.11 The Act, which aims to provide universal healthcare based on need rather than income, is designed to dismantle the long-standing dual healthcare system.12 Under the current model, the high-margin, low-volume private sector, which serves a minority of the population, generates the profits that enable companies to compete in the low-cost public tender system.1 By stating that medical aids will only be allowed to cover “top-up services” the NHI Act is intentionally engineered to dismantle this cross-subsidization model.14 This will force a fundamental re- evaluation of pricing and market access strategies, shifting the industry from a two-tiered market to a single, high-volume, low-cost system.1

INTELLECTUAL PROPERTY (IP) REFORM:

In parallel with the NHI, the government is pursuing an overhaul of its IP laws, aiming to limit the number of

pharmaceutical patents and relax restrictions on generic drugs.15 The government argues this will cause drug

prices to “fall drastically” and improve access to medicines for a population with a “massive disease burden”.15 The pharmaceutical industry, however, has reacted with alarm. Innovative Medicines South Africa (IMSA) has called the reforms “discriminatory, unfair and unconstitutional” warning of a “loss of confidence in and damage to the South African economy”.15 The industry’s concern is that, as the “hub for the pharmaceutical industry in Africa” a loss of strong IP protection in South Africa could set a dangerous precedent for other developing nations.15

THE NEW FRONTIER: PRODUCTION, ACCESS, AND GROWTH :

The industry’s core functions of production, patient access, and market dynamics are being reshaped by the interplay of economic and policy forces.

CURRENCY VOLATILITY AND INFLATIONARY PRESSURES:

For an industry that relies almost entirely on imports, currency volatility presents an acute threat to the cost base.6 Approximately 98% of the country’s Active Pharmaceutical Ingredients (APIs) are imported, costing the country around R15 billion annually.6 APIs account for 60-80% of a drug’s production cost, meaning any weakening of the volatile South African Rand (ZAR), directly and disproportionately increases production costs for local manufacturers.7 The Single Exit Price (SEP) mechanism, which regulates medicine prices in the private sector, lacks the flexibility to compensate for sudden exchange rate shifts, leading to a steady erosion of profit margins.9 This regulatory friction, coupled with high upfront capital costs, creates a powerful disincentive for companies to invest in local production facilities.10

The Special Investigating Unit (SIU) says it’s confident about the new evidence in its case against Digital Vibes and several other companies and their directors, former Health Minister Dr Zweli Mkhize, and some of his family members. The SIU has been given the green light by the Special Tribunal to introduce crucial new evidence in the R150 million Digital Vibes scandal, set to be admitted in court. The SIU stressed that the affidavit is critical, warning that without it, important details about how public money was laundered through bogus business dealings could be lost.

Investigators say their findings show the Mkhize family, including Dr. Zweli Mkhize’s wife, son and a business associate, personally benefitted from funds meant for COVID-19 and National Health Insurance (NHI) communication contracts. SIU Spokesperson Kaizer Kganyago says, “It was very important for us to introduce their affidavit because we wanted to introduce crucial evidence that shows that certain respondents received money without rendering any service and we feel that if this was not introduced therefore the main case we are dealing with might be decided without the kind of information that was gathered after we start the application to the tribunal that’s why it was very important for us to do that.”