Indian makers of generic drugs with a presence in South Africa must look beyond private-to-private ventures and engage more with the government to increase access to affordable medicines.
This is the view of Vikash Salig, the chief executive of Dr Reddy's Laboratories South Africa, who said that he would not want to prescribe the direction this engagement should take. However, there were opportunities for public-private partnerships and possible joint research projects, he noted.
South Africa still imported active pharmaceutical ingredients (APIs), Salig said, so Indian drug makers could also look at assisting the country to manufacture selected raw materials.
"It is my belief that we should create an environment that bolsters the local industry but it must also encourage foreign direct investment," said Salig.
Peter Breitenbach, the health care programme manager at consultancy Frost & Sullivan, agreed with Salig's view, saying competing for tenders was crucial to building business locally.
Breitenbach said the state health service was a relatively small consumer of the pharmaceutical pie, but the value of its portion was growing faster than that of the private sector. "If one considers the entire South African pharma market, which is worth R23 billion, the public sector represents 14 percent of this value and is growing slightly faster – at an annual growth rate of about 19 percent – than the private sector (17.5 percent).
"Generics account for 55 percent to 60 percent of drug consumption in South Africa, there remains significant scope for substitution of originator products."
Rasmus Jensen, a senior consultant at IMS Health, said Indian generics firms had to go beyond positioning themselves on just price.
Dr Reddy's Laboratories is one of several Indian firms that entered the local pharmaceutical industry either through joint ventures, supply agreements or marketing and distribution deals. It has been in the country for six years and has a joint venture with Venture Pharm, a black-owned company.
Ranbaxy, Cipla, Lupin, Unichem, Glenmark Laboratories and Zydus Cadila are also here. South African drug imports from India in the 2007/08 financial year totalled about R5 billion, representing 2.2 percent of Indian pharmaceutical exports.
Salig said though South Africa lagged behind in producing APIs, which made up 70 percent of the cost of medicines, it was strong in developing the finished product. The country was an attractive export destination, but there were still barriers to entry.