Donors accused of hurting African pharmaceutical industry

Saturday, November 23rd 2019. | Business
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by Tamar Kahn

Aspen Pharmacare’s (South Africa) head of strategic trade, Stavros Nicolaou, has criticised international aid donors, saying their focus on securing the lowest possible prices for medicines they procured was hurting African pharmaceutical manufacturers.

He said African governments should consider paying a premium for locally produced medicines and should do more to support home- grown industries. “We need support from government to reignite industrialisation,” he said.

African countries, including SA, are keen to see their local pharmaceutical industries grow in order to create jobs and reduce dependence on imports. Africa’s pharmaceutical manufacturing industry is insignificant by global standards, and focused on the production of generic medicines, copies of those originally developed by other firms.

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“You need to make sure that when you receive aid you are not disempowering Africans,” Mr Nicolaou told delegates at a conference organised by the Southern African Generics Medicines Association (Sagma). “Well intentioned as their policies are, they have prejudiced local producers, because they look at price (only).

“South African and African producers don’t participate on a level playing field. Often importers enjoy incentives that locals don’t (such as) tax breaks or accelerated depreciation schemes. SA hasn’t yet got it right,” he said, arguing that the government could pay a premium for locally produced medicines, as the funds would be offset by the benefit derived from local production.

The Department of Health’s acting deputy director-general for health planning and monitoring, Anban Pillay, said the government was not likely to pay a significant premium for medicines to support local manufacturers. “We prefer to give back-end support like tax breaks and creating industrial hubs … to drive down the cost of production.”

Deputy executive director for the United Nations Joint Agency on HIV/AIDS, Paul de Lay, conceded donor agencies in the AIDS field had not given much consideration to supporting pharmaceutical manufacturing in the countries they aided.

“We were not looking at this issue four or five years ago … because we (were) in an emergency response (to HIV/AIDS). But we are now asking whether we can gain a more reliable and sustainable source of drugs from (local manufacturers),” he said. “But you have to be realistic — you can’t overly subsidise them,” he said.

Sagma chairman Skhumbuzo Ngozwana, who is also deputy CEO of local generic pharmaceutical company Cipla Medpro, said Sagma wanted donor agencies and governments to acquire medicines from local producers, provided they were quality goods. “A key issue for Sagma is to harmonise the regulatory environment for the region.”

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