It's not a new story. Expiring single molecule patents, historically poor replacement pipelines, and rising R&D costs are
pushing the pharmaceutical industry to move beyond the blockbuster model. It's an industry-wide challenge and South Africa
is no exception.
Issues related to losing exclusivity rights are also affecting the South African operations of multinational corporations
(MNCs). Local affiliates demonstrate varying degrees of creativity in remaining relevant and competitive in an evolving industry.
Some lean on company traditions. John Norman, general manager and director for South Africa, sub-Saharan Africa & Indian Ocean
Islands at Nycomed, of the Japanese Takeda group, says its core values are strategically aligned with the South African market.
He explains that South Africa is a "market for trusted brands in both innovative and generic medicines ... We have focused
and will continue to focus on our core heritage and introduce new products in these therapeutic areas as well as enter new
areas where our products can make a significant difference to patients' lives."
Figure 1: Previous period growth % in volume - IMS Data
Other affiliates favor proximity, trying to identify and find solutions to local needs. "Maybe in an unusual way, the best
thing that has happened to Sanofi South Africa was that our pipeline did not deliver," says John Fagan, general manager of
Sanofi South Africa. "We came to terms with the fact that we were not going to launch two new chemical entities every year.
We, in turn, launched a local business development unit that searches for business opportunities which Sanofi can invest in,
in order to grow our businesses," he says.
"From this initiative we have developed both a Generic & Consumer Healthcare Franchise, which has made our generic business
model different. We have launched generics of our own products coming off patent, forming strategic alliances with other MNCs
whose products will also be coming off patent—and we became the MNC company of choice to launch a second generic, owing to
our expertise and trusted product quality," says Fagan.
Some critics are concerned that so-called "pseudo generics," describing the practice of originator pharmaceutical companies
producing their own generic versions, are anti-competitive. They argue that such practice unfairly influences the market prices
of future "true generics."
According to Paul Miller, managing director of South Africa for Mylan, the trend is ultimately detrimental for patients. "A
lot of innovative companies are introducing pseudo generics to circumvent any future competition. Ultimately, the patients
are not benefiting from this reduced competition."
Laura Engelbrecht Joubert, general manager for Abbott South Africa and Africa, maintains that a peaceful co-existence between
generics and innovative medicine should be possible. "There is definitely an increased understanding that in most countries
the generic and researched-based companies can co-exist to the ultimate benefit of the patient," she says.
"The same holds true in South Africa. Some companies are further down the road to understanding this than others, but I do
believe that ultimately we will have to find a way to co-exist in order for us to have a successful pharmaceutical industry
going forward. The two models are not and cannot be mutually exclusive," Joubert says.
Omar Ehsan, general manager of IMS Health Africa
What will happen in South Africa remains to be seen, according to Symon Vokes, senior manager, supplier relations, at IMS.
"Worldwide, we have noticed that business models are transitioning to hybrid players, but to what extent are we seeing this
happening in South Africa? Do local generic players have the capacity to go and patent products and ensure a pipeline? And
on the other hand, are local players interesting targets for the innovative industry?"
For now, when it comes to the future business model in South Africa post-blockbuster, like in so many other countries today,
many questions remain.