Innovative multinational pharmaceutical companies significantly contribute to direct and indirect job creation in South Africa.
In a Footprint study conducted by the Innovative Pharmaceuticals Association South Africa (IPASA) analysing the contribution of the pharmaceutical industry in the South African economy, findings show that the industry accounts for over 4,700 direct jobs in South Africa. In fact, the total number of direct and indirect jobs generated adds up to a staggering 14,000 jobs.
Moreover, multinational pharmaceutical companies drive demand for highly qualified people, creating an opportunity to build and retain national talent, while contributing to the redress of structural distortions in the South African labour market.
Between 2016 and 2021, more than R5.5bn will have been spent on knowledge diffusion and skills growth. Additionally, innovative multinational pharmaceutical companies continue to make strides in the areas of diversity and inclusion, having invested over R21m in developing the local workforce through access to innovative education and skills development programmes.
The relatively good infrastructure and business-friendly environment in our country, compared to other Sub-Saharan African countries, has resulted in a significant and increasing number of innovative multinational pharmaceutical companies using South Africa as a base to serve African markets. These companies have thereby ensured enhanced access to innovative therapies that benefit more patients across the region. South Africa is fast becoming the hub for beneficial, knowledge-based, regional programmes (R&D and healthcare) deployed in neighbouring countries.
To further promote local value addition, generate income and create jobs, the South African government has encouraged multinational pharmaceutical companies to invest in local manufacturing. Currently, South Africa has approximately 276 companies licensed by the Department of Health and the South African Health Products Regulatory Authority (SAHPRA) to manufacture, import, export or distribute pharmaceuticals. Domestic manufacturing pharmaceutical companies almost exclusively produce generic products. SA pharmaceutical manufacturing companies are mostly import-dependent.
However, the economic contribution of multinational innovative pharmaceutical companies in South Africa goes beyond local manufacturing. It includes the overall investment in manufacturing and distribution capacities as well as the direct contribution to South Africa’s state budget. The value of locally produced drugs from innovative multinational pharmaceutical companies (listed in the study) will reach a value of R17.9bn and the industry will have generated over R20.6bn of revenue, through their local operations, for manufacturing and distribution partners (including other direct business partners) by the end of the year.
Nonetheless, there are strong barriers to local pharmaceutical production across the African continent. More recently, the Covid-19 pandemic has caused the slow-down in most economic activity in the country and on the continent while also overwhelming national health system.
As innovative pharmaceutical companies, we believe that there is an urgent need for policy certainty and consistency, a substantial reduction in the backlog in registration of products by the regulator together with strategic tariffs, remedies, and incentives to level the domestic playing field. In return, innovative multinational pharmaceutical companies will play a significant role in contributing to South Africa’s economy broadly and to sustainable and inclusive growth specifically.