Friday, 4 April 2008

Pharma investment in South Africa -- climate survey

Writing in Moneyweb today, Eustace Davie (Free Market Foundation) reviews the economic and regulatory climate facing pharmaceutical companies thinking of investing in South Africa. His article, "Attracting pharmaceutical investment to South Africa", cites figures from a recent Deloittes report which showed that in 2006 the South African economy derived a direct investment benefit of some R10 billion from the pharma sector. The tax revenue alone generated R1.6 billion. Capital investment contributed R1.8 billion. He adds:
"Pharmaceutical research and development (R&D) could make an even greater contribution to SA’s economic growth. Unfortunately the potential for growth is being hampered because government health care regulators do not appear to have the same appreciation, or interest, as their colleagues dealing with science, technology, trade, industry and finance, in the role that innovation plays in competitiveness and economic development.


A lack of skills and slow regulatory approval for new medicines are among the most pressing problems facing the pharmaceutical sector. SA should take deliberate action to expand current R&D expenditure by, for example, tailoring the regulations for pharmaceuticals and particularly for clinical trials to fit that purpose. SA was in the lead just five years ago but now clinical trial development is growing much faster in India and China".
While he concedes that South Africa has adequate IP protection, he observes that there is no mechanism for extending the patent life of a pharmaceutical product whose effective patent term has been reduced by delays in the registration process. In conclusion he observes:
"It is not for the comfort and benefit of investors that governments provide patent protection for pharmaceuticals, regulatory environments conducive to ease of doing business, and other conditions intended to make their countries attractive investment destinations: it is for the benefit of the country’s citizens. In the case of pharmaceuticals it is to improve access to medicines, jobs, skills, technology and all the other benefits that citizens can derive from the presence of a large and thriving pharmaceutical manufacturing industry".

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