Aspen CEO: Drugmakers ask SA govt for extra price rise

In January, government gave local and international drugmakers a four percent increase.


JOHANNESBURG - South African pharmaceutical companies have asked the government to approve an extra increase in medicine prices this year to compensate for a weaker rand, Aspen Pharmacare's chief executive told Reuters on Thursday.

Local and international drugmakers asked the government for an increase above the 4 percent granted in January, Aspen Pharmacare Chief Executive Stephen Saad said, declining to give a specific figure.

The rand has fallen 20 percent against the dollar since October, significantly increasing the cost of imported raw ingredients used to manufacture medicines.

The pharmaceutical industry in Africa's most advanced economy is tightly regulated with drugmakers usually allowed one increase a year.

"The reality is that the rand has depreciated heavily and many of your input costs are not in rand," Saad said.

Department of Health Deputy Director-General for regulation and compliance Anban Pillay confirmed the companies' request.

"In essence their argument is that the rand weakened significantly and will be at this level for a while now and so they would like an adjustment on their current tariffs to compensate for that," Pillay told Reuters.

Saad said European suppliers were hit especially hard by the weaker exchange rate and companies had flagged the risk of medicine shortages without another increase that reflected the rand's recent depreciation.

"If we fail to reimburse pharmaceutical companies for that risk they will stop supplying us with any particular product," Pillay said. "We need to make sure that companies remain in business."

Aspen, which makes around a quarter of its sales in South Africa, reported a 14 percent rise in half-year profit on Thursday as revenue growth in most international markets offset a weak showing at home.

Drugmaker Adcock Ingram also flagged insufficient drug price increases when it reported its half-year profit last week.

"We made a profit with difficulty," Adcock Ingram Chief Executive Andrew Hall told Reuters, adding his company was restructuring to become less dependent on revenue from regulated prices.

"We are looking at acquisitions outside the regulated sector" he said.