Generic drug maker to increase production as it expands into Africa

28th November 2012 By: Irma Venter - Creamer Media Senior Deputy Editor

Generic medicine specialist Sandoz will upgrade capacity and output at its Gauteng plant by between 20% and 25% over the next 18 to 24 months, says Sandoz South Africa country head Carnie van der Linde.

The facility currently produces 400-million tablets/capsules a year.

Sandoz, part of the Novartis group, and the world’s second-largest generic medicine supplier, produces 80 products locally, with the South African plant one of 44 production sites in the world. The company’s production schedule includes cardiovascular, pain and tuberculosis medicine, as well as antibiotics.

The company services countries in the Southern African Development  Community (SADC), as well as the Comoros, Madagascar and Seychelles.

The company reported $34-million in turnover in 2011 in the SADC region, outside South Africa, says Van der Linde, up 60% from 2010 figures. Zambia is the most significant market for the company within SADC.

Antibiotics is Sandoz’ best-seller in the SADC region.

South Africa recorded around R800-million in business for Sandoz in 2011.

Sandoz is targeting a different approach to ensure increased business in South Africa, explains Van der Linde.

Government’s looming National Health Insurance scheme, which aims to broaden access to healthcare to all South Africans, will open up opportunities in the public tender market for companies such as Sandoz, says Van der Linde.

Sandoz previously mainly targeted the private healthcare market, which is estimated at around 7-million people in South Africa. However, the NHI scheme will add a possible market of 42-million people to this number.

“There is a lot of growth potential in these numbers, especially as Sandoz aims to produce generic medicine at low cost, high volumes and good quality,” says Van der Linde.

Generic drugs are chemical equivalents to brand-name drugs, but generally sell at a cheaper price.

New drugs are typically developed under patent protection. The patent protects the investment in the drug’s development by giving the developer the sole right to sell the drug while the patent is in effect. However, when patents or other periods of exclusivity expire, manufacturers can apply to sell generic versions. 

Between 2005 and 2010, it is estimated that generic drugs saved patients in developed countries $54-billion in costs.

Registration Delays Add To Cost Woes
Government tenders currently comprise around 10% of Sandoz’ business in South Africa. Van der Linde wants this to increase to 20% in terms of rand value.

One manner in which he hopes to achieve this is by adding generic antiretrovirals to the Sandoz product portfolio. This range should be on the shelf in the next two years.

Van der Linde also wants Sandoz to be the first company to introduce a generic drug to the market once a patent has lapsed. Patents currently lapse at around 12 years.

However, to achieve this goal, Sandoz requires registration of the specific drug from the South African Medicines Control Council.

“If you can get your registration first, you can be first on the shelf,” notes Van der Linde.

However, the registration process “can be cumbersome”, he adds. “It can take up to five years, with the current average around 42 months, with only some HIV/Aids drugs fast-tracked”.

Van der Linde says advanced economics typically sees a registration process of between 6 and 18 months.

“This has enormous benefits to the patient, as increased competition means a decrease in prices.”

Van der Linde adds that the rest of Africa can learn much from South Africa in terms of price regulation.

The absence of regulations sees “too many middlemen in Africa making too much money. Governments will have to get involved to stop this practice”.

Van der Linde says Sandoz may sell a drug to Zambia at a low cost, however, by the time a patient has to buy it, the importer may have added 100%, a wholesaler 100% to 300% and a pharmacy 600% – a practice which negates the principle of affordable generic medicine.

Generic medicine has the potential to grow rapidly in Africa, which is a cost-sensitive environment, adds Van der Linde.

“Africa is also increasingly buying from Africa, which means the Sandoz plant is well placed to supply generic drugs to the rest of the continent.”

Another factor hampering growth for generic medicine in Africa is long registration processes, similar to those in South Africa, but sometimes even better. In Zambia, for example, it can take between two to three years to register a generic product.

Sandoz currently has almost a hundred registrations pending in Zambia.

Sandoz hopes to increase its SADC business by 100% a year, says Van der Linde.

He hopes to increase turnover through government tenders, as well as supplying the private health market and nongovernmental organisations.