Healthcare Resource Guide:

South Africa

South Africa Statistics

Summary

Market Entry

Current Market Trends

Main Competitors

Current Demand
Registration Process

Reimbursement

Barriers

Trade Events
FAQs

CS Contacts
Best Prospects

Capital: Pretoria

Population: 57.4 (2018 est.)

GDP: USD344.1 billion (2017 est.)

Currency: South African Rand (ZAR)

Language: English

Summary

Healthcare in South Africa varies from the most basic primary healthcare, offered free by the state, to highly specialized, high-tech health services available in both the public and private sector.

The public sector is both stretched and under-resourced, placing it under considerable stress. The Government contributes just under 50% of all healthcare expenditure (mainly from Treasury) on health, to deliver services for over 80% of the population. On the other hand, the private sector runs largely on commercial lines, and accounts for roughly 50% of all healthcare expenditure and caters to middle- and high-income earners (approx. 18% of the population), of which most (8.879 million) are members of medical schemes (there are 82 schemes in South Africa, with 22 open schemes and 60 restricted). It also attracts over 70% of the country’s health professionals. The private sector healthcare system is one of the most expensive in the world. Preliminary findings published in July by the Competition Commission’s inquiry into the private healthcare sector and medical schemes show that costs are unacceptably high, transparency is low, the market is highly concentrated, consumers are disempowered, practitioners are little regulated, and there is low accountability.

Most healthcare practitioners work in the private sector (2.2 per 1000 population versus 0.3 per 1000 in the public sector), which can be attributed to better working conditions and more pay.

South Africa’s disease burden is high. The country has one of the highest HIV/AIDS prevalence rates, and the highest number of people living with the virus in the world. Correspondingly, there is a sharp increase in non-communicable disease (NCDs), notably cardiovascular, cancers, respiratory and diabetic diseases due to changing lifestyle patterns. The country suffers from significant trauma, brought on by interpersonal inflicted injuries, such as gun-shot wounds, as well as a high number of road accidents.

Market Entry

The South African market is sophisticated, thus entry should be well planned, taking into consideration the following factors:

  • The skewed demographic income distribution pattern, where 10% of the population earns 45% of national income (Gini coefficient is .61)
  • The price-sensitive nature of the majority of consumer demand
  • A volatile Rand-Dollar exchange rate
  • An unreliable and under-capacitated electricity supply network
  • Distribution issues
  • Well-developed consumer protection rules and recently, better enforcement
  • A conservative market bias that tends to stick to known suppliers and therefore requires sustained market development
  • South Africa’s position as a stepping stone for developing market opportunities in sub-Saharan Africa: the marketing mix should anticipate this medium-term option

However, new-to-market foreign suppliers will find markedly different conditions when venturing over South African borders. This lack of regional integration relates especially to financial services, trade documentation and road transportation networks and may have a significant impact on risk exposure and the cost of doing business.

A judicious selection of one of three low-risk entry strategies (representation, agency, or distributorship) is required by new-to-market entities. If you are selling to the government or government-funded organizations, any local partner should be Broad-based Black Economic Empowerment (BBBEE)-compliant and be aware of local procurement regulations. 

Current Market Trends

Because of ongoing concerns of escalating costs, interest will be in high-tech but cost effective and innovative products and consumables.

Although still very much at a nascent stage, South Africa, along with Kenya and Ghana, have taken the lead in Africa in developing e-Health systems to improve healthcare access and clinical information. Funding remains an issue, as well as a slow up-take from both the public and private sector and a preference for open-source systems by the public sector.

Like much of the world, South Africa is moving towards universal healthcare access, in the shape of National Health Insurance, which will be compulsory for all South African citizens. It is envisaged that this will be up and running by 2026, and is likely to be funded using taxes.

The South African Health Products Association of South Africa (SAHPRA), which replaced the Medicines Control Council (MCC), will regulate medicines, supplements, devices and IVDs. There are concerns that the considerable registration and evaluation delays experienced by the pharma sector may spill over to devices.

Main Competitors

Market domination tends to be enjoyed by the United States at 28% of market share. Germany is second to the U.S., followed by China, Switzerland, UK and Japan. China is making significant inroads, increasing by around 10% in market share. 

Current Demand

The underdeveloped market offers potential for growth but is considerably restrained by funding issues, poor infrastructure, and staff shortages (particularly in the public sector). Opportunities will exist for exporters of medical equipment (particularly new and innovative equipment), as extensive upgrades and development of hospital infrastructure is being considered. The private healthcare sector is very sophisticated and boasts world class facilities with several centers of excellence. However, approximately 93% of equipment is imported. Refurbished equipment is not favored by the medical community, particularly in the private sector, and opportunities in this category will be very limited. 

Registration Process

The Department of Health has issued new regulatory requirements for medical devices and in vitro diagnostic (IVD) devices. These regulations, which lay out the procedures for registration, were published in the Government Gazette in December 2016 and appear to have taken immediate effect.

The Medicines Control Council has rebranded itself as the South African Health Products Regulatory Authority (SAHPRA), with expanded powers in that they now regulate all aspects of health: medicines (pharmaceuticals and complementary), medical and invitro-diagnostic devices and foodstuffs.

Registration with SAHPRA is mandatory for devices procured under international tendering. For other transactions, there will be a transitional arrangement of as yet unregistered devices and IVDs. However, SAHPRA can impose requirements at its discretion for devices not participating in public tenders to ensure that the medical device or IVD meets the essential principles of safety and performance, as determined by the Council.

For more information on device regulation by SAHPRA, please refer to: http://www.mccza.com/documents/4a9ef319GG40480_09-12-2016_Medical_Device_Regulations.pdf

All local distributors, manufacturers, importers and exporters must be licensed by SAHPRA.

Reimbursement

Public and private sector normally pay the local agent/distributor directly.

Payment terms are then negotiated between the U.S. company and local distributor. Letters of credit are common. 

Barriers

  • Probable delays in registration/regulation of devices (if similar to Pharma)
  • Funding
  • Rising cost of healthcare
  • High cost of bandwidth and very slow uptake for health IT
  • Lack of change management

Procurement & Tenders

Nearly all purchasing (at all three levels of government – national, provincial and municipal) is done through competitive bidding on invitations for tenders, which are published in an official state publication, the State Tender Bulletin (https://www.greengazette.co.za/publications/tender-bulletins), and sometimes in leading newspapers. Although the purchasing procedures of the government institutions favor local procurement as far up and down the supply chain as possible, the reality is that most devices will be imported, and U.S. companies will not be precluded from bidding if the firm has an agent/distributor in South Africa to act on its behalf.

As a general practice, payment is made to the local agent. Several factors impact the process of selling to the SA Government and its agencies. These factors include local content requirements such as Broad-based Black Economic Empowerment (BBBEE).

In the private sector, distributors with dedicated sales teams develop strong, long-term relationships with hospitals, clinicians and other healthcare personnel.

Trade Events

Africa Health

May 28-30, 2019

Gallagher Center, Johannesburg

www.africahealthexhibition.com

FAQs

1. What is Broad Based Black Economic Empowerment (BBBEE)?

This becomes important, notably when it comes to Government tenders. In line with trying to procure as much local content and to procure as far down the supply chain as possible from local entities that were formerly excluded from the economy under the previous regime, U.S. companies should consider a local partner with BEE certification. Most local healthcare companies will have some form of this.

2. What kind of registration does my device need?

Until recently, with the exception of electro-magnetic devices, these products did not require registration at all! However, new legislation has been introduced, which also includes In-Vitro Diagnostic devices.

U.S. Commercial Service Contact Information

Name: Felicity Nagel

Position: Commercial Specialist

Email: Felicity.nagel@trade.gov

Phone: +27 11290 3332             

Best Prospects

  • This market offers potential for growth but is considerably restrained by funding issues, poor infrastructure and staff shortages (particularly in the public sector). Opportunities will exist for exporters of medical equipment (particularly new and innovative equipment), as extensive upgrades and development of hospital infrastructure is being considered. The private healthcare sector is very sophisticated and boasts world class facilities with several centers of excellence. However, approximately 93% of equipment is imported. Refurbished equipment is not favored by the medical community, particularly in the private sector, and that market opportunities here will be very limited.
  • eHealth. Although very much at a nascent stage, South Africa, together with Kenya and Ghana, are the forerunners in Africa. But it is poorly understood, uptake is very slow and funding remains a big problem. There needs to be a demonstrable evidence that it will cut costs. The South African Government has a preference for open-source systems. The Health Minister has also appointed the Council for Scientific and Industrial Research (CSIR) to evaluate all e-systems.
  • Innovative, state of the art equipment that is cost-effective

Market Size

Healthcare spending (including investment)

 

... as percent of GDP

13.5% (2017)

Hospitals, Procedures, Healthcare Professionals UN:

Number of hospitals and clinics

5083

…Public

407 hospitals, 3863 clinics

…Private

203 hospitals, 610 clinics

Number of hospital beds

119,155

Number of surgical procedures

4852 (2012)

Physicians

34,669 (of which 73% work in private sector)

Dentists

5667 (2013)

Demographics

Population

56.52 million (2017 est.)

Life expectancy men/women

Men: 61.2yrs / Women: 66.7 yrs

Infant mortality

32.8 deaths / 1,000 live births

Percent of population older than 60

8.1

...projection, 2030

15%

Annual deaths

9.4 deaths/1,000 population (2017 est)

...caused by HIV/AIDS

110,000

Prevalence of NCD –

Chronic Respiratory Disease (3%), Cardiovascular (18%), Diabetes (6%), Cancers (7%). Probability of dying from one of these diseases is 27% between the ages of 30 – 70 (2012)

Sources: Country Commercial Guide, WHO, Unicef, Statistics SA, BMI


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