Joanne Walsh & Pie-Pacifique-Kabalira-Uwase
Managing Director – IDG South Africa & Head – FPD Business SchoolContact The Author
THE IDG BLOG
Delivering Affordable, Available, Reliable and Predictable, Medicine whilst Achieving Economic Growth
IDG – South Africa and the FPD Business School hosted a half-day dialogue forum for the South African Pharmaceutical Industry in Sandton on Thursday 14 February. The audience and speakers included influential private and public sector decision-makers in the sector. The delegates, speakers and panelists demonstrated a genuine willingness to collaborate, a commitment to make change, a desire to find new solutions, however, slightly tarnished with cynicism and a sense that things won’t change. IDG are advocates for behavioural change and our experience has evidenced that without profound change in behaviour, little meaningful future shift will be achieved in an organisation, industry, sector, region or nation.
Pressing issues addressed at the forum included:
• Single Exit Pricing and sustainability for local manufacturers to deliver the right amount at the right place at the right time.
• The disparity between the price of medicines in the public and private sector.
• Backlogs and red tape in respect of approvals.
• Question marks over tenders with local manufacturers seeking clarity on the PPPFMA.
• Tackling the scourge of counterfeit medicine and mitigating risks for patients
In response to the healthy debate, the delegates demonstrated willingness to collaborate and address technically complex discussions, the international programme facilitator, Stephen Bennett, the founder and chair of Inspirational Development Group put this into global context. He said, “If only in the UK, we had done this, we would not be facing a complete mess. I know you feel special and that you are the only ones in a mess. But that is not true.”
Business as usual will not affect change
SAHPRA Chairperson, Professor Helen Rees outlined myriad new future models, methods and strategies to cut through the registrations, approvals and licensing practices, acknowledging the need for dramatic change. She introduced the plans for revamped digital architecture, a dedicated clearance team, online tracking, removal of unnecessary bottle-necks and well-considered communications process with patients, communities and industry. Professor Rees exuded confidence in her desire to make SAHPRA a world-class regulatory authority.
In response, Dr Gustaaf Wolvaardt MD Foundation for Professional Development, who chaired the proceedings of the day, proposed that for things to change we need new systems. He said, “Every system is perfectly designed for the results it currently produces.”
Stephen Bennett cautioned, “If bureaucracy gets extended too far, foreign investors will not be interested, and the consequence won’t get the best available drugs.” The discussions were conclusive, emphasizing a need for change. Professor Rees concluded her contribution to the forum by saying, “We need to Fix the Regulator”.
Counterfeit, Consumer Advocacy and Duty of Care
According to Prince Julius Adewale Adelusi – Adeluyi, the Founder and Chairman of Juli PLC and former Minister of Health in Nigeria, consumer advocacy has become an apparent priority with respect to fighting the scourge of counterfeit medicines. The proliferation of online distributors has risks for consumers. Social advocacy is very important. There is plenty of room for education and enlightenment. People need to be taught some of the tell-tale signs of fake products and schooled on why it is important to avoid these products and how. The industry needs to fight the phenomenon of counterfeit until the fakers give up.
Prince Julius went on further to share the success of a Mobile Authentication System in Nigeria. This welcome development empowers consumers to become involved in the authentication of drugs. “It supports advocacy and encourages consumer safety and involvement.
Dr Thulile Zondi, also commented on the need to enable consumers to make informed decisions, with affordable and accessible medicine as the department’s absolute priority.
Why the Public Narrative on Pricing Needs to be Put Right?
Stavros Nicolaou suggested that “the high cost of medicine” is a myth or urban legend. He says, “Yes, medicines are a grudge purchase and public perception is poor. We need to dispel the notion that medicine is expensive.” He referenced the average cost of a monthly prescription ranging from R 20.00 per month for generic products to R 87.00 per month for branded r & d products. “Price bashing will make “would-be” investors uncomfortable.”
Dr Thulile Zondi, acknowledged the co-operation of industry partners with regards to Single Exit Pricing, suggesting that the reduction in the price of medicine would not have been possible without this collaboration. Subsequent to the industry co-operation the Department was able to pinpoint pockets of undesirable practice in terms of illegal discounting. She indicated that the industry can expect the National Department to call on industry soon, to engage further on SEP and review of pricing methodology.
Dr Noluthando Nematswerani, the Head of the Centre of Clinical Excellence at Discovery brought in the voice of the funders. Dr Nematswerani asked why a private or public cancer patient should not have access to equal medicine, which is one of the many questions in the context of the pricing discrepancy between private and public patients.
Overcoming Local Manufacturing Challenges with a Public/Private Sector Success Story
In the mid 80’s the SA Government was importing most vaccines. In 2000 there was a cabinet decision to re-establish vaccine manufacture through a PPP. After a rigorous bidding process, in 2003 Biovac was formed. The positive results are evident with a billion-rand bottom line benefit to the SA economy. This achievement along with healthy milestones in BEE, job creation, Intellectual Property, skills development and foreign direct investment. It goes without saying the Public/Private Partnership has made a positive contribution to the trade balance and has enabled the secure supply of quality, affordable products and health services. Dr Morena Makhoana, CEO of Biovac, added that they enjoy a largely interference-free relationship with the SA Government, despite the 47.5% ownership in the successful Public and Private Partnership.
In Search of a Better Prescription to Boost Local Manufacture and Mitigate the Industry Trade Deficit
Undoubtedly local manufacture should be the solution. Various speakers highlighted some of the facts; the local industry has lost ground with peer countries growing at a higher rate than SA. In 1970, SA produced more than India. In the 1960’s SA produced most, if not all, vaccine requirements for the country. By 1995, the SA government was importing most of their vaccines. SA used to be a force to be reckoned with in Clinical Trials. Despite this past success, it was highlighted that the trade deficit in the Pharma sector is growing alarmingly and in the order of 23 billion rand.
Professor Mano Chetty, the Past Chair of the SA Pharmacy Council raised the more micro-concern, with regard, to skills and capacity. Erik Meinhardt, the President of the Innovative Pharmaceutical Association, proposed a collaborative approach for the private sector to make a meaningful contribution to the skills development capacity requirements.
Given the lack of capacity, shortage of skills, the slow uptake on foreign investment and high cost to set up new manufacturing facilities, Stephen Bennett provoked the audience with a dilemma, asking, “Can you manufacture cheaply enough? “What is the cost of setting up a plant vs the cost of importing? “Are their people in the room who believe local manufacture is not the right way forward?” Seemingly the delegates and speakers indicated that they unanimously believed that local manufacture was the right way forward.
It was proposed by participants, that the Pharma industry look to other industry success stories, by example the Mercedes Benz and BMW local manufacturing model. How did they get it right? It was further initiated that the industry should look to opportunities across the value chain outside of manufacturing including medical research, R & D and clinical trials. Kingsley Tloubatla, the Chair of the Black Pharmaceutical Industry Association, asked “why do we see success with local manufacture for arms, yet a lack-luster effort for medicine.”
The National Department of Health reiterated that along with security of supply, local manufacture and beneficiation remained as two precedent key contracting components.
Collaboration Consensus and Compromise Required for Change
The delegates and speakers were united on collaboration. Collaboration became the golden thread throughout the presentations and facilitated discussions. Stephen Bennett highlighted the UK experience where regulation did not work, “because regulators refused to talk to industry”. He acknowledged that stakeholders come from different perspectives yet suggested that in despite of this, “we can all agree on things”.
Professor Helen Rees applauded the consensus and compromise, give and take, in collaboration with stakeholders in working towards a world-class regulatory authority. Both Erik Meinhardt and Stavros Nicolaou complimented SAHPRA on their major steps toward a collaborative mindset and emphasized the significance of a well-run regulatory authority as a precedence for investors and rating agencies, who have seen the authority as a potential country risk.
Dr Thulile Zondi, concurred that current procurement mechanisms are not effective and welcomed suggestions to look at new methodologies, initiating another opportunity for the industry to collaborate.
Prince Julius introduced a new way of working toward success. “In the past was we had competition and sometimes co-operation. What we need to consider is “Co-opetition”. “Companies must scheme a way to march forward as one.”
Are we “thermometer people” or “thermostat people”?
The delegates were certainly heartened by the good news. Single Exit Pricing going in the right direction. SAHPRA’s bold plans to address the backlogs and formulate a more streamlined process going forward. The PPP success story with Biovac. The opportunities to fulfill local manufacture in the medical device sector. Aspens’ ambitious plans to become the largest anaesthetic provider in the world and the opportunities for local manufacturers to access government procurement spend as outlined by the Department of Health, National Treasury and the DTI.
Heartened by the optimism we are. But we cannot ignore the “elephant in the room”. As recently as 13 February 2019, it transpired that 88% of a 3 year, 15 billion-rand tender for ARV’s was awarded to a foreign company. This despite the President and 14 Cabinet Ministers saying they are going to grow the sector. In response to this apparent lack of commitment from government to favour local manufacture, the Department of Health Dr Thulile Zondi suggested that the DOH have to ask of themselves, “are we focusing on growing the industry or acting in the interests of patients?”.
Prince Julius suggested that for things to change we need to do things differently. He asked delegates “Are you a thermometer or a thermostat. A thermometer measures and registers temperature. A thermostat, on the other hand, measures, registers, regulates and activates change. “Thermometer people” can give you the facts. “Thermostat people” are determined to do something, not just report it, but do something about it.”
Prince Julius suggested that the private sector may not be leaders of the nation, but we can join the efforts of a few people. Given his vast experience in the public sector and his own success in the private sector, he recommended that companies become robust capacity building machines with a high level of ethics and duty of care.
Stephen Bennett closed the discussions by reminding delegates that the 4th Industrial Revolution is upon us and we don’t know what is coming and concluded with a quote from YES MINISTER. “If you want things done quickly it takes time.”
In conclusion, the speakers and panelists do not deny there is a long way to go, yet, appreciated the fact that at least we are sitting around the table.
Joanne Walsh is the Managing Director of Inspirational Development Group, South Africa (IDG-SA).
Joanne’s extensive global experience, her intimate understanding of shareholder value and investor confidence in the world of capital markets, along with her passion to raise the bar for individuals, teams and organisations ensures that IDG’s business performance engagements deliver ROI.
“IDG-SA is a business performance company with access to truly extraordinary client interventions across the globe. Our global faculty of subject matter experts ensures that our leadership, followership and partnership model fully serve the cross-functional business processes, leveraging functional competencies and fulfilling behavioural change required to raise the commercial excellence bar.” Joanne Walsh
Pie-Pacifique Kabalira-Uwase is the Head of the Business School of the Foundation for Professional Development. He is also an associate consultant with IDG South Africa. Pie- Pacifique’s life-story and career path exemplify his resilience and ability to defy the odds. At age 8, his father, a political prisoner died. His family suffered the real threat of the same fate, and were supposed to be killed in the 1994 Rwanda Genocide. At age 14 he became the family’s sole breadwinner, yet managed to complete his schooling with distinction. In 2001, he began his intrepid journey to South Africa, starting out, in Durban as a car-guard. A born leader, Pie-Pacifique inspired refugee women to organise themselves, founding the Union of Refugee Women.
It was only onwards and upwards from there, and for this reason, he travels the length and breadth of the planet, inspiring, coaching and training leaders and followers. With a degree in Physics under his belt, and a career in large corporate organisations, he is a seasoned Business and Leadership professional.
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