Legislative changes and supporting local manufacturing throughout the whole value chain – is it feasible and

competitive?

India - A Historical success story

1950s: produced less than 15 % of the finished formulations, and virtually no APIs Government embarked upon systematic centralised economic planning system

Transformed through phases: Phase 1: Infrastructure Building (1950s-1960s) Phase 2: Reorientation of Industry and Science and Technology Strategies and Policies (1960s-1970s) Phase 3: Promotion of Indigenous Technologies (1970s-1980s) Phase 4: Moving Towards Economic Liberalisation (1980s-1990s)

Critically: Legislative basis was not restricted to trade barriers and local procurement but also towards development of technology, skills and capacity. Brazil – An emerging success story

Government has put in place policies and programmes to encourage and enhance science education and infrastructure

Again: Legislation is targeted towards capacity, skills, educational development

The Industrial Policy Action Plan (IPAP)

South Africa: has commenced legislative change:

The Industrial Policy Action Plan The Preferential Procurement Policy Framework Act 2012

South African implementation of the National Industrial Policy Framework legislation of 2007.

Industrial Policy Framework’s aims is: Long term industrialisation,• To facilitate diversification beyond traditional commodities,• To increased value addition in tradable goods and services,• Promotion of labour absorbing economic development,• Industrialisation that ensures increased participation (B-BBBEE) and marginalised regions • Contributes to building industrial development on African continent.

There are multiple specific target clusters:

Pharmaceutical Manufacturing Sector.

The Strategic Priorities section of IPAP II targets the following: • Domestic production of ARV APIs. • Increase local production of ARV API to

500 tons per annum

This intervention will reduce the trade deficit and risk to the security of supply.

Specific key actions required in pharmaceuticals are:

• Leverage public procurement: • Attract Active Pharmaceutical

Ingredient (API) investments for key ARVs.

• Improve regulatory environment for pharmaceutical production and clinical research

The Industrial Policy Action Plan (IPAP)

The Preferential Procurement Policy Framework Act 2012

The new Preferential Procurement Regulations make a provision for designation of industries identified in national economic development and industrial policies, for

procurement exclusively from domestic manufacturers.

Trade and Industry Minister Rob Davies: “The Pharmaceuticals sector has been designated as one in which the government will purchase selected products exclusively from

domestic manufacturers.”

The government began implement preferential local procurement in the 2012 tender cycle.

• 70% of the last Oral Solid Dose tender was earmarked for products with local content, and 30% open to all suppliers.

• The total tender value was USD $280 million.

The Department of Health was unable to fill the whole tender with the designated products as 50% of the products did not meet the criteria for local production and content.

Government Policy should stimulate investment (risk mitigation, market access, off-takes, protection)

Imbalanced legislation: Lack of local capacity limits implementation

Can the private sector help in shaping pharmaceutical market dynamics?

Private sector collaboration and public-private partnerships

South African examples: Biovac; Ketlaphela

Strengths: Risk allocation, Financing opportunities wider, Off-take and market access; R&D

Weakness: Inefficient, Historically expensive, Time-lines, Inability to execute on technology transfer, Lack of local skills base

Best solution is a cross-over model using para-statals / alternative off takers and a commercially driven operator with strategic skills transfer.