THE government, which expects to spend R7 billion on antiretrovirals (ARVs) next year, wants to push for the local production of key active pharmaceutical ingredients (APIs) as part of a broader plan to leverage local procurement and boost the pharmaceutical industry. This is according to the latest version of the industrial policy action plan (Ipap) released last week. Industry players have welcomed the development, but cautioned the government to ensure the plan is viable as investment will require hundreds of millions of rands. South Africa is the largest market for ARVs, with almost one million people receiving the AIDS treatment. Last year, the government spent R2.8bn on ARVs and that figure is forecast to escalate to R7bn next year. The Ipap document says that, apart from the economic burden, the figures show that there is a risk to the security of supply for these drugs. Two years ago imports were R16bn, while exports were R1.2bn. It said the export market had been under significant pressure due to the crisis in Zimbabwe, which accounted for 50 percent of South Africa's pharmaceutical exports until 2001. It also warned of "competition from exports from India". Stavros Nicolaou, the chairman of Pharmaceuticals Made in South Africa, said the project had to make sense from a capital investment and trade deficit point of view. He said the project also had to attract investors and avoid becoming a white elephant. He said the feasibility study that was currently under way would have to be digested, but with government support and the right technology, it would hold appeal. Vicki Ehrich, the chief operating officer of the Pharmaceutical Industry Association of SA, said the country was a very small market for pharmaceuticals, let alone active chemicals. The Department of Trade and Industry said the objective was to capture at least 50 percent of South Africa's demand for ARV APIs by 2013. The department said the idea was to incentivise investors internationally to exploit the high demand for ARVs that the country offered, set up plants and produce locally. Other opportunities identified by Ipap included local production of reagents of HIV/AIDS diagnostics under licence, production of vaccines under licence and removing constraints to clinical research.

Slindile Khanyile: Business Report,