Aspen Pharmacare has signed a deal with Indian firm Laurus for the supply of active pharmaceutical ingredients (APIs) which are used for making HIV/Aids drugs.
The deal with Laurus, which is one of the world’s largest API suppliers, will give the South African government access to competitively priced APIs, according to Aspen senior executive Stavros Nicolaou.
Laurus has acquired Aspen’s SA subsidiary Phekolong Pharmaceuticals, which paves the way for the Indian pharmaceutical group to participate in the SA public pharmaceutical market.
Aspen, which is one of the long-standing suppliers of antiretroviral drugs (ARVs) to the government, would license its ARV intellectual property to Phekolong on a royalty basis. Phekolong, in turn, would supply and commercialise the ARV products locally.
Nicolaou said the move would strengthen local pharmaceutical manufacturing and counter the trend of deindustrialisation “that has been ongoing for some years now”.
“While ARV drug prices have reduced significantly over the years, ARV API sourcing has remained highly challenging for local ARV manufacturers,” Nicolaou said.
ARV API made up about 70% of total ARV costs, with all ARV API being controlled outside SA. “Without access to competitively priced APIs, you cannot be competitive. You will be shut out even in your own market,” he said.
Nicolaou said the offshore ARV suppliers had a competitive advantage because they controlled the cost of 70% of the overall costing of ARVs.
“In addition, most of the jobs, taxes and technology will be offshore. That is not good for security of supply. If we carry on importing, it is a missed opportunity for the country,” he said.
As part of its overall objective to bring HIV/Aids under control, the government aims to have 6.1-million people on treatment by 2020.
The Joint UN Programme on HIV/Aids (UNAids) has set so-called 90-90-90 targets which aim to ensure that by 2020, 90% of people living with HIV know their status, 90% of them are on antiretroviral treatment, and that the virus is suppressed in 90% of those on treatment.
With about 4.5-million patients on treatment, SA has the world’s largest ARV programme. The government initiated its ARV public programme in 2003.
Nicolaou said local manufacturing capacity was “nowhere near” the targeted 6.1-million monthly patient treatments. With API being manufactured offshore, the scope to increase local capacity was limited.
“Changing the model presents a local manufacturing opportunity, equally it presents an opportunity for smaller local players, who up till now have been left out of this local opportunity to potentially enter the local ARV formulation manufacturing space,” he said.
Nicolaou said the deal would also mitigate the risks of exchange rate volatility. The imported APIs are priced in US dollars.
Aspen share price lost 2.05% to R94.03 on Thursday.