Plans For State Owned Pharmaceutical Company Are Ill Conceived

BMI View: South Africa already has a dynamic and competitive local pharmaceutical industry which meets the majority of the country's needs for antiretroviral (ARV) drugs. The African National Congress (ANC)'s recent proposal for a state-owned pharmaceutical company does not make sense from an economic point of view, as BMI believes that the profit margins for generic ARVs have fallen sufficiently to prevent new entrants to the market. Furthermore, it will undermine the companies that have already invested in producing ARVs, as a state company would receive preferential treatment in tenders.

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