ARV boom kickstarts local industry

The South African anti-retroviral (ARV) industry is booming, with market leader Aspen Pharmacare seeing its share price rise by more than 1 000% since it listed on the JSE Securities Exchange in 1998.

Aspen, founded in 1998 by businessman Stephen Saad, produces generic ARVs among a number of other pharmaceuticals. It also purchases licences for patent-expired medicines from multinational drug companies.

In March Aspen was awarded the lion’s share of the recent Department of Health’s R3,4-billion ARV tender for public health facilities, securing 32% of government procurement across eight ARV products. This puts Aspen’s share of the state ARV tender, which runs for three years, at more than R1,2-billion.

Aspen is the only ARV manufacturer of the successful tenders that produces ARVs in South Africa.
The other successful companies are United States-based Abbott Laboratories, which was awarded a 32% share to provide the ARV drugs kaletra and retonivir, and Merck Sharp & Dhome (MSD) which was awarded a 25% share to provide indavivir and efivarenz.

The balance of the tender was awarded to German-based Boehringer Ingelheim Pharmaceuticals (6%), India-based Cipla (1%) and US-based companies Bristol-Myers Squibb (2%) and GlaxoSmithKline (2%).

Aspen is poised to become the major supplier of ARVs to the rest of sub-Saharan Africa.

Its senior executive, Stavros Nicolaou, says the company’s current export market is worth only R20-million, but that as its new products are registered there will be fewer restrictions on exporting ARVs.

“If I had to equate it to a soccer match, we are in the first minute. The score is nil-nil in the first minute so it is not a meaningful reflection,” says Nicolaou.

Nicolaou says that currently only 9% of Africans who should be on an ARV programme are receiving their drugs, with half of them being supplied branded products.

As soon as its ARVs are registered, Aspen intends to supply Nigeria, Ethiopia, Zimbabwe, Tanzania, Uganda, Kenya, Zambia and a number of other African countries.

Aspen’s market share looks set to increase following the announcement this week that MSD granted it a royalty-free patent licence to manufacture and supply a generic version of efavirenz.

Efavirenz is an ARV drug that forms the bulk of MSD’s 25% of the recent health department tender, valued at almost R1-billion.

Nicolaou says that Aspen’s primary interest is Africa and if it were to begin exporting its drugs outside of Africa, it would have to renegotiate its voluntary licenses, which restrict it to sub-Saharan Africa.

Aspen was the first American Food and Drug Administration approved pharmaceutical company outside the US and the only one in Africa, allowing it to supply the US Presidents Emergency Fund Against Aids Relief (Pepfar), which has $900-billion to spend on drug procurement over the next five years.

Aspen has just received its first Pepfar order for Nigeria, an important step for it according to Nicolaou as it was facing many regulatory obstacles.

In April this year it announced that it had been granted a license by Gilead Sciences to manufacture ARV products truvada and tireda, which are currently unregistered in Africa. In the same month the company also announced a memorandum of understanding with India-based Matrix Laboratories Limited and the Active Pharmaceutical Ingredients manufacturer, in an attempt to secure a strong supply source for its raw materials.

Board of Healthcare Funders head of corporate communications Heidi Kruger says that it is estimated that 4% of the seven million South Africans on medical aid schemes are on an Aids management programme and Aspen has the largest share in supplying the private sector with ARVs.

Lloyd Gedye