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Meeting highlights:
- Geopolitics & Trade: South Africa’s G20 presidency is a key opportunity for emerging markets, with priorities including climate change, debt relief, inflation, price stability, and health equity. These issues are in line with the overall theme, which is solidarity, equity, and sustainability. Tariff hikes from the US threaten key export sectors (automotive, textiles, agribusiness), pushing for diversification of trade partnerships.
- Domestic Politics & Stability: The Government of National Unity (GNU) initially boosted investor confidence; however, there are some tensions that have arisen in the GNU, primarily around Black Economic Empowerment, land expropriation, and NHI.. Stavros believes the GNU will hold, which is vital for economic stability and healthcare investment.
- Healthcare Funding & NHI: Loss of major PEPFAR/USAID funding endangers HIV/TB programs and world-class research capacity. NHI remains contentious, with multiple court cases; Stavros advocates continued dialogue to protect both public and private healthcare sectors.
- Pandemic Preparedness & Local Manufacturing: Africa’s vaccine production potential is hindered by WHO prequalification delays and weak government implementation of localisation policies. He calls for stronger procurement commitments from Gavi/UNICEF and better incentives for local manufacturing.
- Pharma Innovation & Access: Growth in GLP-1 drugs is reshaping the market but raising concerns over counterfeits. Precision medicines face affordability barriers under rigid pricing rules; alternative reimbursement models and stronger regulatory enforcement are needed.
EF: How do you assess the current geopolitical situation concerning South Africa?
SN: One of the most dominant topics is South Africa’s presidency of the G20. We are the last emerging market in the current cycle to hold this role, following Indonesia, India, and Brazil, before it passes to the United States and then shifts toward a more developed market focus. We must deliver as South Africa for emerging markets.
The theme is solidarity, equality, and sustainability. Key agenda items include climate change, emerging market debt, pandemic preparedness, health equity, inflationary pressures, and price stability. We are pleased that the finance track achieved a declaration for the first time in three years, addressing various key issues, including inflation. The issue around debt has not been quite settled and will be escalated to the Heads of State meeting on 22nd and 23rd November.
From the health track, five priorities have been identified, which will form part and parcel of the overall declaration. One of the five priorities from the health working track was developed jointly with the private sector. It focused strongly on regional manufacturing for pandemic preparedness.
The second major geopolitical factor affecting South Africa is the trade and tariff landscape. South Africa received a 35% tariff. We are unsure how the 30% figure was determined. The fact remains that this impacts key sectors in South Africa: The automotive sector, which is an important export industry, textiles and clothing, and agribusiness.
The United States accounts for about 7.8% of South Africa’s exports, with 26% of those falling under AGOA market access. We do not expect AGOA to be renewed in September, and it will likely lapse. Regardless, the automotive sector consistently contributes 64% of the 26%, so you can work out that it represents about 18% of our total exports to the United States. The biggest contributor is platinum group metals (PGMs), which will not attract a tariff.
The United States remains a very important trade and investment partner for South Africa, one of the most important, if not the most important. We continue to speak to our American counterparts to reduce the 30% tariff. Most of the rest of Africa received 15%, and we hope to get down to those levels or below, but that remains to be seen in the ongoing discussions.
So those are some of the geopolitics at play. This has also led to calls for South Africa to diversify economic partnerships by looking at new markets, exploring new export opportunities, and strengthening and diversifying existing ones.
The third area is the impact of global conflicts, with Ukraine, the Middle East, and Sudan being the ones that affect us most. These involve some supply chains, but their main impact is inflationary, especially through higher oil prices and constrained supply chains. No country, including ours, can afford inflationary pressures at this time. This has led to a revision of our 2025 growth forecast, which has been revised downward twice, from 1.6% to 0.9%. We might do slightly better, but geopolitical factors have played a major role in the revision.
Price instability and inflation also place a significant burden on an already shrinking health budget in real terms, further affected by reduced USAID, PEPFAR, NIH, and U.S. CDC contributions. Lower disposable income, inflationary pressures, downward-revised budgets, and less tax collection create a negative picture.
The positive side is the opportunity to diversify our exports and strengthen economic partnerships, which we are actively working on. This is a silver lining. Sometimes a crisis forces action, and that is what is happening now. It also requires a different and more creative approach to transitioning from donor-funded to self-funded, sustainable public health services.
EF: How do you assess the current political landscape in South Africa?
SN: For the past 14 months, domestic politics have been dominated by the Government of National Unity (GNU). Initially, markets responded well, reflected in a stronger Rand, a buoyant stock exchange, and increased investment flows. This has become muted in the last few months as the GNU tensions and pressures started to play out. Some are suggesting that the GNU will not hold, but my view is that there is too much to lose for all parties, and it will remain intact.
Even with next year’s local government elections likely to expose GNU party tensions, I expect it to hold, which is positive for investor sentiment. In healthcare, the GNU has meant ANC-led policies remain dominant, with NHI still a key policy and implementation priority, despite opposition from larger GNU parties like the Democratic Alliance. NHI has been one of the tension points within the GNU.
To summarize the domestic political landscape in the context of this report, it is threefold. First, healthcare systems and investors require a stable government. There have been concerns about stability recently, so the GNU must continue to hold. Second, inflationary pressures are significant. We must move the inflation target from a range of 3% to 6%, with a midpoint of 4.5%, down to 3%. This is a debate currently between the central bank and the Ministry of Finance. It is important to give inflation certainty, given pressures on budgets and the high levels of government and consumer debt. Managing government debt is core to both monetary and fiscal policy. We have breached a 76% debt-to-GDP ratio, which is unhealthy, so reigning it in, servicing debt, and managing the budgetary outlook are crucial.
EF: What are South Africa’s healthcare priorities?
SN: South Africa spends about 8.4% of its GDP on healthcare. About 550 billion rand in total. About 275 billion is consumed in the public sector, and 250 billion by private patients paying out of pocket or cash-paying patients. The issue is that there is a disparity in per capita spending between the public and private sectors. The private sector represents around 16% of the population, and the public sector 84%. People move between public and private care, but private sector spending is about 4.5 times higher per person than public.
According to the Government, there is a significant number of migrant workers who are not necessarily citizens or have permits to be in SA and currently have access to the public health system, but this is under review. You have to demonstrate that you have a work permit or have become a naturalised citizen to access those public services.
Five dominant features characterize healthcare in South Africa. Starting with the public sector, first, PEPFAR and USAID funding have largely dried up, with little prospect of it returning. This has caused some disruption to HIV and TB public health programs. South Africa has about 16% of the world’s HIV population and the highest infection rate globally. HIV and TB co-infection is around 55% to 60%. The loss of funding significantly affects these programs. The government believes it can absorb most of these patients into public facilities, but some argue against that.
South Africa has built a formidable research and clinical trial capacity for HIV and TB, among the best worldwide, producing world-class scientists like Glenda Gray, Linda-Gail Bekker, Helen Rees, Salim Karim, and Francois Venter. These are world-acclaimed scientists, and they have become so largely from the contributions of the US NIH and PEPFAR.
South Africa was receiving between 1.8 and 2.2 billion rand per annum for this research capacity. We built up a significant research and clinical trial ecosystem. It allowed us to train more scientists and more researchers. No new HIV or TB drug is launched anywhere in the world unless it is tested first here in South Africa.
There is a risk that some of this could unravel, which is a real concern because we have always positioned our research and scientific capacity as a key selling point for our country to the international investor community. Diluting much of this will also impact the health science faculties and our universities, so it is a great area of concern. There are plans afoot to explore how we bridge that funding gap, and let us hope some of these issues are resolved. That is the first area I was going to comment on.
The second area is National Health Insurance. Although there’s agreement between the private and the public sectors around Universal Healthcare Coverage, there is a fundamental disagreement between the private and the public sectors on how this should be implemented. The National Health Act was assented to by the President in May last year. The President has not proclaimed the different provisions of the Act, and you need to proclaim the Act first before drafting regulations. The Health Department has been working on drafting regulations, but cannot publish them because the Act has not yet been proclaimed.
There has been a significant challenge from several private sector entities. The funders, the hospitals, and others have now brought seven different court cases. In most cases, the first defendant is the President of the Republic, and the second is the Health Minister. Depending on the legal strategy, some of these cases have gone to the Constitutional Court, and some have gone to the High Court.
Where are we going with NHI? We have an overburdened public sector that is struggling to cope with volumes and a private sector that can assist – we should be looking to see how we best leverage the two. The courts will ultimately have to settle this matter, as the current rapprochement between the private and public sectors is not working. Of course, we will continue trying to find a middle ground.
From an organised business perspective, it is important to continue engaging with the government. I am likely conducting this interview in multiple capacities, including as chairman of the PTG, which represents the entire pharmaceutical industry, including IPASA (Innovative Pharmaceutical Association of South Africa), GBMSA (Generics and Biosimilar Medicines of South Africa), Pharmisa (Pharmaceuticals Manufactured in South Africa), SCA (Self-Care Association), and others. The PTG’s view is that we must, at all costs, exploit every opportunity for dialogue to find a middle road. It is not in anyone’s interest for either the public sector or the private sector to be destroyed in the process. We are strong advocates for rapprochement between the two industries.
Let me move on to the third important element of the health landscape in South Africa, and that is pandemic preparedness. There is a lot of focus here, largely because of the G20, the AU commitments, and the role of President Ramaphosa as the African Union pandemic preparedness champion. But there is another important element, and that is the Gavi–UNICEF element.
As you know, one of the cornerstones of pandemic preparedness is ensuring security of supply, vaccine equity, and health sovereignty, with vaccines as a cornerstone. This covers paediatric routine vaccines, emergency outbreak vaccines, and all other categories. You cannot implement this successfully without GAVI, UNICEF, and WHO pre-qualification in place.
If you have regional manufacturing, WHO pre-qualification needs to be aligned with your national regulator (NRA). Unfortunately, there have been disappointing delays in terms of the WHO and the NRAs aligning on priority review and parallel submissions, and this has caused procurement delays.
On the Gavi front, they have made the AVMA commitment, the African Vaccine Manufacturer Accelerator. We welcome it as African vaccine manufacturers, but we believe it does not go far enough. What we want to see are procurement commitments. UNICEF has set a target of 20% procurement of African vaccines. The African vaccine industry feels that it is not enough, and not moving quickly enough, but it is at least some form of commitment. We continue to engage constructively with UNICEF to work out the modalities and procurement mechanisms that would achieve the African Union’s 60% local procurement target.
To further promote regional manufacturing and procurement, SAHPRA introduced a localization policy about six weeks ago. They have committed to reducing registration timelines by 50% for domestically produced products, as well as a 50% reduction in costs for post-registration variations, inspections, and other related services. This is an important signal.
However, as disappointing as WHO’s delays have been, the South African government, particularly the Department of Health, has failed to implement the country’s localisation and preferential procurement policy. The current antiretroviral tender, just awarded, shows this clearly. Three major ARV producers, Sun Pharma, Adcock Ingram, and Cipla, all of whom manufacture ARVs in South Africa, lost the biggest antiretroviral product tender. This demonstrates a lack of implementation of the localisation policy and needs to be addressed at the earliest opportunity.
(Update) We now have a vaccine tender coming out on Friday. There is great hope that the government, particularly the Department of Health, will begin implementing the country’s localisation policies. This is another very important and significant feature. You cannot have your President as the African Union Pandemic Preparedness Champion and Co-Chair of the Global Fund, alongside Sir Keir Starmer, the two Co-Chairs of the Global Fund for AIDS, TB, and Malaria, and simultaneously have his own Health Department fail to implement these policies. It is not just the Health Department; it is across the board. This needs to be rectified with urgency.
EF: How do these factors impact the pharma sector?
SN: We have often discussed the evolution of pharma from small molecules to large molecules. It is a very interesting progression, and targeted and precision medicine is now very much the order of the day. However, we have an access problem in South Africa. The single exit pricing system offers no pricing flexibility, making it particularly challenging for patients without the means or private health insurance coverage. Even for those with private insurance, coverage is partial and subject to many rules.
The access problem is especially acute for precision medicines such as monoclonal antibodies, TKIs, CAR-T therapies, JAK inhibitors, and others. We need to find a solution. The industry has one, but it requires a receptive government to advance it. We are in discussions, and I intend to take this up personally now as Chair of PTG. In the past, I have not focused on it, but I hope to succeed because we need an alternate reimbursement model (ARMs) to make these precision medicines more accessible to the population.
Local manufacturing is a very important element, and as local manufacturers, we want three things. First, the implementation of the Public Procurement Act. Second, resolving the WHO pre-qualification issue will enable us to start exporting these products. Third, we need a more competitive set of government incentives, such as faster and more urgent action on special economic zones. For example, Aspen has been granted SEZ status, but there are still modalities that need to be worked out.
Another area we have seen with great excitement is the traction with the GLP-1 and GLP combination products. Aspen has launched a product, which has been the most successful launch ever in South Africa. I can say that because, when I was 25 years old, I launched a product in South Africa in 1990, which at the time was the most successful launch. It was a new proton pump inhibitor. Our latest launch has not only surpassed our previous record but also outperformed the competitor. It has been the quickest product ever to reach 100 million rand, then 200 million, and then 300 million, even with stock constraints.
These GLP-1 products are excellent, with emerging data showing they may be cardioprotective, renoprotective, and possibly improve dementia. These are not yet on-label indications, but the data are strong. However, this success has also created a problem: counterfeit, fake, and compounded medicines. There must be a strong focus on tackling this. I am currently speaking to the Minister of Police about it, as we have seen a proliferation of such products, similar to what has happened in Europe, where patients have died from these. This must be stopped.
The pharmaceutical sector is mixed. There are constraints from funders and the public sector, but also major excitement around the growth of GLP-1 drugs, which are redefining the pharma landscape globally and in South Africa.
