Aspen Pharmacare and Indian drugmaker Laurus Labs have announced a deal enabling South Africa to access competitively priced active pharmaceutical ingredients (APIs) for local manufacture of antiretrovirals in Port Elizabeth. Photo: Simphiwe Mbokazi

CAPE TOWN – Aspen Pharmacare and Indian drugmaker Laurus Labs have announced a deal enabling South Africa to access competitively priced active pharmaceutical ingredients (APIs) for local manufacture of antiretrovirals in Port Elizabeth.

The deal gives Laurus – one of the world’s biggest ARV API suppliers – a foothold in the country which will support the government’s 90-90-90 UN treatment target to control the pandemic and work towards an HIV-free world.

The UNAids initiative is based on the principal of universal testing and treating. The world Aids body’s ambitious target hopes to see, by next year already, that 90% of those infected by HIV will be diagnosed, 90% of those diagnosed will be on antiretroviral treatment and 90% of people on ARVs will be virally suppressed. Viral suppression is when a person’s viral load – the amount of virus in an HIV-positive person’s blood – is at undetectable levels. This makes it almost impossible to transmit HIV, but it does not mean a person is cured, as the virus remains in the body.

Aspen Pharma has been the anchor supplier to the South African government since the inception of its ARV public programme in 2001.

Today, about 4,5-million, or 60% of South Africans living with HIV, have started ARV treatment. It’s the world’s largest public health system chronic care programme. The Health Department hopes to increase public sector ARV coverage to 6,1 million by 2020.

South Africa’s HIV strategy now entails “test and treat”, which means that everyone diagnosed with HIV in the public health system is placed on treatment – regardless of their CD4 count.

Stavros Nicolaou, senior executive for strategic trade at Aspen Pharmacare, says while ARV drug prices have reduced significantly over the years, sourcing ARV API has become challenging for local manufacturers.

“ARV API makes up around 70% of total ARV costs. But all ARV API is being controlled outside of South Africa, mostly coming from Indian and, to a lesser degree, Chinese suppliers,” Nicolaou explains.

“Often these ARV suppliers become competitors to local ARV manufacturers. They hold most of the cards as they control 70% of the overall costing.”

He says this has led to an increasing number of ARV products being imported, at the expense of the local industry, which is exacerbated by exchange rate risk and long working capital cycles related to ARVs for SA producers.

It’s forced Aspen to relook its ARV model and address the competitive API advantage held by competitors abroad.

Nicolaou says Aspen believes local manufacture presents the best form of ensuring security of supply, particularly of life-saving and essential medicines such as ARVs.

“Ideally, as a country we should be manufacturing all 6,1 million required patient treatments in South Africa. But the current domestic capacities are nowhere near 6-million monthly patient treatments and with the API cards held elsewhere, the scope to increase local capacities to 6 million are limited.”

He says changing the model presents a local manufacturing opportunity for smaller players and black pharmaceutical industrialists to enter the local ARV formulation manufacturing space.

The Aspen and Laurus deal, in which the Indian firm acquired a 100% stake in Phekolong Pharmaceuticals (an Aspen subsidiary meaning “place of healing”) presents a strong ARV pipeline offering.

“Aspen will license its ARV dossiers and intellectual property to Phekolong on a royalty basis and Phekolong will supply and commercialise these ARV products into the South African public market, assisting to support and achieve the 90-90-90 target of the government.

“In turn, Laurus will directly supply Aspen API through Phekolong for Aspen to toll manufacture ARVs from its Port Elizabeth facilities for the local ARV public programme.”

The deal will ensure that the government has access to competitively priced ARV API because it allows for procurement through tendering, reducing working capital cycles and the exchange risk for local producers.

The Health Department is currently considering a supplementary ARV tender, which Aspen hopes to  participate in.

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