Johannesburg - Pharmaceutical companies had asked the government to approve an extra increase in medicine prices this year to compensate for a weaker rand, Aspen Pharmacare’s chief executive said yesterday.
Local and international drugmakers asked the government for an increase above the 4 percent granted in January, Aspen Pharmacare chief executive Stephen Saad said, declining to give a specific figure.
The rand has fallen 20 percent against the dollar since October, significantly increasing the cost of imported raw ingredients that are used to manufacture medicines.
The pharmaceutical industry in South Africa is tightly regulated with drugmakers usually allowed one increase a year.
“The reality is that the rand has depreciated heavily and many of your input costs are not in rand,” Saad said.
Department of Health deputy director-general for regulation and compliance, Anban Pillay, confirmed the companies’ request.
Saad said European suppliers were hit especially hard by the weaker exchange rate and companies had flagged the risk of medicine shortages without another increase that reflected the rand’s recent depreciation.
“If we fail to reimburse pharmaceutical companies for that risk they will stop supplying us with any particular product,” Pillay said. “We need to make sure that companies remain in business.”
Aspen, which makes around a quarter of its sales in South Africa, reported profit after tax grew by 35 percent to R3.3 billion for the six months to December.
The group also saw revenue from customers in Europe and the Commonwealth of Independent States increasing by 21 percent to R6.1bn.
Deputy chief executive Gus Attridge said Aspen had an advantage because it was not affected by the slow growth in the economy.
Aspen shares rose by 1.93 percent to close at R302.06 on the JSE yesterday.