Pharmaceuticals, Life Sciences and Biotechnology

Pharmaceuticals, Life Sciences and Biotechnology Sector Fact Sheet 1. Sector Description The Global Industry Classification Standard (GICS) distinguished two main groups in the healthcare industry: Health care equipment and services; and pharmaceuticals, biotechnology and related life sciences. This fact sheet straddles both of these groups, examining medical equipment, medical supplies, private health care services, biotechnology, pharmaceuticals and miscellaneous scientific services. 2. Sector Overview 2.1 Global Sector Overview Currently, the global pharmaceutical market is dominated by United States companies, which accounted for 28 of sales in 21, according to IMap (212). The European Union accounted for nearly 15, and Japan for 12 of the global market. The global pharmaceutical market is expected to grow at a compound annual growth rate (CAGR) of 5 to 8 through 214. This growth is expected due to accounting for the impact of the changing combinations of innovative and mature products on the market and the rising healthcare access in emerging markets, and on the other hand, the price pressure by regulators in developed countries (IMap, 212). The pharmaceutical sector in emerging markets is expected to grow by 13 in 21 to16 in 215 (IMap, 212). Single-digit growth is forecast for the sector over the next five years due to funding pressures and the dynamics of the innovation cycle. Companies face pressure to adapt to evolving patient needs and long-term trends in the market place. Patent expirations have led to growth in the generic drug market globally, coupled with the rising cost pressure on healthcare. In 21, generic drugs were estimated to cost 3 to 8 less than original medicines. 2.2 South Africa Sector Overview According to Business Monitor International (BMI; 212), South Africa is a fast-emerging pharmaceutical market. The country s pharmaceutical industry is well-developed and mainly focused on the production of generic products, including manufacturing copy drugs under licence. Many multinationals have an established presence in South Africa, many as a base for their Sub- Saharan African operations. Tendering for the public sector is competitive, particularly on price. Top companies include Adcock Ingram and Aspen Pharmaceuticals. Foreign companies operating in the country include Pfizer (United States), GlaxoSmithKline (United Kingdom), Sanofi (France), Bristol Myers Squibb (United States) and Johnson & Johnson (United States). The South African healthcare system consists of the public sector and smaller, fast-growing private companies. The public healthcare sector supplies basic primary services via relevant public institutions. High-tech, complex operations are often only supplied by private sector companies. Almost 5 of South Africa s healthcare expenditure is accounted for by private insurance schemes. Approximately 8 of the population receive public sector healthcare (BMI, 212). The National Health Insurance Scheme is scheduled to start roll-out in 212, and is expected to take 14 years, with the first five years scheduled for the administration and regulatory measures to be put into place. This plan aims to focus on the fundamentals of care administration, management and delivery. In terms of research and development in the sector, many new projects have been established in the past five years. An International Centre for Genetic Engineering and Biotechnology (ICGEB) was established in 27 to pursue research into 1

Value (ZARbn) diseases affecting the developing world including African sleeping sickness, bilharzia, malaria and HIV/AIDS. The centre has partner laboratories in Italy and India. The South African drug pricing system is based on a single exit price (SEP) which is determined by the manufacturer price, which the Department of Health decides by looking at a pricing basket of Canada, New Zealand, Spain, Australia and selecting the lowest price. Value-added tax (VAT) and the logistics fee, which are both 1 and15, are added to the price. This is the price at which the drug is sold to the pharmacists, which then calculate what tier the drug s price comes under and adds their own profit margin accordingly, while not going over the maximum mark-up (BMI, 212). In terms of industry developments, the biggest sellers in terms of pharmaceutical sales are treatments for diseases such as heart disease and hypertension which predominantly affect a richer population profile. According to BMI (212), nearly 1 South Africans die of heart attacks or strokes each day, although this figure pales when compared with the 1, people that are estimated to die of AIDS. According to BMI (212), drug spending in South Africa reached ZAR27.19bn in, an annual increase of 9.3 from 21. South Africa s prescription drug market was worth ZAR23.96bn in, and is expected to increase in value to ZAR36.41bn (USD4.55bn) by 216. The prescription drug market accounted for 88.1 of South Africa s total drug market in. It is forecast that increases in the demand for generic prescription drugs in conjunction with slowing demand for prescription drugs and the government policy compelling state organisations to buy some drugs exclusively from domestic suppliers will affect this percentage contribution up until 216 (BMI, 212). PHARMACEUTICAL SALES, 24-215* 45 4 35 3 25 2 15 1 5 3 25 2 15 1 5-5 Growth 24 25 26 27 28 29 21 212* 213* 214* 215* Value (ZARbn) 9.7 1.96 13.46 15.72 2.14 22.11 24.48 27.19 29.62 32.38 35.22 38.22 Change 26.27 22.28 15.51 12.8 9.25 7.87 27.34 11.94-3.52 12.5 8.76 8.52-1 Source: NEDLAC 212, BMI, 212 * Forecasted Values The performances of different drug categories are shown below. Sales of prescription drugs are forecast to continue growing at rates of more than 1 this trend is set to continue until 215. In 212, sales of prescription drugs increased by 1.57, while sales of generic drugs and over-the-counter drugs have grown at 12.78 and 14.95, respectively. 2

Value (ZARbn) 24 25 26 27 28 29 21 212 213 214 215 Prescription drug sales (ZARbn) 8.43 1.2 12.22 14.21 18.9 19.74 21.67 23.96 26.6 28.44 3.96 33.62 Patented drug sales (ZARbn) 6.99 8.9 9.59 1.3 12.96 13.68 14.64 16.2 17.11 18.34 19.58 2.86 Generic drug sales (ZARbn) 1.44 1.93 2.62 3.91 5.13 6.6 7.4 7.94 8.95 1.11 11.38 12.76 Over-the-counter (OTC) medicine sales (ZARbn) Source: NEDLAC 212, BMI, 212 4 35 3 25 2 15 1 5 PERFORMANCE OF DRUG SALES, 24-215.64.94 1.24 1.51 2.5 2.37 2.81 3.23 3.56 3.94 4.26 4.6 Consumers spending on prescription sales in South Africa have decreased due to the availability and affordability of over-thecounter (OTC) medicines. Patented medicines represent the largest single segment of the total market (patented, generic and OTC drugs) by value, at just under 59 in, although this share is expected to continue declining going forward (BMI, 212). South Africa s patented drug market was worth ZAR16.2bn (USD2.21bn) in, with this value expected to increase to ZAR22.16bn (USD2.77bn) by 216. The use of patented drugs is buoyed by the ever-present demand for niche medicines. South Africa s generic drug market was worth ZAR7.94bn in and is calculated to increase to ZAR14.25bn (USD1.78bn) by 216, according to BMI (212). Generic drugs share of total medicine sales in South Africa increased to more than 5 in in volume terms. Customers preference for generic drugs is also supported by the fact that many medical aid schemes only cover the cost of generic equivalents. South Africa s OTC medicines market was worth ZAR3.23bn in and is calculated to increase to ZAR4.96bn by 216. The OTC sub-sector is becoming highly competitive with chain pharmaceutical stores like Clicks and DisChem, Over-the-Counter medicines are accessible and cheap, appealing to consumers without adequate medical aid. According to BMI (), genericisation in the prescription drug market will allow the OTC market to gain in its relative share against prescription medicines. South Africa s medical device market was worth ZAR11.43bn (USD1.57bn) in and is calculated to increase in value to ZAR16.43bn (USD2.5bn) by 216. The medical device market accounted for 4.4 of total healthcare spending in and is forecast by BMI (212) to account for 4.1 of total healthcare spending in 216, before falling to 3.8 by 221. Generic drugs 29 BREAKDOWN OF PHARMACEUTICAL SALES, Over-the-counter (OTC) medicines 12 Source: NEDLAC 212, BMI, 212 Patented drugs 59 South Africa s medical device market was valued at USD1.52bn in (BMI, 212) and is dominated by foreign companies. Imports account for 9 of the market by value, an indication of the underdevelopment of the industry. South Africa has successfully transformed nuclear weapons from the apartheid era into medical tools, which could be used to detect cancer and 3

heart diseases. The South African Nuclear Energy Corporation (Necsa) formulated a new technique allowing scientists to create molybdenum-99 (MO-99) using low-enriched uranium, instead of the high-enriched type used for making bombs. According to BMI (212), domestic manufacturing mostly remains fragmented and focused on the production of low-tech and low-value devices such as surgical goods and disposable needles. Expensive equipment, such as magnetic resonance imaging (MRI) scanners, is imported, much like in other emerging markets. The developed markets of the United States, European Union and Japan produce virtually all the high-tech medical devices and accounted for 83 of global medical device manufacturing by value, according to a 22 survey by the World Health Organisation. 2.2.1 Swot Analysis of the South African Pharmaceutical and Healthcare Sector: STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Well established local manufacturing industry, supported by foreign investment. High disease burden ensures a high demand for drugs, especially antiretroviral drugs Winners of government drug tenders are guaranteed substantial revenues. Government procurement schemes favour local drugmakers Largest drug market in Africa, with the fifth highest expenditure on pharmaceuticals per capita Source: BMI, 212 Government pricing policy focused on reducing costs. Ambiguous parallel trade regulations open to abuse Private drug market and threatening multinationals profit margins. Funding shortcomings in the public healthcare system. Lack of universal healthcare insurance, with 2 of population not covered by any insurance schemes. Slow drug approvals process Vast inequality between the provision in the public and private sectors. 2.3 Western Cape Sector Overview Potential for marked generic sector growth, in line with cost containment and the recent introduction of a tiered-pricing structure for pharmacists. Huge market for HIV/AIDS drugs given disease s epidemic levels, tenders favour local companies with high Black Economic Empowerment (BEE) ratings. Rising demand for diabetes and other chronic disease management treatments. Regulatory conditions to improve with new drug registration agency SAHPRA. Growing market for clinical trials due to the country s high infectious disease burden and high number of treatment-naïve patients. An attractive export base into less politically stable Southern African nations particularly with new Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation Scheme (PIC/S) membership Rising competition from Indian generic drug producers. State organisations will be compelled to buy some drugs exclusively from domestic suppliers. Some firms may struggle to comply with BEE guidelines in the South African Healthcare charter. Failure to expand and revise medicines reimbursement. Modernisation costs to potentially prohibit harmonisation of domestic regulation with international norms. Price restrictions and proposed benchmarking are likely to lead to a reduction in foreign investment and even result in some companies exiting the market. Rising private health costs threatening to put private health insurance further out of reach of the majority of the population. The Western Cape is a strong market in the biotechnology and medical devices sector, with institutes such as the Biovac Institute forming the cornerstone of the Province s health sector. In addition, the Western Cape hosts one of the highest concentrations of medical device and biotechnology companies, research institutes and research groups in South Africa. This provides an ideal opportunity for further improving the sector s competitiveness and international attractiveness. Cape Town boasts some of the worlds top technology companies in medical devices, with products that are considered top of their class, and unique. The Western Cape Provincial Government, together with the City of Cape Town is testing the feasibility of investing in a health technology park in Cape Town. The objective is to create a strategic clustering of pharmaceutical companies, research institutes and groups, clinical trial facilities and R&D facilities. 4

Value 3. Trade 3.1 Global Trade in Pharmaceutical Products The figure below shows the trend in global exports of pharmaceutical products from 22 to. In, exports totalled ZAR3.3bn, an increase of 19.33 from 21. Imports totalled ZAR15.96bn in, an increase of 5.87 from 21. This is the highest level of imports recorded in the ten-year period from 22 to. GLOBAL EXPORTS OF PHARMACEUTICAL PRODUCTS, 22-4 3 5 3 2 5 2 1 5 1 5 22 23 24 25 26 27 28 29 21 Exports 1 547.77 1 355.8 1 436.51 1 579.91 1 933.7 2 434.17 3 233.57 3 5.6 3 242.53 3 342.61 Source: TradeMap, 212 The top global exports of pharmaceutical products in were medicament mixtures (ZAR2.4trn), human and animal blood (ZAR643.22bn) and pharmaceutical goods such as specified sterile products sutures and laminaria (ZAR15.93bn). RANK HS CODE TOP GLOBAL EXPORTS OF PHARMACEUTICAL PRODUCTS, PRODUCT (ZARbn) 1 34 Medicament mixtures (not 32, 35, 36), put in dosage 2 365.48 3.38 2 32 Human & animal blood; antisera, vaccines, toxins, micro-organism cultures 643.22 1.58 3 36 Pharmaceutical goods, specified sterile products sutures, laminaria 15.93 4.41 4 33 Medicament mixtures (not 32, 35, 36) not in dosage 85.44 7.42 5 35 Dressings packaged for medical use 48.92 8.4 6 31 Glands & extracts, secretions for organotherapeutic uses; heparin 43.8 16.25 TOTAL EXPORTS 3 342.61 5.8 Source: TradeMap, 212 The top export markets for pharmaceutical products are located primarily in North America and the European Union. The top export markets for pharmaceutical products were Germany (ZAR491.94m), Switzerland (ZAR381.61m) and Belgium (ZAR344.8m). The export performance of the top 1 exporting countries for pharmaceutical products differed extensively in terms of growth in : Exports from Switzerland increased by 15.9 and exports from Ireland increased by 14.57. Alternatively, exports from the Netherlands declined by 25.86, while exports from the United States declined by 6.24 in. 5

TOP 1 EXPORT MARKETS FOR PHARMACEUTICAL PRODUCTS, RANK MARKET SHARE, 1 Germany 491.94 4.8 14.72 2 Switzerland 381.61 15.9 11.42 3 Belgium 344.8-4.72 1.32 4 United States 278.82-6.24 8.34 5 Ireland 259.1 14.57 7.75 6 United Kingdom 237.29-1.26 7.1 7 France 236.65-3.18 7.8 8 Netherlands 15.75-25.86 4.51 9 Italy 135.88 13.89 4.7 1 Spain 85.65 5.19 2.56 TOTAL EXPORTS 3 342.61.5 1. Source: TradeMap, 212 The top import markets for pharmaceutical products are located primarily in North America and the European Union. The top import markets for pharmaceutical products are the United States (ZAR474.77m), Germany (ZAR346.7m) and Belgium (ZAR243.68m). Imports by the Netherlands declined by 4.66 in. TOP 1 IMPORT MARKETS FOR PHARMACEUTICAL PRODUCTS, RANK MARKET SHARE, 1 United States 474.77 4.95 14.2 2 Germany 346.7 5.9 1.37 3 Belgium 243.68-15.11 7.29 4 France 19.45 4.48 5.7 5 United Kingdom 183.31 9.1 5.48 6 Italy 155.57 14.26 4.65 7 Switzerland 149.15 18.58 4.46 8 Japan 143.17 21.43 4.28 9 Netherlands 121.71-4.66 3.64 1 Spain 113.6 5.5 3.38 TOTAL IMPORTS 3 342.61 5.8 1. Source: TradeMap, 212 3.1 South Africa Trade in Pharmaceuticals Products The figure below shows the trend in South Africa s trade in pharmaceutical products from 22 to. South Africa has consistently held a negative trade balance in this sector. In, exports totalled ZAR1.1bn, an increase of 19.33 from 21. Imports totalled ZAR15.96bn in, an increase of 5.87 from 21. This is the highest level of imports recorded in the tenyear period from 22 to. 6

Value (ZARm_ 2 15 1 5 Source: Quantec, 212-5 -1-15 -2 SOUTH AFRICA TRADE IN PHARMACEUTICAL PRODUCTS, 22-22 23 24 25 26 27 28 29 21 Exports 833.61 654.87 683.49 749.3 787.34 877.62 1 277.61 1 311.84 937.28 1 118.5 Imports 6 174.64 5 811.76 6 179.86 7 444.4 9 41.41 1 442.58 13 42.84 13 482.39 15 73.8 15 958.48 Trade balance -5 341.3-5 156.88-5 496.37-6 695.37-8 254.7-9 564.96-11 765.2-12 17.5-14 136.5-14 839.9 The table below shows the top pharmaceutical products traded by South Africa in. The top exports of pharmaceutical products from South Africa in was medicaments in dosage (ZAR65.31m), medicaments formulated in bulk (ZAR1.56m) and vaccines for veterinary use (ZAR73.97m). In terms of growth in, exports of contraceptive preparations based on hormones or spermicides increased by 88.65, while exports of medicaments formulated in bulk increased by 83.53. The top pharmaceutical product imports to South Africa in were medicaments in dosage (ZAR1.1bn), vaccines for human use (ZAR1.1bn) and antibiotics in dosage (ZAR889m). RANK TOP 1 EXPORTS FROM SOUTH AFRICA, TOP 1 IMPORTS TO SOUTH AFRICA, PRODUCT (HS6) 21- RANK PRODUCT (HS6) 21-1 H349: Medicaments, in dosage 65.31 26.4 1 H349: Medicaments, in dosage 1 143.8 13.87 2 H339: Medicaments, formulated, in bulk 1.56 83.53 2 H322: Vaccines, human use 1 96.9 1.13 3 H323: Vaccines, veterinary use 73.97-7.98 3 H342: Antibiotics, in dosage 888.88-17.88 4 5 6 H351: Medical dressings having an adhesive layer H359: Medical dressings except those with adhesive layer H366: Contraceptive preparations based on hormones or spermicides 71.86-3.6 4 7.87 44.17 5 26.25 88.65 6 H321: Antisera and other blood fractions H3439: Hormones, except contraceptives, in dosage H339: Medicaments, formulated, in bulk 576.76 7.73 38.67 11.41 375.26-39.97 7 H345: Vitamins, derivatives, in dosage 25.14-24.8 7 H3431: Insulin, in dosage 368.41-48.82 8 H3339: Hormones, no antibiotics, bulk, not contraceptive 9 H342: Antibiotics, in dosage 14.25-31.88 9 1 H3439: Hormones, except contraceptives, in dosage 2.51 35.64 8 H323: Vaccines, veterinary use 297.1 2.14 14. -52.56 1 H341: Penicillins and streptomycins, derivatives, in dosage H3432: Adrenal cortical hormones, in dosage 272.85 29.13 253.86 12.69 TOTAL EXPORTS 1 118.5 19.33 TOTAL IMPORTS 15 958.48 5.87 Source: Quantec, 212 7

Value 3.2 Western Cape Trade in Pharmaceuticals Products The figure below shows the trend in Western Cape trade in pharmaceutical products from 22 to. The Western Cape has consistently held a negative trade balance in this sector. In, exports totalled ZAR148.41m, an increase of 28.35 from 21. Imports totalled ZAR2.4bn in, an increase of 38.12 from 21. This is the highest level of imports recorded in the ten-year period from 22 to. WESTERN CAPE TRADE IN PHARMACEUTICALS PRODUCTS, 22-3 2 1 Source: Quantec, 212-1 -2-3 22 23 24 25 26 27 28 29 21 Exports 66.12 43.16 115.93 86.38 135.44 54.3 94.32 14.36 115.63 148.41 Imports 99.6 1 131.56 1 179.32 1 376.87 1 738.19 1 75.28 1 724.83 1 6.27 1 732.72 2 393.32 Trade balance -843.48-1 88.41-1 63.39-1 29.49-1 62.75-1 2.98-1 63.5-1 459.91-1 617.9-2 244.91 The table below shows the top pharmaceutical products traded by the Western Cape in. The top exports of pharmaceutical products from the Western Cape in was medicaments in dosage (ZAR121.9m), medicaments formulated in bulk (ZAR5.8m) and vaccines for veterinary use (ZAR4.55m). The top pharmaceutical product imported by the Western Cape in were medicaments in dosage (1.4bn), vaccines for human use (ZAR439m) and antibiotics in dosage (ZAR145m). RANK TOP 1 EXPORTS FROM THE WESTERN CAPE, TOP 1 IMPORTS TO THE WESTERN CAPE, PRODUCT (HS4) 21- RANK PRODUCT (HS4) 21-1 H349: Medicaments, in dosage 121.91 59.4 1 H349: Medicaments, in dosage 1 421.99 25.96 2 H339: Medicaments, formulated, in bulk 5.82 7.91 2 H322: Vaccines, human use 439.49 83.33 3 H323: Vaccines, veterinary use 4.55 3.92 3 H342: Antibiotics, in dosage 144.53 34.44 4 5 6 H3439: Hormones, except contraceptives, in dosage H345: Vitamins, derivatives, in dosage H366: Contraceptive preparations based on hormones or spermicides 3.7-13.12 4 2.91-73.64 5 2.21 1667.4 6 H3439: Hormones, except contraceptives, in dosage H341: Penicillins and streptomycins, derivatives, in dosage H3432: Adrenal cortical hormones, in dosage 111.66 62.92 91.33 186.82 31.5 32.49 7 H365: First-aid boxes and kits 1.38 156.82 7 H323: Vaccines, veterinary use 25.83 28.18 8 9 1 H319: Heparin, salts, for therapeutic use H359: Medical dressings, except those with adhesive layer H329: Blood, toxins, cultures, medical use.96 3493.59 8.94-32.44 9.94-41.9 1 H339: Medicaments, formulated, in bulk H359: Medical dressings, except those with adhesive layer H364: Dental cements and other dental fillings, bone cements 25.34.84 19.81 1.4 19.56-14.11 TOTAL 148.41 28.35 TOTAL 2 393.32 38.12 Source: Quantec, 212 The Western exports pharmaceutical products primarily to markets in Asia, Africa and Europe. The top export markets for pharmaceutical products from the Western Cape are India (ZAR3.66m), Zimbabwe (ZAR14.37m) and France (ZAR12.67m). Exports to Nigeria increased by 2,927.55 in, while exports to India increased by 1,665.19. 8

TOP 1 EXPORT MARKETS FOR PHARMACEUTICAL PRODUCTS FROM WESTERN CAPE, RANK COUNTRY 21- SHARE, 1 India 3.66 1665.19 2.66 2 Zimbabwe 14.37 38.72 9.68 3 France 12.67-42.36 8.53 4 United Kingdom 8.58 13.77 5.78 5 Bangladesh 8.24 77.31 5.55 6 Nigeria 6.35 2927.55 4.28 7 Indonesia 4.43-5.72 2.98 8 Myanmar 4.26 14.4 2.87 9 United Arab Emirates 4.25 592.23 2.87 1 Hong Kong 4.1 31.53 2.7 TOTAL 148.41 28.35 1. Source: Quantec, 212 The Western imports pharmaceutical products primarily from North America, Europe and Asia. The top import markets for pharmaceutical products to the Western Cape in were the United States (ZAR69.37m), India (ZAR417.31m) and Ireland (ZAR275.34m). Imports from Canada increased by 331.53 in TOP 1 IMPORT MARKETS FOR PHARMACEUTICAL PRODUCTS BY WESTERN CAPE, RANK COUNTRY 21- SHARE, 1 United States 69.37 6.39 25.46 2 India 417.31-2.58 17.44 3 Ireland 275.34 16.56 11.5 4 Italy 259.54 97.19 1.84 5 United Kingdom 16.39 68.97 6.7 6 Germany 114.25 23.4 4.77 7 Belgium 16.14-9.46 4.43 8 France 75.99-13.64 3.18 9 China 56.99 55.62 2.38 1 Canada 39.97 331.53 1.67 TOTAL 2 393.32 38.12 1. Source: Quantec, 212 4. Foreign Direct Investment (FDI) 4.1 Global FDI Between January 23 and June 212, a total of 5,455 FDI projects were recorded globally, equating to a 3.9 share of global FDI across all sectors. These projects represent a total capital investment of ZAR1,442.1bn, which is an average investment of ZAR264.25 m per project. During the period, a total of 528,391 jobs were created in this sector globally. The table below provides a breakdown of FDI into this sector. The most FDI activity was recorded in the pharmaceuticals sector, accounting for 2,391 projects in this period, while medical devices accounted for 1,435 projects, healthcare for 95 projects and biotechnology for 679 projects, globally. 9

Value SECTOR PROJECTS CAPEX (ZARbn) BREAKDOWN OF FDI, 23-JUNE 212 AVERAGE CAPEX (ZARbn) JOBS CREATED AVERAGE JOBS COMPANIES Pharmaceuticals 2 391 826.42 345.24 252 923 15 957 Medical Devices 1 435 226.59 157.89 137 221 95 822 Healthcare 95 2.37 211.7 93 924 98 367 Biotechnology 679 188.64 278.16 44 323 65 439 TOTAL 5 455 1 442.1 264.25 528 391 96 2445 The figure below demonstrates the trend of FDI activity for this group of sectors, from 23 to June 212. FDI peaked in 23, when 799 FDI projects were recorded totalling ZAR213.69m in total capital value. In, 751 projects were recorded, while 285 projects were recorded from January to June 212. FDI PERFORMANCE, 23- JUNE 212 25 2 15 1 5 23 24 25 26 27 28 29 21 212 Capex (ZARbn) 127.57 112.62 13.4 131.47 177.42 162.17 213.69 173.4 158.51 82.49 Projects 385 399 41 465 542 679 799 749 751 285 9 8 7 6 5 4 3 2 1 Projects The top global source markets were the United States (2,331 projects), Germany (423 projects) and the United Kingdom (354 projects). In terms of the capital value of projects, the top source markets were the United Kingdom (44.73 of total capex) and Switzerland (1.73 of total capex). TOP GLOBAL SOURCE MARKETS, 23-JUNE 212 RANK COUNTRY PROJECTS PROJECTS CAPEX (ZARbn) CAPEX COMPANIES COMPANIES 1 United States 2 331 42.73 644.94 44.73 974 39.84 2 Germany 423 7.75 12.69 7.12 186 7.61 3 United Kingdom 354 6.49 11.4 7.3 139 5.69 4 Switzerland 328 6.1 154.74 1.73 16 4.34 5 Japan 296 5.43 52.56 3.64 147 6.1 6 France 215 3.94 51.95 3.6 111 4.54 7 India 189 3.46 38.37 2.66 89 3.64 8 Canada 123 2.25 27.22 1.89 72 2.94 9 Netherlands 121 2.22 22.61 1.57 47 1.92 1 Denmark 11 1.85 31.49 2.18 39 1.6 Other Countries 974 17.86 214.4 14.84 535 21.88 TOTAL 5 455 1. 1 442.1 1. 2 445 1. 1

The top global destination markets were the United states (1,373 projects), China (414 projects) and the United Kingdom (325 projects). In terms of the capital value of projects, the top source markets were the United States (24.9 of total capex), China (9.78) and India (7.23). RANK COUNTRY PROJECTS PROJECTS TOP GLOBAL DESTINATION MARKETS, 23-JUNE 212 CAPEX (ZARbn) CAPEX COMPANIES COMPANIES 1 United States 1 373 25.17 359.13 24.9 784 32.7 2 China 414 7.59 141.5 9.78 283 11.57 3 United Kingdom 325 5.96 47.95 3.33 256 1.47 4 India 294 5.39 14.32 7.23 197 8.6 5 Germany 252 4.62 47.58 3.3 222 9.8 6 Ireland 195 3.57 1.19 6.95 111 4.54 7 France 187 3.43 45.35 3.15 145 5.93 8 Singapore 14 2.57 72.54 5.3 98 4.1 9 Spain 118 2.16 28.4 1.97 95 3.89 1 Russia 1 1.83 2.35 1.41 84 3.44 Other Countries 2 57 37.71 475 32.95 17 6.95 TOTAL 5 455 1. 1 442.1 1. 2 445 1. The top companies in this sector, measured by FDI activity, are Aspen Dental (95 projects), GlaxoSmithKline (GSK) (78 projects) and Pfizer (64 projects). TOP 1 INVESTING COMPANIES, 23-JUNE 212 RANK INVESTING COMPANY PROJECTS CAPEX (ZARbn) 1 Aspen Dental 95 2.8 2 GlaxoSmithKline (GSK) 78 42.5 3 Pfizer 64 34.44 4 Novartis 43 63.1 5 Euromedic International 37 2.84 6 Sanofi-Aventis 37 21.24 7 AstraZeneca 33 13.89 8 Eisai 33 8.6 9 GE Healthcare 31 17.16 1 Pharmaceutical Product 29 5.2 Other companies 4 975 1 441. 81 TOTAL 5 455 1 442.1 In terms of the sub-sector breakdown of FDI, 35.6 of projects were pharmaceutical preparations, followed by medical equipment and supplies (25.6), biological products (1.61) and medicinal and botanical (5.4). In terms of capex, the top two sub-sectors were pharmaceutical preparations (47.54 of total capex) and medical equipment and supplies (14.29). 11

BREAKDOWN OF FDI BY SUB-SECTOR, 23-JUNE 212 Pharmaceutical preparations Medical equipment & supplies Biological products (excluding diagnostics) Medicinal & botanical Outpatient care centres & medical & diagnostic laboratories Offices of physicians, dentists and other medical practicitioners General medical & surgical hospitals Health & personal care stores Nursing & residential care facilities In-Vitro diagnostic substances Electromedical and Electrotherapeutic Apparatus Other (Healthcare) Other (Biotechnology) Unspecified Home healthcare & all other ambulatory health care services Psychiatric & speciality hospitals 14.29 11.47 1.61 8.44 5.43 2.3 5.35 2.56 5.21 7.51 4.25 1.17 2.66 1.37 1.92 1.54 1.63 1.3 1.15.24.68.7.2.16.15.3.7.2.2 25.6 35.6 47.54 5 1 15 2 25 3 35 4 45 5 Capex Projects 4.2 South Africa and Western Cape FDI 4.2.1 Inward FDI to South Africa and the Western Cape Between January 23 and June 212, a total of 23 FDI projects were recorded into this sector in South Africa. These projects represent a total capital investment of ZAR5.63bn, which is an average investment of ZAR244.61m per project. During the period, a total of 3,98 jobs were created. 12

Value INWARD FDI TO SOUTH AFRICA, 23-JUNE 212 1 8 1 6 1 4 4.5 4 3.5 1 2 1 8 6 4 2 23 24 25 26 27 28 29 21 212 Capex 49 4 318 11 136 881 375 1 11 479 1 698 Projects 1 1 2 3 4 3 2 4 2 1 3 2.5 2 1.5 1.5 Projects The top source markets were the United Kingdom (8 projects), United States (6 projects) and India and Japan with 2 projects each. In terms of the capital value of projects, the top source markets were the United Kingdom (19.98 of total capex) and Switzerland (3.15 of total capex). TOP 1 SOURCE MARKETS FOR INWARD FDI TO SA, 23-JUNE 212 RANK COUNTRY PROJECTS PROJECTS CAPEX CAPEX COMPANIES COMPANIES 1 United Kingdom 8 34.78 1 787 31.73 4 21.5 2 United States 6 26.9 1 125 19.98 6 31.58 3 India 2 8.7 571 1.14 2 1.53 4 Japan 2 8.7 261 4.63 2 1.53 5 Netherlands 1 4.35 85 1.51 1 5.26 6 Singapore 1 4.35 16.28 1 5.26 7 Switzerland 1 4.35 1 698 3.15 1 5.26 8 China 1 4.35 16.28 1 5.26 9 France 1 4.35 68 1.21 1 5.26 TOTAL 23 1. 5 632 1. 19 1. In terms of the sub-sector breakdown of FDI, 47.83 of projects were pharmaceutical preparations, followed by medical equipment and support activities (21.74), biological products (13.4) and medicinal and botanical (8.7). In terms of capex, the top two sub-sectors were pharmaceutical preparations (37.77 of total capex) and medicinal and botanical (34.5). In terms of business activity, 3.43 of projects were manufacturing activities, 26.9 were sales, marketing and support activities and 26.9 were research and development activities. Manufacturing activities accounted for 48.81 of total capex of projects. 13

BREAKDOWN OF FDI BY SUB-SECTOR, 23- JUNE 212 BREAKDOWN OF FDI BY BUSINESS ACTIVITY, 23-JUNE 212 Outpatient care centres & medical & diagnostic laboratories 7.16 4.35 Construction 7.16 4.35 Unspecified 6.98 4.35 Business Services.62 4.35 Medicinal & botanical 8.7 34.5 Design, Development & Testing 8.5 8.7 Biological products (excluding diagnostics) 11.67 13.4 Research & Development 31.29 26.9 Medical equipment & support activities 1.88 21.74 Sales, Marketing & Support 3.59 26.9 Pharmaceutical preparations 37.77 47.83 Manufacturing 3.43 48.81 1 2 3 4 5 6 Capex Projects 1 2 3 4 5 6 Capex Projects The table below provides a list of the inward projects initiated in the Western Cape in the pharmaceuticals, life sciences and biotechnology sector. The highest-value project was initiated by VIP Healthcare Solutions Limited from the United Kingdom, who initiated the construction of an outpatient care centre and laboratory, employing an initial 29 people. Four projects were initiated in Cape Town and one project in Stellenbosch. DATE INVESTING COMPANY SOURCE COUNTRY INWARD FDI TO THE WESTERN CAPE, 23-JUNE 212 DESTINATION CITY INDUSTRY SECTOR /9 Cryo-Save South Africa Netherlands Cape Town Biotechnology 21/1 GlaxoSmithKline (GSK) United Kingdom Cape Town Pharmaceuticals 21/4 VIP Healthcare Solutions Limited United Kingdom Cape Town Healthcare 25/11 GlaxoSmithKline (GSK) United Kingdom Cape Town Pharmaceuticals 24/9 Alltech United States Stellenbosch Medical Devices SUB-SECTOR Biological products (except diagnostic) Pharmaceutical preparations Outpatient care centres & medical & diagnostic laboratories Pharmaceutical preparations Medical equipment & supplies CLUSTER Life sciences INDUSTRY ACTIVITY Design, Development & Testing JOBS 85.9 43 Life sciences Manufacturing 168.53 176 Life sciences Construction 43.33 29 Life sciences Manufacturing 24.54 5 Life sciences Manufacturing 4.91 19 TOTAL 979.93 728 14

4.2.2 Outward FDI from South Africa and the Western Cape The table below provides a list of all outward FDI projects initiated by South African companies in this sector, from 23 to June 212. The highest value project was initiated by Network Healthcare Holdings Limited (Netcare) in 29, who initiated the construction of a hospital in the United Kingdom. The Clicks Group, based in the Western Cape, invested in 3 retail projects in the health and personal care stores sub-sector, in Swaziland (), Botswana () and Lesotho (212). DATE INVESTING COMPANY 212/4 Clicks Group /7 Clicks Group /6 Clicks Group SOURCE STATE Western Cape Western Cape Western Cape SOURCE CITY OUTWARD FDI FROM SOUTH AFRICA, 23-JUNE 212 DESTINATION COUNTRY INDUSTRY SECTOR Cape Town Lesotho Pharmaceuticals Cape Town Botswana Pharmaceuticals Cape Town Swaziland Pharmaceuticals 29/9 BMI Healthcare Gauteng Johannesburg United Kingdom Healthcare 29/3 29/2 25/5 23/12 Aspen Healthcare Afrinatural Holdings Network Healthcare Holdings Limited (Netcare) Network Healthcare Holdings Limited (Netcare) Gauteng Johannesburg UAE Pharmaceuticals Western Cape Wellington United States Pharmaceuticals Gauteng Johannesburg United Kingdom Healthcare Gauteng Johannesburg Bulgaria Healthcare SUB-SECTOR Health & personal care stores Health & personal care stores Health & personal care stores General medical & surgical hospitals Pharmaceutical preparations Pharmaceutical preparations General medical & surgical hospitals Outpatient care centres & medical & diagnostic laboratories CLUSTER Retail Trade Retail Trade Retail Trade Life sciences Life sciences Life sciences Life sciences Life sciences INDUSTRY ACTIVITY JOBS Retail 81.81 86 Retail 81.81 86 Retail 81.81 86 Shared Services Centre 26.2 52 Headquarters 247.7 1 Sales, Marketing & Support 18.82 42 Construction 423.78 227 Sales, Marketing & Support 18.82 49 TOTAL 423.21 452 15