Napm 2014 review

1
inside
Linking our members
to industry news and views
NAPM
Review

Linking our members to industry news and views
KEY
TRENDS
SPECIAL
REPORT
INSIDE
1 Challenging perceptions
4 From the Chairman’s Desk, Generic Trends
5 Bio-similars: the Next Frontier
6 Private healthcare under the spotlight
7 Intellectual property on the state’s agenda
8 Fair pricing vs prescribed formulas
10 The napm committee update
10 Making our mark
11 International connections
13 Important dates
12 Napm serving our members in 2014
Key Areas where the NAPM is making a difference
Our Vision
To champion affordable and accessible healthcare, by promoting generic medicines and supporting
the development of the South African pharmaceutical industry as a national asset.
Our Mission
To ensure that the healthcare sector plays a constructive role in our country’s economic growth,
through development and transformation, thereby creating an environment that can thrive ,
expand, and be competitive , with the ultimate aim to enhance access of medicines to all of our
country’s citizens.
Objectives
• To promote the use of generics medicines
• To be the voice of the generic pharmaceutical industry in South Africa
• To respond to regulations and represent members with government agencies
• To provide information and facilitate trade opportunities for members
CONTENTS

1
KEY
TRENDS
Challenging perceptions
A recent editorial in the Journal of Pharmaceutical Policy and Practice (JOPPP) advocated
research into the access of affordable of medicines. The article describes some of the barriers
that generic medicine manufacturers face in gaining greater usage of their products.
One of the arguments put forward are that funders do not actively promote the use of generic
medicines. This is not valid in the South African context as the medical aid administrators
in this country give great support to the dispensing of generic medicines through their
reimbursement policies and formularies. Another barrier JOPPP discusses is the non-alignment
of the medicines value change where incentives for distribution, wholesaling, prescribing and
dispensing can be contradictory.
In a presentation by the NAPM CEO at the conference on Market Access and Pricing held in
April 2014 the challenges facing generic medicine suppliers in South Africa was the topic. Some
of the barriers identified by JOPPP are relevant, but the others are pertinent only to our local
market. Some of those discussed were:
In our communication to the media and public the Association
tries to emphasize that generic medicines are subject to the same
registration and manufacturing regulations as the originators.

2
1. Prescriber Attitudes
Informal research has shown that physicians feel that funders impinge on their decisions
when formularies defined by Pharmaceutical Benefit Managers (PBM) are imposed on
them. Specialists especially feel that they have little or no say in how the formularies are
compiled and in most cases consideration for the particular drugs are based on price alone.
Consequently there is an aversion to prescribing generic medicines which comprise the
major portion of the formularies.
2. Consumer Perceptions
With regard to medicines, patients rely on their doctors in forming attitudes about generic
medicines. If the physician is not averse there is general acceptance by the consumer.
However it is a known consumer perception in marketing circles that the average person
equates quality to price. It is hard for a patient to believe that a medicine costing a third
of the price of an originator could have the same quality and efficacy as the higher priced
medicine.
3. Intellectual Property
The NAPM is in agreement with JOPPP in highlighting the challenges provided by
intellectual property legislation. The concept of “ever greening” where for trivial changes to
the manufacturing processes, patent periods are extended. In the majority of cases there
is no extra benefit to patients as the finished product remains unchanged. The NAPM has
supported the SA government in its publication of the draft IP policy to ensure patients are
only granted for novel inventions through an examinations office.
4. Regulatory Delays
An element which affects every one of the NAPM members. The lengthy registration times
for generic medicines affect the patients, businesses, and industry. Our members alone
have a backlog of more than 1000 dossiers to be evaluated. The members report that on
average it is taking about four years to achieve a registration, but because of the long lead
times, manufacturing processes have changed and post registration changes can take a
further eighteen months.
5. Pricing Factors
Input costs are of concern to any business, but in the generics industry the room to
manoeuvre is limited. The regulations’ pertaining to medicines preclude the easy change of
suppliers for active ingredients. This prevents shopping around for cheaper alternatives in
the short term.

3
Even locally manufactured generic medicines have at least a 60% imported content, which
makes the industry very susceptible to volatility in foreign exchange rates. The dramatic
changes in the value of the Rand against the currencies of our trading partners since November
last year create a hardship for generic suppliers due to the slim gross profit margins.
Medical Aid driven formularies force generic marketers to be “price takers”. If a medicine is
priced higher than the reimbursement level set by the medical aid administrator, the consumer
would have to make a contribution towards the purchase price. Medical aid members in general
are averse to paying a co-payment on a generic medicine.
With the expansion of pharmacy chain stores the concept of formulary tendering has crept in.
The generic medicine space is very competitive and choice is wide. This gives the pharmacy
buyers the opportunity to stock those generic medicines which provide the greatest financial
benefits in the form of advertising and the controversial “data fees”.
Most telling of all in this debate is that many consumers are
quite continent to pay over R200 for an unregistered, untested
complementary or so called “natural “medicine, rather than R50
for a proven generic anti- inflammatory medicine.
KEY
TRENDS

4
From the Chairman’s Desk
Generic Trends
This last year has seen the generic market continue to grow at double digits, recording
a year end growth rate (MAT) of 10.3% with a unit growth of 4.2%. This implies that most
generic companies took advantage of the price increase granted by the DoH and also
reflects the growth of newly launched, off patent generics.
The ethical market on the other hand recorded a much slower growth rate of 2.3%
(MAT), the bulk of which was due to volume growth (2.1%). The market share of generics
(MAT) has grown to 35.7% while the volume market share is now as high as 63%.
There has been much debate recently about the pricing of generics relative to that of
the originators, with some role players suggesting that the discount of generics could be
greater than it currently achieves.
The March IMS data suggests an average price for the ethical market of R5.28 per
counting unit while the average price of generics is just R1.49, a 67% difference. While
these figures are not comparing equivalent molecules, it does demonstrate the role that
generics play in expanding access to medication.

5
KEY
TRENDS
Bio-similars: the Next Frontier
In November 2013 the Medicines Control Council issued guidelines for comment on the
registration of bio-similar medicines. A bio-similar medicine is a follow on biological
medicine product whose active substance is made by or derived from a living organism
by means of recombinant DNA or controlled gene expression.
The term bio-similar was created by marketers to describe a subsequent version of
innovator biopharmaceutical products developed following patent expiry.
Generally, the difference between a small molecule generic medicine and a “follow-on
biologic” is the complexity of manufacture and the imitator manufacturer does not have
access to the originator’s cell bank.
With substantial assistance from our member, Cipla, the NAPM submitted comments on
31st January 2014 broaching three main aspects which we believe are pertinent to the
South African market.
Firstly, given that safety, efficacy and quality should be the prime considerations in the
registration of all medicines, guidelines for bio-similars need to be formulated in such a
way as to abide by these tenets but also promote access to these advanced medicines
by the greater population.
Promoting access involves providing biological drugs at substantially lower prices than
the originators’ versions. Access can either be promoted or prevented through the
registration process.
The proposed guidelines require local clinical trials to be conducted in each indication
claimed by a bio-similar.
In our submission we made a case for the utilization of clinical trials carried out in
other regulated jurisdiction as evidence for registration of the indications. In addition
to this some form of extrapolation of indication should be permitted. Included in our
submission was a request for a right by healthcare practitioners to substitute originator
medicines with a bio-similar as is allowed for generic medicines.

6
Private healthcare
under the spotlight
The five person committee of the Competition Commission delving into the private healthcare
market is led by former Chief Justice Sandile Ngcobo, was supposed to have started
deliberations in February this year. This has seemingly been delayed by a court application from
Netcare Hospital Group to oblige the consulting company, KPMG, to return all documents they
hold pertaining to Netcare Hospital Group.
KPMG, has acted as an advisor to Netcare in the past and allegedly hold 30 000 documents
pertaining to Netcare in their IT system. The reason for Netcare’s application is that KPMG
has been appointed as a support for the Competition Commission Committee probe into the
Private Healthcare Market.
The matter was set down for hearing in the High Court on 21st and 22nd May. The outcome of
the application is still awaited at time of printing. The enquiry into the private healthcare market
was announced on 13th May 2013 by the then Minister of Economic Development Mr Ebrahim
Patel.
The enquiry was the first to be undertaken after the amendment to the Competition
Commission Act came into effect on 1st April 2013.
Unlike the market enquiry into the banking sector where the participants cooperated on a
voluntary basis, participation into this one is no longer voluntary. The committee has wide
ranging powers such as to summons persons to appear and to provide documents. The
Commission now also has the power to initiate a complaint against a firm based on information
obtained in the inquiry. Under the Amendment Act, the commission is able to apply criminal
sanction to the results of a complaint.
The original terms of reference of the committee excluded the pharmaceutical sector from the
inquiry. This is the only part of the healthcare sector subject to price controls. Despite this the
CEO’s of both Mediclinic and Netcare called for the pharmaceutical sector to be included into
the probe. The Minister acceded.
Subsequent to this decision the then Deputy Commissioner of the CC, Trudi Makhaya with a
panel, interviewed the CEO of the NAPM as a preliminary investigation. Ms Makhaya has since
resigned from the CC. As the Association we can expect further contact when the inquiry
committee starts their probe.

7
SPECIAL
REPORT
Intellectual property on the
State’s agenda
The NAPM supported the draft intellectual property policy document which was issued earlier
this year. The publishing of the policy precipitated a row between the originator Association,
IPASA, and the Minister of Health Dr Aaron Motsoaledi. The NAPM cooperated with the
civil society organizations, MSF, Section 27 and TAC in formulating our response which is
summarised below.
1. Patent terms relating to medicine should be limited to a maximum of 20 years as authorised
by Article 33 of the TRIPPS agreement
2. The policy should clarify subject matter that is not considered patentable. (E.G. New uses,
treatment of diseases, known processes applied to new pharmaceutical entities.)
3. The policy should define what is meant by novelty and inventiveness and require significant
technical advances from the state of the art relating to pharmaceuticals.
4. The NAPM supports the draft policy in Chapter 1a) i) for the establishment of a substantive
Search and Examination facility.
5. We support Chapter1 a) v) for the establishment of a Pre- and Post- grant opposition
mechanism utilizing digital media and time lines for opposition. We further recommend that
post grant to existing patents be allowed with a cut-off date in the region of the past 10
years. If this process was overseen by a competent authority the need to up skill Judges on
patent aspects would be reduced.
6. We insist that although data ( such as clinical test data) be protected from commercial
abuse, the data submitted to a government agency such as the MCC or its successor, may
be utilised by that agency to evaluate generic medicines, for the benefit of the South African
nation. Chapter 1a) vii)
7. Under the heading Disclosure of information in patents, we concur that sufficient
information be disclosed in the lodging of a patent that would enable a technical evaluation
of the patent.
8. The NAPM recommends that legislation under the jurisdiction of other government
departments be brought into line to take advantage of TRIPPS flexibilities. E.g. regulations
from the DOH impede parallel importation.
9. The patent act should supersede any bilateral or multilateral agreement between countries
and these agreements should not be allowed to alter any provisions of the Act or its
regulations
10. Patents granted in other jurisdictions should not become a prima facie basis for granting
patents in South Africa.
11. We support the Bolar provisions allowing development of generic versions prior to the
expiry of the originators patent.
12. We concur with the recommendations in Chapter 2 to simplify compulsory licensing.

8
Fair pricing vs prescribed formulas
The most active committee in the NAPM has been the pricing sub-committee. Headed by
Graham Holt of Pharma Dynamics, the committee has dealt with various pricing regulations in
the past year with much of the effort surrounding the annual price adjustment.
The guidelines for the 2014 price adjustment were issued in September 2013. After evaluation
the sub-committee, using the NDOH price adjustment formula, calculated that the price
increase on the SEP should be at least 8,7%. In fact if there was an equal split between the
consumer price index and the producer price index, the increase would be 9%.
The NAPM submitted the information on the 11th November 2013, giving what we believe
were justifications for the calculations based on the published formula; the high component of
medicines that are imported; the cross subsidization of state tender products by the private
market and the fact that an average forex rates based on the previous year has no relevance to
the current rates at which medicines are procured.
Alas, in February 2014, the industry was granted a 5,82% increase with effect from 1st April.
This amount was the consumer price index, which has little bearing on the input costs of
medicine.
After submitting a letter to the NDOH expressing dismay at the price adjustment rate,
considering the steep and dramatic deterioration of the Rand /Dollar and Rand/ Euro
exchange rates. Following the letter, the Exco of the NAPM met with the Deputy Director
General of the NDOH, Dr Anban Pillay.
At the meeting Dr Pillay indicated that the Department would call for recommendations on
how the formula should be derived. He further said that they were intending to have three
levels of adjustment relating to originator products, imported generic medicines and locally
produced medicines, respectively.
We indicated to Dr Pillay that there was an immediate problem with the pricing and he made
the offer that our member companies could approach his Department directly to seek relief on
individual products.
When the “change in formula” documents were released the NAPM consulted with its
members. After evaluation the consensus was that the current formula was adequate, but it
needed further engagement. If the formula had been used and not overridden by ”political”
expediency, the industry would have gained about 5% over the past two years which would
have helped to stabilise the exchange rate volatility. After all according to the Council for
Medical Schemes, the rate of increase in medicines was in single digits as opposed to that of
Specialists, Private Hospitals and Medical Aid Administrators.

9
SPECIAL
REPORT
The NAPM met with the Minister of Health Dr Aaron Motsoaledi at his office in Pretoria, to
discuss the future of the generic medicine industry in South Africa.
At the time the Intellectual Property Policy was a discussion item, Dr Motsoaledi indicated
that the government would double the treatment of HIV/Aids patients within the next couple
of years and also provide intensive treatment for tuberculosis. Access could only be achieved
through the promotion of generic medicines.
IN ATTENDANCE from Left to
Right: Dr Anban Pillay Deputy
Director General (DOH). Tommy
Scott (Pharma Dynamics) Gaurav
Jain (Zydus), Herman Grobler
(Cipla), Vivian Frittelli (NAPM),
Dr Skhumbuzo Ngozwana
(independent Consultant)
Dr Aaron Motsoaledi, Minister of
Health, Nihar Patnaik (Dr Reddys),
Muhamad Bodhania (Medreich),
Anita Smal (Abex).
Generic medicines are subject to price dampening through the competitive nature of the
market, so any price adjustment allows a breathing space for medicines with exceptional
increases in input costs.
The NAPM submitted its recommendations before the deadline on 28th March 2014 and
requested that the exchange rate utilised should be based on the current situation. We heard
afterwards that Pharmisa and IPASA have requested an extension, which was granted for
another three months.
The NAPM, having left membership of the Pricing Task group (PTG) some three years
previously was invited to attend a meeting with the group and Dr Pillay. This meeting, to
discuss the formula, was cancelled a few hours prior to the start. Cynically, we believe this was
cancelled to allow publication of the International Benchmarking Regulations, for comment. The
IBR may negate the concept of an annual price increase as a cursory look at them indicates that
the prices in the benchmark basket countries should be evaluated annually. The impression had
been created in the past that the IB would be a once off process.
The NAPM pricing committee is meeting early in May to evaluate the impact the regulations will
have on generic medicines.

10
The napm committee update
The new Executive Committee of the NAPM will be elected at the 37th Annual General Meeting
on 11th June 2014.05.29 We thank the outgoing Committee for their contributions during the
past year.
This work was on a voluntary basis to benefit all members. During the year Kevin Grant was
replaced by Herman Grobler, COO of Cipla and Skhumbuza Ngozwana (Consultant), Suhail
Gani CEO of Austell and Kingsley Tloubatla CEO of the Bliss Group were co-opted onto the
committee. The good news is that all have agreed to nomination on the 2014/2015 committee.
Making our mark
We are pleased and proud to report that Ms Anita Smal, a member of the NAPM Exco, was
nominated and elected as secretary with the ITG which is representative of the industry in
meetings with the Registrar and management of the MCC.
Anita, who has performed the function before is very efficient in providing and supplying
minutes of the meetings and disseminating valuable information concerning the regulatory
body. In addition Anita heads our scientific committee and single-handedly has been
responsible for countless submissions on technical guidelines from the MCC and NDOH.
We thank Anita for her valuable contribution to the NAPM.
From Left to Right:
Vivian Frittelli,
CEO, Gaurav Jain,
Muhammad Bodhania,
Vice Chair, Desmond
Brothers, Kevin Grant,
Paul Anley, Chair, and
Anita Smal.

11
INSIDE
International connections
The NAPM is a member of the management committee of the International Generic
Pharmaceutical Alliance (IGPA). Co members on the committee are the US Generic Association
(GPhA), the Canadian Generics Association (CGPA), the European Generics Association (EGA),
the Jordanian Association of Pharmaceutical Manufacturers (JAPM) and the Japanese Generic
Association (JGA). The IGPA is in its 17th year of existence.
The benefits of belonging to the International alliance enable us to share information
on intellectual property, trade and scientific aspects affecting the generic medicine and
biopharmaceutical medicine industries.
The IGPA has three subcommittees to which members of the various Associations belong.
There is opportunity for members of the NAPM companies to serve on these sub-committees.
These sub-committees are coordinated by members of the management committees. Senior
members from our own members’ head offices participate such as Teva and Mylan. The sub-
committees comprise Scientific, Trade, and Intellectual Property. A fourth committee under
the lead of Suzette Kok of the EGA is being established to cover Bio-similars. The IGPA with
its committees develops and provides position papers on aspects such as benchmark pricing;
Generic Medicines in Trade agreements and in relation to TRIPS and Patent Protection.
The IGPA holds an annual meeting with the WHO, WIPO and WTO in Geneva. This year the
meetings are on 10th and 11th June and conflict with our AGM. The members of the IGPA are
able to gain information on the future policies and strategies from these UN committees as
well as provide input from a generic medicine point of view.
In the past the IGPA relationships were governed by a formal agreement to which each
member complied. Mechanisms are in motion to register the IGPA as an association in
Switzerland as a legal enterprise. This will afford official recognition by the committees of the
United Nations. The IGPA is currently lobbying for a place on the International Committee for
Harmonization (ICH),
The IGPA holds an annual conference to highlight issues pertaining to generic and bio-similar
medicines around the world. The 2011 conference was hosted in South Africa. In 2014 the
conference is being hosted from 19th to 21st November by the US Generic Association in Key
Biscayne, Miami, Florida. Details can be found at www.Gphaonline.org/events/upcoming-
events/17th-annual-igpa-conference
19 – 21 Nov
Key Biscayne

12
Important dates
11 June NAPM Annual General Meeting
28 June Deadline for comments into alternate formulae
for SEP adjustments
12 August Deadline for comments on International
Benchmarking
28 August Deadline for comments on Foodstuff labelling
19-21 November International Generic Pharmaceutical Alliance (IGPA)
annual conference, Miami.

13
INSIDE
Napm serving our members in 2014
Key Areas where the NAPM is making
a difference:
STAKEHOLDER
ENGAGEMENT
WORKSHOPS ADVOCACY
LOBBYING
POLICY ADVICE
INTERNATIONAL
REACH
HEAD OFFICE
Interviews
and comment
in trade
publications/
radio/ television
Issue of press
releases to
media
Invited and
participated in
7 government
workshops
Evaluation,
distribution and
or comment on
27 regulations
issued by
Departments
of Health
and Trade
and Industry.
Including
submissions
on pricing,
Intellectual
Property and
Bio-similars
Participation in
SAGMA meet-
ings
Refurbishment
and input into
NAPM website
Presentations at
various health
conferences
CPD for doctors
on ethics and
generic medi-
cines
Represent
NAPM at Reg-
ulatory Discus-
sion Group on
CAMs
Executive mem-
bership of IGPA
Conversion of
NAPM Articles
of Association
to Memorandum
of Incorporation
Presentation
and motiva-
tion to UNIDO
on project for
eCTD skills
training
Workshop on
new BBEEE
legislation
Participation in
the MCA pro-
cesses
Participation
in IGPA Trade
and Intellectual
Property sub-
committee
Participation in
student re-
search projects
Workshop on
sales models
Participation in
Industry Task
Group (ITG)
with the MCC
Workshop on
CAMs legisla-
tion

14
To stay in touch with the NAPM office and keep yourself informed
of the latest developments and points of interest we invite you to
go to the NAPM’s website www.napm.co.za and get connected.
NAPM Member Companies
Abex Pharmaceuticals (Pty) Ltd
Activo Health (Pty) Ltd
Aurobindo Pharma SA (Pty) Ltd
Austell Laboratories (Pty) Ltd
Bliss Pharmaceuticals
Cipla Medpro
DI Medicine Reg. Consultants (Pty) Ltd
Dr. Reddy’s Laboratories (Pty)
Execu Regulatory Services
Mc Pharma (Pty) Ltd
Medreich (Pty) Ltd
Mylan Ltd
Mra-Regulatory Pty) Ltd
Pharma Dynamics (Pty) Ltd
Primapharma (Pty) Ltd
Ranbaxy SA (Pty) Ltd
Teva Pharmaceuticals (Pty) Ltd
Watson Pharma (Pty) Ltd
Zydus (Pty) Ltd
Contact Us:
Email: info@napm.co.za
Website: www.napm.co.za
Tel: 011 312 6966
Fax: 086 529 4245
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to industry news and views

Napm 2014 review

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