The relationship between global pharmaceutical companies and the biotechnology industry in South Africa : implications for an emerging biotechnology industry in South Africa

Nel, Izak Bartholomeus Jacques (2003-12)

Mini-study project (MBA)--University of Stellenbosch, 2003.

Thesis

ENGLISH ABSTRACT: This report reviews the global and South African pharmaceutical and biotechnology industries and provides an overview of the changes taking place within these two industries. It highlights the impact this relationship will have on a developing South African biotechnology industry. Since the 1980s the pharmaceutical industry has experienced phenomenal growth in sales and profits. By the mid 1990s drug sales exceeded USD250 billion. Today the pharmaceutical industry is dominated by multi-national corporations with extensive R&D budgets, widespread use of trademarks and patents and complex commercial process technology. However they face threats from depleted product pipelines, patent expiry on billion dollar drug products, generic competition, increases in drug approval times, costs and price pressures. The entrepreneurial biotechnology industry promises to solve a number of the pharmaceutical industry's problems. In recent years biotechnology companies proved more effective in the development of new molecular entities. They promise individualised therapeutics, novel and more efficacious drug discovery and development of preventative treatments. However the decrease in equity financing after 2001 left almost 40% of biotechnology companies with less than 1 year of R&D funding. The industry experienced losses again in 2002 and the world is divided over the ethical, environmental and economic implications of biotechnological applications. The biotechnology and pharmaceutical industries have a symbiotic but antagonistic relationship. The change in this relationship will hugely affect South Africa's ideals of developing a biotechnology industry. Various diseases plague South Africa including HIV/AIDS, TB, obesity, diabetes, hypertension and infective diseases. These diseases will have a huge impact on South Africa's society. Yet only 10% of global R&D funding is committed to third world diseases and existing drugs and treatments are either not effective or too expensive for developing countries. It is in this situation that biotechnology and the development of a biotechnology industry could playa major role in alleviating South Africa's health burden. South Africa is already capable in first generation biotechnology, but third generation applications holds the most promise. Developing countries face various obstacles and challenges, but all boast well for South Africa. The government has committed R400 million (over a three year period) to utilize South Africa's biotechnology potential. Further, the country has highly skilled researchers, indigenous plant and animal species, a diverse population and a favorable exchange rate (low R&D costs).

AFRIKAANSE OPSOMMING: Die projek ondersoek beide die globale en Suid Afrikaanse farmaseutiese en biotegnologie industrieë. Verder word die veranderinge wat plaasvind in die industrieë onder die soeklig geplaas. Die projek beklemtoon die impak wat die verhouding sal hê op 'n ontwikkelende biotegnologie industrie in Suid Afrika. Die farmaseutiese industrie het sedert die 1980s dubbel syfer groei getoon in omsete en wins. Teen die middel 90's het verkope van farmaseutiese middels US$250 miljard wêreldwyd oorskry. Vandag word die farmaseutiese industrie oorheers deur multi-nasionale korporasies met omvattende navorsing en ontwikkelings begrotings, algemene gebruik van handelsmerkte, patente en komplekse proses-tegnologieë. Ten spyte hiervan word die industrie bedreig deur leë produksie-lyne, verval van patente, miljard dollar farmaseutiese produkte, generiese kompetisie, verlengde produk-goedkeurings periodes en prys-mededinging. Die biotegnologie industrie met sy innoveerende eienskappe beloof om verskeie van die farmaseutiese industrie se probleme op te los. Onlangs het biotegnologie maatskappye getoon dat hulle meer effektief is in die ontwikkeling van nuwe molekulêre eenhede. Biotegnologie beloof nuwe en meer effektiewe produk-ontwikkeling asook beter individuele terapieë en voorkomende behandelings. Die industrie staar finansiële krisisse in die gesig. Slegs 40% van biotegnologie maatskappye het voldoende navorsing en ontwikkelings-kapitaal tot 2004. Dit is hoofsaaklik as gevolg van 'n afname in eienaars-finansiering na 2001. Die industrie as 'n geheel het weereens 'n verlies gelei in 2002 en die wêreld is verdeeld oor die etiese, omgewings en ekonomiese implikasie van biotegnologiese toepassings. Die biotegnologie en farmaseutiese industrieë het 'n simbiotiese maar tog vyandige verhouding. 'n Verandering in die verhouding gaan Suid Afrika se ideale om 'n biotegnologie industrie te skep grootliks beïnvloed. Suid Afrika gaan gebuk onder verskeie siektes insluitende MIVNIGS, TB, vetsugtigheid, diabetes, hipertensie en infeksie siektes. Hierdie siektes het 'n groot impak op Suid Afrika se samelewing. Tog word slegs 10% van die globale navorsings en ontwikkelingsfondse aangewend om 'n oplossing te vind vir derdewêreld siektes. Verder is bestaande produkte en behandelings oneffektief of onbekostigbaar vir ontwikkelde lande. Dit is in sulke gevalle waar biotegnologie en die ontwikkeling van 'n biotegnologie industrie 'n groot rol kan speel in die verligting van Suid Afrika se gesondheids-las. Suid Afrika is vaardig in eerste-generasie biotegnologie, maar wêreld wyd hou derde generasie biotegnologie die meeste belofte in. Die tegnologie is tot op hede onderbenut in Suid Afrika. Ontwikkelende lande staar verskeie uitdagings in die gesig, maar Suid Afrika het talle sterk punte. Die regering het R400 miljoen (oor 'n drie jaar periode) beskikbaar gestel vir die ontwikkeling van Suid Afrika se biotegnologie potensiaal. Die land beskik ook oor navorsers van hoogstande gehalte, onbenutte inheemse plante en dier spesies, 'n diverse populasie en 'n gunstige wisselkoers (lae navorsings en ontwikkelings kostes).

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/53672
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