Read the Conversation

EF: Do you think other business executives outside pharma understand the complexity of running a pharma company?

ER: If they are not directly involved, I don’t think they do understand the complexity of our segment. From the outside it seems straight forward: bring a product to market and market it up with a margin and sell. But it is way more complex, especially in the last 15 years. I have been in the industry for 25 years on both sides of the fence, originally with GSK for 10 years and since then in the generic sector and people, in general, don’t understand the complexity of maintaining a brand over a life cycle period. There are many complications involved with the local authorities, regulatory challenges and issues from a local perspective because of the massive changes that were due to happen with the regulating authority going from NCC to SAHPRA. NCC was a very complex system, isolated from the life of generics. The first few generic companies came to South Africa in the early 2000s with limited products. After the “patent cliff”, it became a flood, and the NCC would have found themselves in a backlog scenario with all the dossiers for registration. We have entered a new era with the creation of SAHPRA. The complexities are difficult to understand especially if you are part of a global company where shareholders don’t look for complexities but for return. We have also been hit with global complexities with regards to the API’s, there has been a lot of scrutiny on foreign companies or API companies, what is on the net and what is surfing borderline in quality efficacy, etc. We need high standards and high quality as these are products that go to human bodies, but it also creates complexity for the people working that segment who want to run a profitable business. There always is an opportunity even if people outside the investment segment don’t agree. NHI is a huge opportunity from an access perspective, the huge potential of South Africa as the springboard into the African continent. The vision needs to be understood. The NHI vision and mission in South Africa is to create access to high-quality effective health. It is the democratic basic right of every single human being to have access to high quality, effective, and affordable healthcare. The government aspires to create access for everybody. This can only be done through the right infrastructure and the right pricing. The DOH or SAHPRA will register batches of products simultaneously, especially generics. From a generic perspective, in the old days the first one to market would be protected for at least a year and in this way would establish market share and be protected from there on in the life cycle. Now, there are 6 similar products coming at the same time and if a company is strong in certain therapeutic areas, they can capitalize on it, some might not launch at all, and others could go ahead and drop the price to capitalize on the market.  The bottom line is that prices will move downwards and so, grant access. The opportunity is for global companies to expand into manufacturing, packaging re-tabling facilities to provide for the masses in South Africa and later Africa. We need to do this due to our currency slippage, margins will shrink if we keep on importing everything, so I think the time is right to have good partnerships with all key stakeholders to start doing local manufacturing at a large scale to provide access and consistent cost-effective products to all South Africa. 

EF:  You have been country director for PHARMA DYNAMICS for 4 years now, what was the mission you set for yourself when appointed and where are you today? 

ER: The management changed, going from a local family-owned company to being incorporated into a global shareholder company, I was recruited by the global company. My first mission was to create a company culture, while at the same time balance the expectations of hungry shareholders who wanted immediate growth. I had to gain trust from my shareholders for 18 months on the complexities and how things really work in South Africa. In regard to business on the ground we decided to keep focused on our key area, which is cardiovascular, we still are the dominant player in South Africa, we kept a chronic portfolio, and chronic business is good business. By managing the channels of the endorsement through the value chain, we can have patients that require our medicines for 20 or 30 years. They keep on our product as long as they can get access at the right price. Choosing chronic medicine was a strategic move from the founder, the bottom-line mission was protected and grow CVS and start growing CNS which is also a strategic therapeutic area for us. We had to bolster our hospital basket and my first input was to open the OTC market to include the “missing middle” in between private and public health. We see 7 or 8 million people privately, with 7 or 8 plans where anything can be bought, and the rest is cash patients that are getting into the government medical aid programs slowly but surely even with an unemployment rate of 30%. We have analyzed the data and there are at least 15 to 20 million people, “the missing middle” that access their pharmacies or their clinic system for the first point of access to healthcare, they don’t go to the government, they don’t go to pharmacies in the urban area. For this reason, we thought there was an opportunity and immediately started presenting dossiers OTC. We started developing non-scheduled complementary medicine products where if the dossier is clean, we can go to market immediately. So my mission was to bring something to the table from a business perspective, looking after the missing middle, keeping the shareholders happy with something additional coming in while we wait for SAHPRA. It might sound simple, but it was really complex. We have started developing our digital value-add platforms, we already had them but as we are the number one cardiovascular player in South Africa, we have various value-add initiatives that we market on social media platforms to all our patients and customers. We are a generic company and we have an initiative where we cook recipes, we are on our fourth edition of the barbeque ‘The South African Flavor’. We do our events all organized on social media, we have mental healthcare support, and we have allergy experts, healthcare professionals, and pharmacies all on social media platforms structured to create awareness on the disease, as well as assessments and brands of Pharma Dynamics. In my 4-year journey, we have been investing so the patient identifies us, as a that has extra and interesting initiatives to keep them healthy. This speaks of our access strategy of investing more in value-added digital initiatives. We plan for a 3 or 4% increase in the next 5 years by diversifying the portfolio we can bring balance and value through volume and value finding the best mix. 

EF: What does “access” mean to you? 

ER: There are two levels of access:

1.Patient access to quality healthcare, access to information from our perspective, the value-added programs I mentioned earlier to educate on diseases and on lifestyle changes. We partner with the University of Stellenbosch where ‘A change for life’ is now curricula for first-year medical students. They also have a Masters in changing life habits, impact on disease and other behavioral aspects, and they are transformational, and it must be kept going.

2.Medical access, on this level it is more for originator companies bringing new molecules to market, cost-effectiveness, clinical trials and outcome studies, this was access in the last 20 years but access these days is more about price, quality, and dependability on supply. Our big medical A partners in the country list our products as choice products due to the reliability of our products, they haven’t been out of supply for the last 15 years and they see that as access reliability. 

From a generic point of view, access is a cost-effective affordable product always available for the general public and broadly so. It’s a partnership with access to the patient. 

EF: What is the role of digital health in making better use of resources for a company like Pharma Dynamics?

ER: It has been transformational for us to access the consumer though all social media platforms, we were the first company to utilize an application we built called Bug Wise, we own the API on that and it is for antibiotic resistance in hospitals. It’s for all doctors and they can access on a daily and weekly basis the resistance trends in the region, it is a map for physicians although GPs also have access, ultimately its education for the consumer through work endorsement from the healthcare professionals on interactions and what is happening in general. In South Africa a lot of people can go to pharmacies and buy antibiotics over the counter, the pharmacy is capped on price, they are only allowed to charge a certain amount for the drug and if a mum comes in with her very sick child they know what doctors are prescribing and they will dispense it because they want business but this a disaster creator of complications and is very irresponsible. Our mission is to create responsible healthcare and to educate on this front, we are partnering with a certain pharmacy group in South Africa where we will support the initiative of accessing patients remotely through a TV screen consultant and patient room online.  To this end, we have started working with physicians, specialists, and pharmacists as it is the sort of initiative, we want to be involved in. To give quality healthcare in rural area is the type of initiatives that are needed. There are a lot of ideas floating around like investments in rural clinics which can be created in various formats with digital options, all to create access. 

EF: What is Pharma Dynamics role in this market? 

ER: Part of my role is to have an influence on the government, I am the first pharma CEO and we are the first pharma company that got an EDIP approved by the DTI of the IPSE which is the equity equivalent of the Investment Program. They take care of the ownership pillar of the BE, if a company is not willing to give shares away to black people or people of color to have a 51% ownership, they can never be compliant from label 5 downwards on the different pillars as they are calibrated. The US companies Microsoft and Dow approached the DTI about 7 or 8 years ago with delegate state contracts and said they had to be compliant, a business to business scenario, so they went to the DTI and asked them to come up with a different program and they came up with a different proposal and they launched the EIP through the DTI. But this had never been done in healthcare so 2 years ago I got called to one of my key chronic medicine distributors that had had a takeover with all black owners and they informed me that I wasn’t being compliant, so what we did next find a consultancy and re-utilize it. All the other areas can be calibrated on the ownership pillar, equity, procurement, management, etc. because even if all the other areas are calibrated if the ownership is not done correctly, you’re not compliant. We went to the DTI and explained we want to do business correctly and that eventually, I wanted to do stake tenders, which is an area where one must be compliant. We did what no other pharma company had done before and it took an amazing 18 months to get the certificate. The learning curve I had in those 18 months taught me the basis of what I need to do, what all pharma companies actually need to do, which is influence the government stakeholders to see the role of pharma companies. The NHI needs to adapt because nobody wants the damage of collapsing public healthcare. We don’t want investments pulling out or sub-quality in healthcare, the authorities need to recognize value in key players willing to invest, investment costs big money to fund and the EIP on an annual base costs a lot of money – it took 6 months to convince and educate my shareholders to send the money- but slowly and surely our business will grow. The government needs to take advantage of these initiatives, my role together with my very competent team is to transform to manage stakeholders in the future, more than managing operational deficiencies because I have other people on that. The CEOs are becoming more negotiators at a government level, motivating and educating stakeholders and look at opportunities. Pharma Dynamics needs to maintain a position to provide the products and bolster portfolios and we will always invest in initiatives that educate the consumer. We invest in the country’s economy, but we need to take this to the next step to form portfolio partnerships, manufacturing alliances, scale the business and local manufacturing to make products more affordable. We must hold hands with the government to make it a win-win scenario. We will be the most populated continent in the world in 30 years so the opportunity is massive, but it can’t be done at the moment as the stakeholders need to see the long-term future, not just the next 2 years of the present administrations in office. 

EF: Where do you see Pharma Dynamics 5 years from now? 

ER: We will still be the number one CVD suppliers because we have very unique cardiovascular products, we will be the dominant player in CNS in 5 years, we will be the dominant player in OTC, and we will double our turnover. We need to maintain a healthy profit margin so we need to look at initiatives to protect the cost of our goods through local initiatives in packaging, manufacturing and bringing more bulk.

October 2019
South Africa