The pharmaceutical industry has issued an urgent plea to the health department to rethink the newly gazetted increase in the maximum single exit price for medicines in 2026 — an adjustment that is less than half of what the sector had anticipated.
Industry representatives say the 1.47% increase announced by health minister Aaron Motsoaledi, coupled with ongoing uncertainty about how this figure is calculated, will undermine investment in a sector the government itself has designated as a priority in its industrial policy action plan.
They warn that the unpredictability of the pricing methodology also threatens broader ambitions, including the AU’s goal of strengthening regional pharmaceutical manufacturing across the continent.
The industry was expecting a maximum single exit price increase of 3.2%, in line with the inflation rate, which it thought was fair and reasonable, and will be asking for an exceptional additional increase of 1.73% to bring the 1.47% to this level.
The 1.47%, which takes effect on January 1 2026, is significantly lower than the increases granted over the last six years — 5.25% for 2025, 6.79% for 2024, 5.01% for 2023, 3.5% for 2022, 3.68% for 2021 and 4.53% for 2020. The initial 2023 increase of 3.28% was topped up by 1.73% after representations by the industry to the department.
Stavros Nicolaou, chair of the Pharmaceutical Task Group, which represents 90% of the industry, said in an interview on Sunday that a request was made to the health department on Friday for the decision of the pricing committee to be reconsidered. It is asking for an increase of 3.2%.
The industry had made representations to the department of health and the pricing committee appointed by the minister prior to the maximum price determination.
The single exit price — the price of medicines at the factory gate — only affects the private sector, mainly medical aid schemes, and not government purchases of medicines. Included in the price is the cost of logistics, which is paid to wholesalers and distributors.
Nicolaou said the industry had always called for consistency in the application of the pricing methodology.
“Any investor, or any supplier of goods and services as critical as medicines, requires that element of consistency. We thought we had achieved this, but then we got this 1.47% increase.
“We are going to advance a case with the department for them to reconsider. They do have the ability to grant an exceptional increase. There is precedent for this.
“The methodologies that are applied should have due regard for the prevailing economic circumstances at a point in time. Inflation is sitting at 3.2%. Companies’ costs go up far in excess of 147%. You just have to look at the wage settlements in the industry — they were well above inflation.”
The industry will also be asking for clarification as to how the pricing committee arrived at its decision.
Nicolaou said the industry is acutely aware that it must balance its own sustainability with the imperative of ensuring access to medicines.
He said the government was on an investment drive, and the pharmaceutical sector was regarded as a priority with a strong focus on growing local manufacturing capacity.
This required investment by both foreign and domestic investors. However, the sector was not investing as much as it did a few years ago.
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