South Africa’s drug manufacturers caution that climbing production expenses are tightening the supply of medicines, as the single exit price for pharmaceuticals and scheduled substances will rise by 2.88% beginning 1 October, marking the year’s second revision officially announced today.
Acting Health Minister Stella Ndabeni has approved a price increase for medicines listed in the official database as of September 30, regardless of earlier calculations in the 2026 pricing cycle. This follows a smaller increase earlier in 2026, when the pricing committee set the first SEP increase at 1.47%, down from 5.25% in 2025 and below the 3.6% consumer price inflation.
Input Costs Surge
Pharmisa’s chairperson, Stavros Nicolaou, argued that the January increase was insufficient to cover manufacturers’ rising costs. He informed MPs that the situation worsened after March due to the Gulf oil crisis and disruptions near the Strait of Hormuz, causing input costs to surge by 30% to 40%.
Rising costs have strained medicine supply, leading to shortages. In April, the Pharmaceutical Task Group, representing four industry associations, requested an additional 1.73 percentage points from the health department. They cited the rand’s depreciation and higher input costs due to geopolitical tensions and the Middle East conflict.
Nicolaou told parliament’s health portfolio committee in August that the sector was “in crisis”, with 2,500 local pharmaceutical manufacturing jobs lost over the preceding 18 months. The issue was discussed again at an August 18 meeting between government and pharmaceutical industry representatives, including the Department of Health, National Treasury, the Presidency, the Competition Commission, the South African Health Products Regulatory Authority and the Medicines Pricing Committee.
The government and industry agreed to address the sector’s urgent challenges, with the government pledging to consider an extraordinary SEP adjustment to counter domestic and geopolitical pricing pressures. The 2.88% adjustment allows manufacturers and importers a higher SEP from October, though manufacturers can apply permanent reductions to specific medicines based on market conditions.
Nicolaou noted that the increase would minimally impact patients, as it applies for only three months of 2026. The industry estimates the full-year effective increase at around 2.19%, below inflation and the 3.2% to 3.3% increase budgeted by medical schemes. He emphasized the adjustment’s importance for maintaining medicine supply while government and industry continue discussions on balancing patient access with pharmaceutical sector viability.
