Global value chains, import orientation, and the state: South Africa’s pharmaceutical industry

Abstract

As opposed to the predominant focus of global value chain (GVC) research on export-oriented contexts, this article examines the prospects for development in places where the dominant form of engagement with GVCs is import-oriented. Through the case of South Africa’s pharmaceutical industry, this analysis demonstrates the challenge for local manufacturing to compete, and the associated state policy responses, in a place which is largely plugged into GVCs as an end market rather than as a production location. As multinationals have concentrated production elsewhere, South Africa’s manufacturing capacity in the pharmaceutical industry has relatively declined in recent decades. Having struggled in its facilitator role, the South African state’s efforts to promote local manufacturing have turned to the producer role through a state-owned company and especially the buyer role through public procurement. Motivations for state policy in this context, however, must navigate the tension which sometimes exists between the industrial interest in local manufacturing and the consumer and health policy interest in access to medicines. The experience of South Africa’s pharmaceutical industry points to the wider challenge and consequences of import-oriented engagement with GVCs for local industrial development.

Antibiotic geographies and access to medicines: Tracing the role of India's pharmaceutical industry in global trade

“…The history of the Indian pharmaceutical firm Cipla and its role in improving the access to HIV/AIDS medicines in the early 2000s ( Zaman and Khanna, 2021 ), stands as an example of how Indian actors in the past have contributed to improve access to medicines in many countries through lowering prices, although of course not without self-interest ( Sell and Prakash, 2004 ). On the other hand, the increasing dominance of Indian generics around the world, especially in Africa, may have made it even more difficult to establish or maintain robust generic domestic industries in many of these countries, as argued by Chaudhuri et al (2010) with reference to Tanzania, and by Horner (2021) in the case of South Africa. In the new international trade regime, these countries do not have the same policy space that India had post-independence, which contributed to build a domestic pharmaceutical industry for the production of basic medicines such as antibiotics.…”

Making sense of global value chain-oriented policies: The trifecta of tasks, linkages, and firms

“…Horner ( 2021 )’s article in this special collection provides useful insights into how a government can address market failures in the development of resilience. In the article, the author focuses on countries that mostly have an import-oriented engagement with GVCs in essential goods – they act as an end market –and asks what governments can do to promote both their development and health policy interests.…”

Making medicines in post-colonial Ghana: State policies, technology transfer and pharmaceuticals market

“…Yet the challenges and debates around the local production of medicines in Africa are not new; they have been a topic of discussion since postcolonial times. The history of local production in Ghana is embedded in debate about the value and viability of producing drugs locally versus importing them ( Banda et al, 2021 ; Cassier and Baxerres, 2022 ; Horner, 2022 ; Mujinja et al, 2014 ; Shadlen and Massard da Fonseca, 2013 ). This paper aims to contribute to this debate as the impact of COVID-19 in Africa has demonstrated the dangers of siloed health systems' planning and funding that focuses on a few existing infectious diseases and immediate health policy priorities.…”

“…Finally, economists have analysed the role of the State for the development of the pharmaceutical industry from facilitator to producer and buyer in South Africa ( Horner, 2022 ), or from market-fixer to biopharmaceutical innovation, towards market-shaper ( Mazzucato and HenryLi, 2021 :12). However, local production as a component of national pharmaceutical sovereignty ( Hayden, 2007 ) remains overlooked.…”