South Africa is currently working with its medical devices manufacturing sector to identify potential specific objectives to add to the medical devices masterplan, following feedback from the Department of Trade, Industry and Competition (dtic) office on the broadly agreed four core objectives, said consulting firm HolaVic Consulting director Victor van Vuuren.

Van Vuuren was appointed by the dtic to oversee the development of the national masterplan, with the vision of creating "an effective and competitive medical devices value chain that produces reliable, quality, affordable and competitive medical devices for local and export markets".

The key objectives of the plan were very broad, Van Vuuren said during a presentation as part of the economic research institution Trade and Industrial Policy Strategies (TIPS) Development Dialogue on medical devices earlier this week.

"These broad objectives will then be unpacked in each of the five pillars in an integrated way to identify specific initiatives for short-, medium- and long-term interventions. The dtic office said they want to see more specific objectives and how and when they can be delivered. We are now working with the private sector to identify specific objectives," he said.

The four objectives are to grow a competitive medical devices manufacturing industry that will supply local and international markets, reduce the trade deficit, generate employment and build technical skills, and increase broad-based black economic empowerment.

"The manufacturing of medical devices in South Africa can be bolstered. With an estimated 90% of these devices being imported, there is a large trade imbalance. During Covid-19, we were found wanting and unable to procure personal protective equipment, ventilators and diagnostics consumables," said South African Medical Research Council executive director Dr Michelle Mulder, who moderated the dialogue.

"It is important to have domestic capacity to produce medical goods, and the South African medical devices study showed that all the elements of the value chain are present. We have stakeholders and capacity, but they are not at full capacity.

"Further, if we strengthen the local medical devices production industry, it will help ensure we can address the needs of the health system directly and improve health outcomes," she said.

South Africa needed to determine whether it would be better served by separating the legislation for medical devices from pharmaceuticals in the Medicines and Related Substances Act, said Van Vuuren.

"It is mostly the pharmaceuticals industry that is driving the act at the moment, with medical devices added to it. They do not work well intertwined and countries that have successfully stimulated their medical devices manufacturing industries have separate pieces of legislation for medical devices and pharmaceuticals," he said.

However, this would take several years, and, on the more immediate side, South Africa should look at its regulations and how it introduced registration and how the costs of these fed into the industry. An impact assessment was required, he noted.

"While regulations are necessary, we must look at their impact and how we introduce them. Introducing new requirements without considering their impact may force marginal businesses to close.

"Further, the South African Health Products Regulatory Authority has significant capacity constraints and implementing new regulations without capacity will be a tall order. Therefore, industry and government need to develop an enabling regulatory space," he suggested.

Further, procurement processes were misaligned currently, with the Department of Health procuring some pharmaceuticals and then provinces procuring some medicines and medical devices separately, often directly from importers, which was not effective. Local product procurementwas an area that could be improved, said Van Vuuren.

Additional considerations included using local raw materials, such as titanium ore, that was exported and then importing titanium at a significant cost because it was not processed locally, he added.

LOCAL CAPACITY
Meanwhile, TIPS senior economist Liako Mofo, who provided feedback on the study of the industry undertaken on behalf of the dtic, said that, of the 136 medical device manufacturing companies, 60% used only one shift, 17% used two shifts and 6% used three shifts a day.

Further, only 17% of these companies used more than three-quarters of their capacity, while 14% used less than one-quarter of their manufacturing capacity.

"The manufacturing capacity [of the industry] is under-used in South Africa. However, while about 79% of the companies can increase production by 40%, the ability to increase production is dependent on a number of strategic factors, including capital expenditure, product development and diversification, and productivity improvement, among others."

Most medical device manufacturers cited increasing capital expenditure as their main strategy to increase production, while 32% aimed to do product development as their strategy, 25% aimed for diversification of products and 11% aimed to use productivity improvement as their strategy.

However, most of the companies were classified as small, with 50 or fewer staff, she added.

"Small businesses making medical devices in South Africa have additional capacity and we can increase manufacturing from existing sources, if we better manage our procurement processes," said Van Vuuren.

"Across the four main categories of medical devices, categories one and two present low-hanging fruit, and medical aids and hospitals can help to identify the medical devices that are not so sophisticated that can be produced locally and which we are currently importing," he said.

"We are identifying these opportunities with industry and will then go to the market with them, and procurement and tendering processes can support small businesses and build in local content requirements.

"Procurement requirements can address some of the challenges the local industry faces, including lower quality requirements for certain imports compared to those required of medical device products produced locally," he added.

All stakeholders had agreed to the four key objectives of the masterplan, and the need to address cost drivers to ensure cost competitiveness and develop the value chain and skills, and therewas ongoing engagement to unlock growth in the sector, as well as to develop enabling policy and a monitoring system, said Mofo.

"The existing work started at the end of 2021 with five working groups with representatives from industry, government and labour. Work started with identifying quick interventions through collaborations with the working groups, which ran parallel to the production of the master plan," she said.

South Africa has limited medical device manufacturing, and most product categories are supplied by imports and the manufacturing is also mainly limited to assembly and lower-end products, although there are exceptions.

The report on the industry's value chain, which formed part of the study, was being finalised and would be released to the industry, she added.

"The next step is to send out the document and see what commitments from the private sector we can add to the commitments from government," concurred Van Vuuren.