Investing in the economy

Summary of operational performance

Healthcare SBU
Performance   2010   2011   2012   2013  
Total value of financing approved (Rm)  178   264   170   302  
Total number of jobs expected to be created or saved   (160)* 1 606   1 626   910  
Impairments as a % of outstanding book (at cost excluding undrawn commitments)  9%   6%   4%   8%  
*Negative job numbers reflect the impact of cancellations of previous year’s approvals.    
Focus areas  
Pharmaceuticals – Manufacture of active pharmaceutical ingredients (APIs) with a focus on anti-retrovirals (ARVs) and the manufacture of pharmaceutical products including animal and human vaccines  
Malaria – Artemisinin Combination Therapy APIs and manufacture of anti-malaria pharmaceuticals, Sterile Insect Technology  
Medical devices – Manufacture of medical devices, including surgical instruments and diagnostic test kits focusing on HIV, TB and malaria  
Hospitals – Hospital Public Private Partnerships (PPPs), private hospitals in the rest of Africa  


Highlights  

2009   2010   2011   2012   2013  
  • Supported local manufacture of medical devices by funding a local producer of sutures
  • Funded two hospitals under the Township and Rural Hospital Scheme, bringing the total number of hospitals funded to five
  • Provided funding for the construction and equipping of a day clinic in the Cosmo City mixed-income area
  • Approved a building loan facility for a company providing hospital services in the Cape Flats
  • Assisted two local pharmaceutical manufacturers to upgrade factories to international standards
  • Uptake under the Township and Rural Hospital Scheme gained momentum, demonstrating the demand for hospitals in underserviced areas
  • Approved first funding for a PPP hospital concession in Phalaborwa, Limpopo
  • Sod-turning for a R100m pharmaceutical plant in Midrand
  • Funding for a 100-bed hospital in Soshanguve catering specifically for women and children
  • Provided funding for a local manufacturer of orthopaedic bracing products, generating import replacement and boosting exports
  • Opening of the first IDC-funded PPP hospital in Phalaborwa
  • Approved funding to a client for a PIC upgrade which enhances global competitiveness


Recent performance  

Although requests for funding increased, cancellation of commitments not drawn down had a negative impact on this year’s figures. The IDC’s role in providing funding for private hospitals was also reviewed during the year, and funding approved fell in comparison with previous years.

We are particularly encouraged that in the year under review the Healthcare SBU was able to help address the financial challenges faced by one of our clients, which has since returned to full-scale operation.

The Corporation pursued a strategy aimed at combating malaria. This project entails the development of an African value chain for the manufacture of anti-malarials made from the plant Artemisia annua. This is a significant development, as the prevalence of malaria remains a challenge on the continent and affordability of malaria treatment drugs is also a major issue. Some progress has been made with local stakeholders in identifying suitable sites for the cultivation of Artemisia annua.

Challenges  

The establishment of the 500t Ketlaphela (API) plant has been delayed due to delays in negotiating necessary agreements with government, and the technical partner not being able to provide their requisite equity contribution. Construction of the pilot plant is therefore unlikely to commence in 2013 as originally planned.

The industry is strictly regulated and highly dependent on government procurement, and process delays have a severe impact on the financial sustainability of clients.

Strategy and prospects  

The South African government’s Preferential Procurement Policy Framework Act, which prioritises domestic manufacturers in the allocation of public sector tenders, is a positive development for the industry, while this is an encouraging development, the local industry will need to become more efficient if the proposed pricing levels are to be sustainable. In order to strengthen the local manufacturing sector, the IDC shall continue to pursue funding opportunities for the upgrading of pharmaceutical infrastructure to achieve Pharmaceutical Inspection Co-operation Scheme (PICS) standards in line with global best standards.

In line with its revised hospital funding mandate, the Corporation will in future only consider applications from private licence holders if a significant portion of their beds is contracted to the state, and only fund hospital public-private partnerships including concessions. The strategy followed by IDC is to assist in the provision of quality, accessible and affordable medical care whilst assisting government to roll out the proposed National Health Insurance (NHI).

Considerable effort is being placed on the development of the Ketlaphela project, which aims to have a positive impact on the balance of payments, localisation of APIs, security of supply and creation of skilled jobs.

Other funding priorities include telemedicine medical devices and continued development of early stage projects.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.


APPROVALS
R13.1 billion
DISBURSEMENTS
R16.0 billion
JOBS FACILITATED
18 922
JOBS SAVED
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa