Medical Devices Market South Africa – Status and Developments

Market Overview

The South African health economy is made up of two sectors. The public sector provides care to about 85 per cent of the population, while it only accounts for about 48 per cent of health expenditure.

The private health sector provides care to about 15 per cent of the population (about 9 million people) who can afford private insurance or who pay for treatment without insurance. The private sector accounts for 52 percent of health expenditure.

Both sectors offer a wide range of health services, from basic care to modern, medical treatment. The private sector meets international standards. The public sector is broad-based and remains the leader among public health sectors in sub-Saharan Africa, despite the crisis mode.

The public sector is the largest purchaser of medical equipment and devices. However, the focus of demand is on basic care. Demand for more complex medical equipment is much stronger in the private sector.

Market development & Trends

The modernisation and expansion of the equipment fleet in the private hospital sector is driving demand.

With a volume of around US$ 1.3 billion, South Africa's medical technology market is set to grow significantly in 2022 and 2023 compared to 2021. The recovery is due to the high demand for image diagnostics and other devices for the treatment of chronic diseases (diabetes, cardiovascular diseases, cancer). South Africa imports around 90 per cent of its medical technology products.

The production of protective masks and other hygienic materials has been boosted by Covid. The production of respirators can be considered a great success.

Promising investment plans of the private sector

The private sector is dominated by three hospital companies Netcare, Life Healthcare Group, Mediclinic Southern Africa. They account for 70 percent of the market. Independent smaller hospital companies are organised in the National Hospital Network. In the private sector, there is a trend towards mergers of smaller hospitals. Public-private partnerships are also on the rise. Netcare is involved in four such partnerships.

Life Healthcare Group has announced plans to expand its diagnostic and imaging services in its South African portfolio in partnership with AMG (Alliance Medical Group). In addition, Life Healthcare has announced a joint venture with AXIM Group for the construction of initially two cyclotron facilities (particle accelerators for diagnostics) in Gauteng, South Africa’s wealthiest province. Axim is a radiology and nuclear medicine service provider with a strong presence in Europe.

In Mediclinic's 2022 financial plan, the equivalent of EUR 31.4 million is earmarked for new investments. These will go towards the expansion of clinics, the opening of two day clinics and a telemedicine programme that will manage long-term care in oncology, radiology and dialysis. Mediclinic is implementing digital patient registration and other digitisation programmes.

The real estate company Growthpoint Properties has been investing in the healthcare sector since 2018 and opened the Cintocare Private Surgical Hospital in April 2012. The target market for the surgical hospital is the highest income niche in South Africa.

High technological standard

The value of local medical technology production in South Africa ranges from US$ 200 to 300 million annually. About 55 per cent of South Africa's exports of medical devices and materials - amounting to 98 million euros - were destined for southern Africa in 2021. Relatively large customers are Germany and the USA with around 9 million euros each.

Medical device manufacturing in South Africa is mainly focused on low-tech and low-value products such as hospital furniture, hygiene materials, bandages, disposable needles and other disposable medical products. The industry nevertheless has several examples of locally developed high-tech devices that are sold internationally. These include the design and manufacture of breast imaging technology and low-radiation full-body X-ray machines. An increasing technical level can be observed.

Respirator production

During the Covid pandemic, there were shortages in the supply of test reagents, test kits, personal protective equipment and non-invasive and invasive ventilation equipment. In response, a large amount of government funds and other finances have been diverted to the purchase or production of scarce medical equipment, protective and hygienic goods, etc. Supported by the state-owned Industrial Development Corporation, local production of personal protective equipment (masks, gloves, etc.) has received a considerable boost. There has also been local development of PCR and antigen test kits and a protective lock for hospitals.

The South African government launched the National Ventilator Project to develop a respirator. In response, the SA Ventilator Emergency Project, a consortium of companies and the CSIR 2020 research institute, used private donations to set up production for simple and low-cost ventilators. The programme involved the design and manufacture of 20,000 non-invasive ventilators for 69 government hospitals. Parties involved in the programme included German companies Bosch and Siemens.

Leading multinational medical technology providers, such as Siemens Healthineers, Draeger, Health, Becton Dickinson, Boston Scientific, Elekta, GE Healthcare, Johnson & Johnson, Medtronic, Philips, Smith & Nephew and Stryker have at least one representative office for sales and service. Some foreign companies that manufacture in South Africa include Fresenius Kabi. Another German company, B Braun. Beiersdorf has a 50 per cent share in the company BSN Medical as part of a joint venture in the production of wound dressings and gauze bandages, among other things.

Rising demand for Medical Devices

Demand for new technology is particularly high in the private health sector. The reason for this is, on one hand, the stopped investments for medical technology that does not serve the Covid treatment and, on the other hand, the existing demand for new technologies that existed prior to Covid.

South Africa has significant infection rates for HIV and tuberculosis. Despite declining mortality rates, AIDS was the leading cause of death in 2019. It was followed by ischaemic heart disease, heart stroke, stroke, respiratory infections, diabetes and tuberculosis. Chronic diseases in particular are on the rise.

As a result, there is a great need for MRI and PET (magnetic resonance imaging; positron emission tomography) scanners, radiotherapy equipment and other diagnostic imaging equipment. The diagnostic imaging market is estimated to be worth around US$192 million in 2019. The leading suppliers are Germany and the United States, each with a market share of 20 per cent.

The growing number of diabetics is driving the demand for dialysis machines. In minimally invasive surgery, the use of trocar devices is increasing, especially in urology and abdominal surgery.

Import of Medical Devices in South Africa

German exports of medical devices and orthopaedic appliances to South Africa amounted to 550 million euros in 2019 to 2021. South Africa was thus the largest sales market on the African continent, with a market share of 34.6 per cent, ahead of Egypt (20.5 per cent).

X-ray machines are mostly imported from Germany. This is followed by the USA and China. Chinese suppliers continue to gain market share in this high-tech sector.

The majority of imports of medical technology and medical goods from Europe are not subject to customs duties.

Importers wishing to import necessary medical equipment, devices and medicinal products to combat Covid-19 into South Africa duty and VAT free must first apply to the International Trade Administration Commission of South Africa (ITAC).

Digital Health

The Covid pandemic has significantly accelerated investments in digital solutions in medical practices and hospitals.

The South African government has announced that digital health technologies will be an integral part of a planned National Health Insurance (NHI). To this end, the South African government has published a Digital Health Strategy for South Africa 2019-2024.

The drop in income recorded in 2020 due to patients staying away and the high costs of healthcare management have given a massive boost to digital health plans.

For a successful digitalisation of the health sector, however, data transmission costs need to fall and the infrastructure for information and communication technologies needs improvements. After long delays, the South African government has provided an important requirement for this with the successful auction of radio frequencies in March 2022. Given the high number of users, mobile phone-based digital health solutions are promising. Due to the rapid expansion of digital health services, the need for data protection and IT security solutions has grown rapidly.


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