Government purchases account for 70 percent of industry volume but only 30 percent of revenues, while the private sector generates 70 percent of turnover on only 30 percent of volume. For example, for the asthma inhalant, Ventolin, the South African private sector pays 28.99 rands while the state sector pays 5.66 rands. The world average price is 22.86 rands. Although drug manufacturer prices in South Africa are among the lowest in the world, its retailers' markups in the private sector are among the highest. By comparison, the manufacturer's price is 65 percent in Germany and 88 percent in Sweden.
Retail margins are high due to cartel-like distribution in a noncompetitive retail market.
Government Hostility to Pharmaceutical Companies South Africa has enjoyed a comparative advantage in clinical research because of its high-quality medical schools, accomplished yet relatively inexpensive personnel, experience in dealing with both tropical and common diseases, and use of English as the primary language. The South African government has so far refused to accept gifts of AIDS drugs from drug companies, arguing that accepting the donations would divert resources from other disease areas. Over the past several years the trend in the public sector has been to expand primary care and cut back on expensive, curative medicine. AIDS is apparently no exception. The growing AIDS epidemic in sub-Saharan Africa could be worsened by giving the medications in areas with inadequate health care infrastructure to monitor the precise distribution and dosage.