HealthPlus Pharmacy Group Business Plan › Section 2 › Industry Analysis

2.1 South African Pharmaceutical Market Overview

South Africa’s pharmaceutical industry is the largest and most
advanced in sub-Saharan Africa. The broader pharmaceutical market was
valued at approximately USD 7.88 billion in 2024 and is projected to
reach USD 10.74 billion by 2030, reflecting a compound annual growth
rate of 5.3%. The historic ten-year compound annual growth rate for
pharmaceutical and medical spend in South Africa stands at 7.4%,
demonstrating the sector’s resilience and consistent expansion.

The retail pharmacy segment specifically—encompassing prescription
dispensing, over-the-counter sales, health and wellness products, and
related services—was estimated at USD 4.17 billion in 2023. Industry
analysts project this segment to reach USD 7.35 billion by 2030, growing
at approximately 5.19% per annum. This growth is underpinned by
demographic shifts, rising chronic disease prevalence, expanding medical
scheme membership, and increasing consumer orientation toward
preventative health and wellness.

2.2 Key Market Drivers

Chronic Disease Burden

South Africa faces one of the highest chronic disease burdens
globally. Cardiovascular disease and stroke account for approximately
215 deaths per day. The diabetes prevalence rate continues to escalate,
while the country’s HIV/AIDS treatment programme—the world’s largest
antiretroviral rollout—generates sustained demand for chronic medication
management. Approximately 31% of males and 68% of females are classified
as overweight or obese, driving demand for related medications and
wellness interventions. Asthma affects 10–15% of adults and over 20% of
children.

Demographic and Economic Factors

South Africa’s growing middle class, increasing urbanisation, and
rising health literacy are driving consumers toward formal pharmacy
channels. Medical scheme membership, while stagnating at approximately
16% of the population, concentrates significant pharmaceutical
purchasing power among scheme members who frequent retail pharmacies for
chronic medication collection and discretionary health purchases.

Regulatory and Policy Environment

The National Health Insurance (NHI) framework, while subject to
implementation uncertainty, signals a long-term shift toward universal
coverage that could expand the addressable patient pool for retail
pharmacies. The Single Exit Price (SEP) mechanism governs medicine
pricing, providing pricing transparency but also constraining dispensary
margins. Generic substitution policies continue to drive volume toward
lower-cost alternatives, benefiting pharmacies with strong generic
procurement capabilities.

Technology and Digital Health

E-commerce penetration in pharmacy retail remains nascent, currently
contributing approximately 5% of total pharmacy revenues. However, the
segment is experiencing the highest growth rate within the channel mix,
driven by consumer demand for convenience, home delivery, and digital
prescription management. Online pharmacies and digital health tools are
reshaping consumer expectations and creating competitive advantages for
digitally enabled retailers.

Figure 2

2.3 Competitive Landscape

The South African retail pharmacy market is highly consolidated,
dominated by two publicly listed chains that together account for over
70% of formal market turnover. Understanding the competitive dynamics
between these incumbents is essential for positioning HealthPlus’s
market entry strategy.

Clicks Group Limited

Clicks is the country’s leading health, beauty, and wellness retailer
and the largest retail pharmacy chain. As of its most recent reporting
period, Clicks operates over 990 stores and 780 pharmacies, supported by
a growing digital presence. The group reported annual turnover of ZAR
45.4 billion for FY2024, with retail turnover growing 11.7%. Clicks
plans to open 40–50 new stores annually, targeting a medium-term goal of
1,200 stores. The company maintains a retail trading margin of
approximately 9.8% and operates with virtually no interest-bearing debt,
funding expansion entirely from internal capital.

Dis-Chem Pharmacies Limited

Dis-Chem is South Africa’s second-largest pharmacy chain and has been
the more aggressive growth player, pursuing both organic expansion and
acquisitions. The company reported group revenue of ZAR 39.2 billion for
the twelve months ended February 2025, up 8% year-on-year, with headline
earnings per share increasing 20%. Dis-Chem holds approximately 35%
pharmacy market share in Gauteng and aims to replicate this nationally.
The company plans to increase its trading space by approximately 40%
over the next three years.

Independent Pharmacies

Independent community pharmacies are finding it increasingly
difficult to compete with large wholesale-retail chains. Market
concentration continues to increase, with the combined market share of
Clicks and Dis-Chem having grown by 21 percentage points over the past
decade. This ongoing consolidation creates both a challenge (formidable
incumbent competition) and an opportunity (acquisition targets and
underserved micro-markets) for HealthPlus.

2.4 Porter’s Five Forces Analysis

2.5 Industry Trends and Outlook

• Continued shift to preventative healthcare, driving demand for
  vitamins, supplements, and wellness products
• Accelerated generic penetration as budget pressures favour
  cost-effective medication alternatives
• Vertical integration and consolidation—wholesale distributors and
  retail chains pursuing backward integration to secure margins
• Growth in e-commerce and digital pharmacy services, including
  online prescription management and home delivery
• Expansion of in-store clinic services, aligning pharmacies with
  primary healthcare delivery
• Increasing focus on private label products as a margin expansion
  strategy
• Sustainability and ESG considerations becoming important to
  institutional investors and consumers

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