HealthPlus Pharmacy Group Business Plan › Section 7 › Regulatory & Legal Framework

7.1 Pharmacy Licensing

The operation of a pharmacy in South Africa requires a premises
licence issued by the Director-General of Health, in collaboration with
the South African Pharmacy Council (SAPC). The licensing process
involves submission of an application to the Department of Health,
assessment of the need for a pharmacy in the proposed location,
compliance inspection against Good Pharmacy Practice (GPP) standards,
and approval or decline by the Director-General.

Key regulatory requirements include designation of a Responsible
Pharmacist (RP) registered with the SAPC for each premises, compliance
with the Pharmacy Act 53 of 1974 and associated regulations,
registration with the South African Health Products Regulatory Authority
(SAHPRA) for the handling of scheduled medicines, and adherence to the
Medicines and Related Substances Act 101 of 1965. The non-refundable
application fee for a Pharmacy Premises Licence is ZAR 1,000, though the
total regulatory compliance cost—including professional fees,
infrastructure requirements, and ongoing SAPC annual fees—is estimated
at ZAR 80,000–120,000 per store.

7.2 Medicine Pricing Regulations

The Single Exit Price (SEP) mechanism, administered by the Department
of Health, establishes the maximum price at which manufacturers may sell
medicines to any purchaser. The dispensing fee—structured as a
combination of a fixed professional fee and a percentage of medicine
cost—determines the pharmacy’s margin on prescription transactions. SEP
annual adjustments are typically linked to the Consumer Price Index
(CPI), providing some inflation protection but limiting pricing
flexibility.

7.3 National Health Insurance (NHI)

The NHI Act, signed into law in 2024, envisions a single-payer
universal health coverage system. While full implementation timelines
remain uncertain and subject to significant political and fiscal
challenges, the NHI framework could, in principle, expand the pool of
funded patients accessing retail pharmacy services. HealthPlus’s
business plan assumes no material NHI impact during the five-year
projection period but positions the Company to participate as an
accredited NHI service provider should implementation proceed.

7.4 Corporate and Tax Structure

HealthPlus Pharmacy Group will be incorporated as a private company
(Pty) Ltd under the Companies Act 71 of 2008, registered with the
Companies and Intellectual Property Commission (CIPC). The standard
corporate income tax rate of 27% applies. Value-added tax (VAT) at 15%
is applicable to front-shop retail sales; prescription medicines are
zero-rated for VAT purposes. The Company will register as a B-BBEE
compliant entity, targeting a Level 2 or better B-BBEE scorecard to
facilitate medical scheme partnerships and potential public sector
opportunities.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of HealthPlus Pharmacy Group (Pty) Ltd.