HealthPlus Retail Group Business Plan › Section 3 › Industry Analysis & Market Opportunity

3.1 Macroeconomic Context

South Africa is the second-largest economy on the African continent
and the largest pharmaceutical market in Sub-Saharan Africa. With a
population of approximately 62.0 million in 2024 and a real GDP of
approximately R5.0 trillion, the country presents the deepest
formal-sector consumer base on the continent. While macro headwinds —
including unemployment, currency volatility, and episodic load-shedding
— create genuine challenges, the healthcare and personal-care category
has demonstrated remarkable resilience across cycles.

According to Statistics South Africa, total household healthcare
expenditure increased at a compound annual rate of 8.4% from 2018 to
2024, materially outpacing both nominal GDP growth (5.6% CAGR) and
overall consumer inflation (5.2% CAGR over the same period). This
out-performance reflects the non-discretionary nature of healthcare
spend and a steady upward shift toward preventative and over-the-counter
consumption.

3.2 Pharmaceutical Market Size & Trajectory

The total addressable market for HealthPlus combines two adjacent and
converging revenue pools: pharmaceutical retail (prescription and OTC
medicines) and health-and-beauty retail (personal care, cosmetics, baby,
and wellness). Together these pools represented approximately R72.1
billion in 2024 and are forecast to reach R119.3 billion by 2030 — a
6-year CAGR of 8.7%.

Figure 3.1

The historical period (2020–2024) has been characterised by a steady
acceleration: market growth was 8.4% in 2021, 7.7% in 2022 (a
deceleration tied to consumer pressure), and recovered to 8.7% in 2023
and 8.4% in 2024. Independent forecasts from IQVIA, BMI Research, and
the South African Pharmacy Council (“SAPC”) project sustained 8–9%
growth through 2030, driven by the demographic, epidemiological, and
economic factors set out below.

3.3 Healthcare Expenditure Patterns

Figure 3.2

South Africa’s healthcare expenditure has steadily grown across all
three major channels. Public-sector spending reached approximately R298
billion in 2024 (4.7% growth year-on-year), while private-sector
spending — funded largely through medical schemes — totalled R302
billion (6.0% growth). Critically for the HealthPlus thesis, household
out-of-pocket pharmaceutical expenditure grew from R42 billion in 2018
to R64 billion in 2024 — a 7.3% CAGR — reflecting rising chronic disease
prevalence and a structural shift toward self-medication and
preventative wellness.

3.4 Demand Drivers

Six structural forces underpin the long-term attractiveness of the
South African pharmaceutical retail market:

3.4.1 Demographic Expansion

South Africa’s population is forecast to grow from 62.0 million in
2024 to 67.5 million by 2030 (0.9% CAGR). More importantly for
healthcare retail, the share of the population aged 50+ — the highest
pharmaceutical-spend cohort — is projected to expand from 18.4% to 22.1%
over the same period, a structural tailwind for chronic-disease and
wellness consumption.

3.4.2 Middle-Class Growth

The South African Reserve Bank estimates that the middle-income
segment (households earning between R8,000 and R45,000 per month) will
expand by approximately 3.8 million households between 2024 and 2030 — a
24% increase — driven primarily by formal-sector job creation in
services and government, and by social-grant transfers that lift
purchasing power at the lower end of the segment.

3.4.3 Rising Chronic Disease Burden

The Council for Medical Schemes reports that prescriptions for
chronic medications grew at 6.4% CAGR over 2019–2024. Diabetes
prevalence is projected to increase from 4.6 million adults in 2024 to
5.7 million by 2030; hypertension affects an estimated 13.5 million
adults; and HIV antiretroviral programmes serve over 5.7 million
patients, with active state and private investment expanding access.

3.4.4 Preventative Health & Wellness

Younger consumers — particularly those aged 25–40 — are driving
structural growth in vitamins, supplements, mental-wellness products,
and preventative skincare. The wellness category grew at 12.3% in 2024,
the fastest-growing major category in pharmacy retail.

3.4.5 Beauty & Personal Care

South Africa’s health-and-beauty retail segment has consistently
outpaced food retail since 2018. Premium beauty (anchored by
international brands and own-label dupes) and mass beauty (sub-R200
price points) are the two fastest-growing sub-segments, with combined
growth of 9.1% in 2024 according to NielsenIQ.

3.4.6 Digital & E-commerce Penetration

Online pharmacy and click-and-collect penetration in South Africa
stood at 4.6% of formal pharmacy sales in 2024 — well below benchmarks
of 12–15% in developed markets. The combination of expanding smartphone
penetration (now over 90% in urban areas), improving last-mile
logistics, and consumer comfort with digital health post-COVID positions
e-commerce as a multi-year tailwind.

3.5 Regulatory Environment

South Africa’s pharmaceutical retail sector is governed by a
comprehensive regulatory framework that, while imposing genuine
compliance costs, also acts as a barrier to entry for poorly capitalised
competitors. HealthPlus regards the regulatory environment as a
competitive moat and has staffed its compliance, legal, and clinical
functions accordingly.

3.6 Industry Structural Analysis (Porter’s Five Forces)

The following structural analysis underpins management’s view that
the South African pharmaceutical retail market offers favourable,
defendable economics for a well-positioned operator.

3.7 Bottom-Up Demand Sizing for HealthPlus

Against the R72.1 billion total addressable market (2024), HealthPlus
has constructed a bottom-up demand model based on serviceable
addressable market and serviceable obtainable market analysis:

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