South Africa’s regulated medicine prices are going up again. The single exit price (SEP), the fixed, government-set price manufacturers may charge for a medicine in the private sector, rises by 2.88% from 1 October, the second increase this year and an unusual one, since the SEP is ordinarily adjusted only once annually.
Acting Health Minister Stella Ndabeni approved the increase, which applies to prices recorded on the official medicines database as at 30 September, Business Day reported. The first 2026 adjustment, in January, was set at 1.47%, well down from 5.25% in 2025.
Why a second increase in one year
The industry’s position is that the January increase was too small from the start. Stavros Nicolaou, chairperson of pharmaceutical industry body Pharmisa, said the January adjustment was “too low to absorb rising costs faced by manufacturers” and that shortages were “emerging in some cases” as a result. The Pharmaceutical Task Group had asked government in April for an additional 1.73 percentage points on top of the original increase.
The cost pressure the industry points to is real and largely external. Input costs have risen 30% to 40% in some cases, driven by the rand’s depreciation and by the Gulf oil crisis and disruptions around the Strait of Hormuz since March, which have pushed up the cost of importing active pharmaceutical ingredients and the fuel used to transport them. Roughly 2,500 local pharmaceutical jobs were lost in the 18 months to August, a figure the industry cites as evidence the pressure is already showing up in the sector’s employment.
What the numbers mean for patients and payers
Because the 2.88% increase only applies for the final three months of 2026, the industry calculates the effective full-year increase at closer to 2.19%, below general inflation. Medical schemes had already budgeted for contribution increases of 3.2% to 3.3% for the year, so the extraordinary SEP adjustment falls within, rather than beyond, what schemes had planned to absorb.
Manufacturers retain the ability to apply permanent price reductions to individual medicines where market conditions allow, so the 2.88% ceiling will not automatically apply uniformly across every product on the shelf. In practice, medicines with thinner margins or heavier reliance on imported inputs are the more likely candidates for the full increase.
How the single exit price system works
South Africa’s SEP regime, introduced under the Medicines and Related Substances Act, exists specifically to stop the price variation between pharmacies, doctors and hospitals that characterised the private medicine market before it was introduced. A manufacturer sets one national price for a medicine, publishes it on the official Medicine Price Registry, and every private-sector seller charges that same price plus a regulated dispensing fee, rather than negotiating margins deal by deal. The system gives government direct control over one of the largest line items in private healthcare costs, but it also means manufacturers cannot pass through cost increases at will, they must wait for, and argue for, an annual (or in this case, extraordinary) adjustment.
What this means for business
For pharmacies and healthcare retailers, a below-inflation increase squeezed against above-inflation input costs means margins on medicine sales likely tighten further before they improve, particularly for independent pharmacies without the buying power of the larger retail chains. For employers running group medical aid schemes, the increase sitting inside already-budgeted contribution growth is a rare piece of good news in an otherwise expensive year for healthcare costs, though the broader risk the industry is flagging, medicine shortages, would hit any business regardless of how well its own costs are contained.
The government’s commitment to consider a further extraordinary adjustment if pressures persist suggests this will not be the last SEP conversation of the year. Businesses in pharmaceutical retail and distribution should watch for further Department of Health notices on the Medicine Price Registry rather than assume October’s adjustment settles the matter for 2026.
For more on the regulations shaping South African business, see our Regulatory & Policy coverage.
