CC2023(01) Naidoo M. Insights into the Evolution of the South African Private Primary Healthcare Clinic Market

When NHI is introduced in South Africa the government will purchase primary healthcare (“PHC”) services from both the public and private sector. In this regard, private PHC providers are positioning themselves to be key providers to the NHI by expanding their clinic services to various geographic areas. However, till the NHI is implemented there is a significant percentage of the population that is formally employed but do not have medical aid coverage. Both Clicks and Dis-chem have been embarking on a rapid expansion over the years acquiring the independent pharmacies which has allowed it to expand both its retail pharmacies and clinics. Recently the independent group clinics have also entered the market. To further expand their geographic reach some of the corporate and independent clinics also offer telemedicine services that allows consumers to access to GPs at much lower rates. This may be a strategy undertaken by the retail pharmacies to strengthen its position in the dispensary market, as it is convenient for patients visiting the clinic to purchase their medicines from the dispensary. A more recent development in the PHC market is the PHC insurance offered by Clicks and Dis-chem. PHC insurance is an attractive product to the uninsured population as it provides PHC services at a much lower cost than medical aid coverage. There are several players offering PHC insurance but Clicks and Dis-chem are the only players that are active in the retail pharmacy and clinic market. Furthermore, both Clicks and Dis-chem’s focus has evolved from only retail pharmacies to a far broader offering including wholesale and distribution, clinics, telemedicine and PHC insurance providing an integrated PHC model in South Africa. Therefore, it is important to identify the key developments occurring in the PHC market as these may need to be considered for imminent mergers and acquisitions and enforcement cases taking place in the market.