Up next

SA's ARV producers cry foul over share of R11 billion tender

SA's ARV producers cry foul over share of R11 billion tender

The life-saving ARV treatment that never runs out for those who need it.
  • South Africa's latest ARV government supply contract is valued at R11 billion.
  • 49% of the tender went to companies based in India and the remainder will be produced by South African companies.
  • The tender has become a contentious topic in the pharmaceutical industry, with Pharmaceuticals Made in SA (Pharmisa) chairperson, Stavros Nicolaou, saying the award to the Indian companies prejudices local manufacturers.
  • Get the biggest business stories emailed to you every weekday, or go to the Fin24 front page.

The South African economy and local pharmaceutical companies will be the biggest losers after almost half of the country's antiretroviral tender was awarded to companies in India.

The contract, which is valued at R11 billion, is for the supply of antiretroviral (ARV) medication to the Department of Health from the beginning of this month to 30 June 2025, according to the department's tender documents on its website.

Of the winning bids for the supply the combined tenofovir disoproxil, lamivudine and dolutegravir (TLD) dose, 45% are companies in India. And 55% was awarded to local producers Aspen Pharmacare, Sisonke Pharmaceuticals and Cipla Medpro, which has manufacturing facilities in Durban.

TLD makes up the bulk of the contract for the supply of more than 145 million packs of the pills.

READ | Owner of Sensodyne, Advil makes R620bn market debut, biggest European listing in more than 10 years

For the other combined tenofovir, emtricitabine and efavirenz (TEE), 67% will be produced by Indian pharmaceutical companies, and local manufacturers were awarded a combined 33%.

The combined supply of both drugs is 49% from the companies in India and 51% from local producers.

South Africa's Adcock Ingram's bid did not win.

However, the tender has become a contentious topic in the pharmaceutical industry, with Pharmaceuticals Made in SA (Pharmisa) chairperson, Stavros Nicolaou, saying the award to the Indian companies prejudices local manufacturers.

Nicolaou said the decision on the winning bids should not be based on the cheapest price but rather the best value for money.

In this case, the best value for money would be one that adds to South Africa's tax revenue.

He pointed out that although the department's mandate is to provide health services, every department in the country has a responsibility to grow the economy, given the tough economic situation.

WATCH | Police arrest suspects holding business owner and security hostage in Ladysmith

"The importers ... keep all the profit and the jobs and the technologies in India, in the case of the ARV tender. It's not like they are going to pay huge taxes here in South Africa [because] all the economic activity takes place in India," he asserted.

This goes against the government's efforts to prioritise local manufacturing.

Another blow to South Africa's producers, said Nicolaou, comes from the number of pills per pack that each company is meant to produce according to the contract.

Both the TLD and TEE come in a 28-pack, one-month supply, and three-month supply with 84 pills per pack. None of the South African companies are producing the 84-packs.

"There's a real risk here, by them not taking any locally produced 84-packs, that the 84s cannibalise the 28-pack, and this even further prejudices the local producers," Nicolaou said.

The department's spokesperson Foster Mohale said: "The National Department of Health supports local manufacture. However, this support must be considered in the context of reduced budget allocations and security of supply."

Mohale added that foreign manufacturers offer the lowest price, ensuring that there is security of supply and there are no stock-outs.

"Local manufacturers need to import Active Pharmaceutical Ingredients (API) before manufacturing can happen – as a result, the resilience of local manufacturers is reduced. By awarding to both local and foreign manufacturers potential risks to security of supply can be managed and mitigated," he said.

Mohale also pointed out that 73% of the value of the tender award was made to local pharmaceutical companies.

As for Adcock, a spokesperson said the company was not overlooked, and has been awarded nine ARV products.

"It should be noted that not all of the items for which Adcock Ingram submitted bids are locally manufactured. Furthermore, when there are a number of local manufacturers bidding for an item, factors such as final price (after price negotiations) and previous supplier performance are also taken into consideration before contract award," he said.

Powered by
3D Issue