SA's pharmacy giants and government have come head to head over the state's alleged preference for cheaper imports over medicines made locally, a situation which has been blamed for the loss of 2 500 jobs in the past 18 months, and medicine shortages. MedicalBrief writes that the dispute, aired in Parliament last week, comes amid a global medicines shortage, according to a new report which revealed that the average duration of shortages for drugs of all kinds has more than doubled since 2019 (see story in sidebar).
US Pharmacopeia, a non-profit scientific group, which released its latest report on drug shortages, said the reasons are essentially economic, and have to do with hospitals paying as little as possible for lifesaving drugs. In SA, a similar situation has allegedly led to local pharmaceutical groups losing out to foreign companies, claims Pharmaceuticals Made in South Africa (Pharmisa), whose members include Aspen Pharmacare, Adcock Ingram, Biovac, Sandoz, the National Bioproducts Institute and Fresenius Kabi.
The share of pharmaceutical tenders awarded to domestic firms has steadily shrunk in recent years, with little weight being accorded to local production. Consequently, the sector has shed more than 2 500 jobs in 18 months, medicine shortages are at an all-time high and the pharmaceutical trade deficit is widening, said Pharmisa chair Stavros Nicolaou.
“During Covid-19, South Africa was at the back of the queue for countermeasures (such as vaccines). It is disappointing that … we have not heeded those lessons,” he told the Portfolio Committee on Trade, Industry & Competition, which last week was consulting business groups and government departments about the state’s new industry development strategy.
Pharmisa’s analysis shows the Health Department awarded just 28% of the value of its 2025 Aids drug tender to local manufacturers in 2025, down from 72% in 2008. A similar trend was evident in its tender for pills and capsules, which saw the share by value awarded to local firms fall from 56% in 2014 to 18% this year.
Nicolaou said the local industry was in crisis. “The only facility for making oral contraceptives has shut, and there is no longer any domestic capacity to formulate penicillin or produce the active pharmaceutical ingredient for paracetamol,” he said.
Nine contract manufacturing organisations have closed recently, disrupting the supply of folic acid (taken by pregnant women to prevent neural tube defects), plasmoquin (used to treat malaria) and various types of eye drops.
He said what was urgently needed was preferential procurement regulations and tax incentives, along with greater certainty that companies would see a return on investments in new or upgraded facilities.
A request to the Health Department to award longer contracts of up to seven years, instead of the current three-year terms, had been ignored, he added. “We need long-term investment cycles that will promote technology transfer and foreign direct investment.”
The Health Department hasn’t yet responded to the request in April for an adjustment to this year’s single exit price (SEP) increase, set at just 1.47% and which is well below consumer price inflation (3.6%) and sectoral wage increases (6%), Nicolaou said.
The Pharmaceutical Task Group has asked for a 1.73 percentage point increase to take the SEP for 2026 to 3.2%.
Cosatu has called for immediate government intervention to halt the pharmaceutical manufacturing sector’s job losses.
But in a second Business Day, report the department defended its public procurement processes and accused Pharmisa of misleading Parliament about the reasons behind the job loses.
It accused Pharmisa of giving MPs a distorted picture of its procurement processes and glossing over crucial market developments putting pressure on manufacturers, like more stringent regulatory requirements.
It said a reduction “in the value of some of the contracts awarded to particular manufacturers is not, on its own, evidence that government policy has failed”.
“It reflects a dynamic and increasingly competitive pharmaceutical market in which the government must balance industrial development with its constitutional obligation to maximise access to affordable medicines.”
It did not directly respond to Pharmisa’s analysis of tenders by value, focusing instead on how the tenders were split by volume.
“On the solid dosage form tender (for tablets and capsules), the proportion of quantities awarded to locally produced products increased from 38% in 2023 to 45% in 2026. Similarly, on the ARV (HIV treatment) tender, quantities awarded to locally produced products increased from 67% in 2022 to 70% in 2025,” the department said.
Pharmisa had ignored fundamental changes to the pharmaceutical market over the past decade, including reductions in medicine prices through increased competition and the participation of more manufacturers, it added.
Nicolaou rejected the department’s analysis, claiming it relied on medicine registration certificates instead of production data or customs records of imports. Medicine registration certificates list potential manufacturing sites and do not reflect where production has actually taken place, he said.
Pharmisa defines a local manufacturer as one that has invested in production capacity, imports active pharmaceutical ingredients and formulates medicines in South Africa. It excludes companies that repackage and label imported finished goods.
Business Day – Pharma sector tender rules ‘defy logic’ as industry suffers
Business Day – Health officials defend drug procurement amid clash over job cuts (Restricted access)
See more from MedicalBrief archives:
South Africa must slash its reliance on imported drugs – Pharmisa
Cipla joins legal challenge as Aids drug tender row escalates