Afrox gets contract to supply SA’s public health sector

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Afrox has won the healthcare contract to supply gases to public hospitals in South Africa for five years, in a deal valued at more than R1bn. Business Day reports that this is a coup for the JSE- listed gases group as it last held the entire contract a decade ago and has long identified the healthcare sector as a growth opportunity.

The company, a subsidiary of the global Linde Gases Group, says the contract stipulates that it contracts 30% of business to empowerment companies. The award is effective immediately across all of South Africa’s nine provinces and is exclusive for the next five years. Afrox has until the end of September 2018 to extend its existing contract supply to additional government healthcare facilities in KwaZulu-Natal, Free State, North West and Mpumalanga. Afrox will supply more than 400 hospitals and 1,600 clinics across South Africa.

“Afrox supports the Department of Health’s aspirations and we have been working to ensure our processes, distribution and supply chain operate at efficiency levels to meet the expectations of the entire healthcare sector in South Africa,” Afrox CEO Schalk Venter is quoted in the report as saying.

“We are committed to and have invested in (broad-based black economic empowerment programmes) and 30% of the total contract value has been contracted to black-owned (small, medium and micro-sized enterprises). We have long identified the healthcare sector as a growth point and have been concentrating our efforts in recent years to ensure Afrox can operate at efficiency levels to win this new business,” he said.

“Being awarded the contract for the provision of medical gases to state hospitals across SA underscores this achievement and affirms Afrox’s capability as the leading provider to healthcare services in Southern Africa offering security of supply of quality products.”

Afrox said its health and safety practices and full healthcare products range were of South African and international standards. “We have the production and filling capacity to meet the government’s healthcare requirements for medical gases, and processes and systems in place, backed by a skilled workforce and a robust supply chain,” Venter said.

The report says the government provides full medical services to the more than 45m South Africans who fall outside the private medical aid system and are dependent on public healthcare. The latest figures from Statistics SA show that provincial government expenditure on public healthcare stands at more than R150bn a year.

The new state healthcare contract runs from October 2017 to September 2022 and provides for the supply of a range of medical and other gases, including oxygen, nitrogen, nitrous oxide, carbon dioxide, hydrogen, helium, argon, gas mixtures and refrigeration gases.

Business Day report

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