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HomeNews UpdateGovernment's R11bn ARV tender favours non-SA companies, says local body

Government's R11bn ARV tender favours non-SA companies, says local body

A local pharmaceutical industry body is questioning why almost half of the main medicines in a three-year R11bn antiretroviral (ARV) tender will be bought from Indian companies while SA’s Adcock Ingram was overlooked, despite the Department of Trade, Industry & Competition highlighting the need for increased local manufacturing.

The tender is awarded by the Department of Health (DoH) every three years and covers all of the ARV drugs used by the state in the world’s largest HIV treatment programme, reports BusinessLIVE. About 45% of the 145m packs of the most common three-in-one ARV pill will be procured from Indian companies that repackage drugs made abroad, according to documents on the DoH website.

Four companies with local manufacturing arms entered the bid to supply the government from July 2022 to 2025 with one or two of the main drugs used by most patients.

Cipla, Aspen and Sonke were awarded tenders for the main pill, but Adcock was excluded because its prices were too high, even though it provided medicines in the current tender.

The decision not to use all of SA’s manufacturing capacity and rely on Indian and other imports comes as the Department of Trade, Industry & Competition is promoting increased local manufacturing.

Adcock will now have to reorganise its Wadeville (Gauteng) factory that has been manufacturing ARVs for the government, saying its intention is to save the jobs of the 353 staff there.

Indian firm Hetero and American group Mylan – which is opening a factory in SA – were awarded about 66% of the 31m packs of the second most popular ARV, with Aspen getting a third of this tender and Cipla excluded.

The DoH, however, maintains 73% of the entire tender by value went to local manufacturing if one takes into account the fact Mylan is starting up a factory and counts all the ARVs that were ordered, including those used by children and pregnant women.

Pharmaceuticals Made in SA (Pharmisa) chair Stavros Nicolaou said what matters to manufacturers are the two pills that account for most of the volume, and not the smaller quantities of drugs, which do not cover the high fixed costs of production.

He said the decision to exclude Adcock was in stark contrast to the government’s aim to increase local manufacturing, adding that SA facilities have the capacity to make about 60% of the two main pills rather than the 50% awarded, while using four companies spreads the risk should any of them face delays.

Every single tender for the large boxes of 84 pills that will be given to stable patients for three months went to Indian firms, even as both Aspen and Adcock received approval from the medicines regulator for the larger packs in time for the bid.

In response, the DoH said it supports local manufacturing, but must work within a budget that has not kept up with inflation. At the same time it must procure as much medicine for as many people as possible.

Spokesperson Foster Mohale told TimesLIVE that “foreign manufacturers offer price efficiencies, making it possible to ensure ARV access to all who require treatment within our budget-constrained environment”.

Nicolaou said the department needed to consider the value created by local manufacturing through the payment of taxes, job creation, development of support industries and retaining skilled professionals.

Meetings have been held between the local drug manufacturers and the Departments of Trade, Industry & Competition and Health since as far back as 2011 and as recently as November to explain the need for long-term guaranteed orders to drive investment.
Nicolaou said “departments should be looking at what is the best fiscal decision for the country. We lose jobs and taxes to India”.

The DoH said nine of the 49 ARV tenders went to Adcock, but Nicolaou dismissed this, saying these were small orders.

When bids are evaluated, 90% of the score is linked to the price and 10% to the firm’s BEE score. Some Indian firms scored highly on BEE, according to public documents, despite a small employee presence in SA.

Mylan was awarded 16.2% of the main drug tender and a third of the second most popular one. The DoH said although Mylan is packaging imported drugs, it has plans to manufacture in SA.


BusinessLIVE article – Adcock Ingram misses out on main ARV tender despite state’s localisation goal (Open access)


See more from MedicalBrief archives:


SA’s ARV deal delivers cutting-edge Tx at a fraction of world price


Government delays erode savings made on new HIV-drug tender


DoH confirms global ingredient shortage behind ARV stockouts




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