Health Committee criticises R15bn ARV tender: Are local manufacturers being sidelined?

The Portfolio Committee on Health has raised concerns over the Department of Health’s decision to award R15.5 billion in antiretroviral (ARV) contracts to foreign companies, despite the existence of capable local manufacturers.

These concerns were raised during a briefing with Minister of Health Dr Aaron Motsoaledi and the Department of Health, where committee members questioned the department’s claim that at least 70% of ARVs are sourced locally.

The committee said that several suppliers listed as local, including Emcure, Innovata, Barrs, Aurobindo, and Viatris, actually import ARVs into South Africa.

“The committee expressed its disappointment that a R15,5 billion tender was awarded to foreign multinationals based in India, sidelining South African companies,” the Committee Chair Faith Muthambi said.

“For the 84s pack size, members noted that Emcure (India) won 15% of the tender, but trade data from Indian customs indicates that Emcure imports its ARVs into South Africa. In the last three-year contract, which ended two months ago, Emcure imported $43 million (R1.6 billion) worth of ARVs, yet the department lists Emcure as local.”

Members also pointed out that despite a cabinet resolution in 2007 to establish a state pharmaceutical company, Ketlaphela, nearly 19 years later, there is still no localisation or operational state-owned pharmaceutical manufacturer.

The committee also raised concerns over the fact that two of the awarded suppliers, Barrs and another company, are under business rescue and questioned the department’s due diligence and ability to ensure uninterrupted supply to patients.

“The department said the tender was intentionally awarded to multiple suppliers as a risk mitigation strategy, but members found this assertion questionable. They urged the department to explain the rationale behind awarding contracts to suppliers with common shareholdings, as this does not seem to constitute effective risk mitigation.”

“The committee requested a breakdown of how the department conducts its due diligence, particularly in confirming the shareholding of these companies and verifying whether manufacturers claiming to produce ARVs in South Africa are genuinely doing so.”

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