Pharmisa says the health department’s focus on price is squeezing local drug manufacturers out of crucial medicine tenders, resulting in job cuts. Picture: 123RF/PAVEL CHAGOCHKIN
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The health department has defended its public procurement processes and accused a pharmaceutical industry association of misleading parliament about the reasons behind the sector’s recent job loses.
The row goes to the heart of long-running tension between government policies that seek to support local industries and the budget pressures facing the health department, which has repeatedly drawn fire from domestic players for choosing cheaper imports over medicines made in South Africa.
Last week, Pharmaceuticals Made in South Africa (Pharmisa) told parliament’s portfolio committee on trade, industry & competition that the health department’s focus on price was squeezing local drug manufacturers out of crucial medicine tenders to such an extent that it had triggered the loss of 2,500 jobs in the past 18 months.
Pharmisa’s members include Aspen Pharmacare, Adcock Ingram, Biovac, Sandoz, the National Bioproducts Institute and Fresenius Kabi.
The organisation said local pharmaceutical manufacturers’ share of the HIV/Aids drug tender had plunged in value from 72% in 2008 to 28% in 2025, while their share of the tender for tablets and capsules by value had fallen from 56% in 2014 to 18% in 2026. It also drew attention to the impact of the health minister’s decision to award a below-inflation increase of just 1.47% for private sector medicine sales in 2026, and the effect on input costs of the war in the Middle East.
The health department hit back at the weekend, saying Pharmisa had presented MPs with a distorted picture of its procurement processes and glossed over crucial market developments putting pressure on manufacturers, such as more stringent regulatory requirements.
“South Africa needs a mature discussion about how to strengthen local pharmaceutical manufacturing. It does not benefit from sensationalism or the selective use of procurement data to create the impression that public procurement has failed,” 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.”
The department rejected Pharmisa’s analysis of its tender awards, saying the association had used a definition of local manufacturing inconsistent with its own. Its own analysis showed support for local manufacturing had been maintained despite significant reductions in procurement prices.
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 said.
The pharmaceutical industry was also operating in an environment where regulatory expectations had increased significantly over the past decade, requiring substantial capital investment and continuous upgrading of production facilities. Companies that had been slow to modernise or make the required changes to maintain regulatory compliance were unable to compete effectively.
Pharmisa chair Stavros Nicolaou rejected the department’s analysis, which he claimed 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. Using this definition, its analysis of the latest Aids drug tender showed six of the eight companies that won a share of the core contract to supply monthly packs of the triple pill taken by most HIV patients had gone to importers, Nicolaou said.
“The only way to resolve this is to [have] a discussion with the health department. We hope it will give us an audience this week, given the gravity of the situation.”
South Africa’s biggest trade union federation, Cosatu, has called for immediate government intervention to halt the pharmaceutical manufacturing sector’s job losses. “While the government must seek the best value for money when procuring goods, including health supplies, this must not be taken to Thatcherite extremes or at the cost of badly needed local jobs, producers and value chains,” it said.
Business Day