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BEE, HIV, ARV

December 17, 2010 Leave a comment Go to comments

The South African Government has recently awarded a R4.28 bn (about £400m) contract to a number of pharmaceutical companies for the supply of HIV ARVs. My interest in this lies purely with the mechanics involved in  the fulfilment of the tender process. A local company, Adcock Ingram has expressed surprise and disappointment that it was allocated a very small portion of the contract, only 4%. The company manufactures its products locally. Its chairman has written to the government minister involved, asking for details of how the decisions were made. Adcock has been around for 120 years and is well established and respected. According to the rules of the tender, bidders were awarded points in three categories. Up to 90 points were for price, eight for local manufacturing, and two for BEE (Black Economic Empowerment). When the Treasury named the winners, it provided the total number of points awarded to each successful bidder for each product, but did not give a breakdown by category or explain how points were determined. I think most people would applaud the low level given to BEE, 2%, and would respect efforts by the government to reduce spending by giving such weighting towards price . However,  I think I would have preferred to see more points awarded for the local manufacturing element. After all it would mean that South African money stays in South Africa and presumably taxes paid by local companies would offset some or all of any price differential. Adcock had hoped to win a the contract to supply  Efavirenz which it manufactures under licence from Merck. It failed.

One of the companies that substantially benefited from the process was Sonke Pharmaceuticals. As you can see from its web site it has some interesting things to say about itself. To be fair, I do not know what products precisely Sonke manufactures (it says 8 out of 16) in South Africa and if any are included in the tender, but what caught my eye was its reference to the well-being of its directors and the fact that it partnered Ranbaxy, the largest pharmaceutical company in India. It goes without saying that Sonke is a BEE venture. It is difficult not to draw certain conclusions from this situation. Few of them are positive.

ABOUT SONKE PHARMACEUTICALS

Sonke Pharmaceuticals (Pty) Ltd was established in January 2006 as a Black Economic Empowerment joint venture between Ranbaxy (Pty) Ltd and Community Investment Holdings.

Sonke Pharmaceuticals has launched 16 products to date, eight of which are manufactured locally in South Africa. We are committed to acting responsibly in all economic, social and environmental aspects of our business.

Our people are an important part of our success. At Sonke Pharmaceuticals, we place a high premium on the personal well-being of our directors, management and support staff. We have created and continuously strive to maintain a professional and creative working environment where personnel feel welcome and appreciated for their efforts and contribution. A level 1 AAA Empowerdex BEE Contributor-Rating with 100% staff qualifying as Historically Disadvantaged Individuals confirms our commitment to transformation and empowerment.

RANBAXY LABORATORIES LIMITED

Ranbaxy Laboratories Limited, India’s largest pharmaceutical company, is an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies.

You can read the Business Day article here. http://www.businessday.co.za/articles/Content.aspx?id=129687

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