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BEE, HIV, ARV

December 17, 2010 Leave a comment

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. Read more…

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