South Africa’s local pharmaceutical manufacturers have warned that the Department of Health’s growing reliance on imported medicines could place jobs, industrial capacity, and the country’s security of medicine supply at risk.
The warning follows analysis by Pharmaceuticals Made in SA (Pharmisa). Their findings show that importers have steadily increased their share of two of the Department of Health’s biggest medicine tenders. Importers have done this over more than a decade.
Pharmisa chairperson Stavros Nicolaou said the trend undermines South Africa’s localisation policy. Additionally, it weakens efforts to build stronger domestic pharmaceutical manufacturing capacity.
Public-sector contracts account for about 70% of pharmaceutical products bought in South Africa, according to Pharmisa. The Department of Health’s HIV/AIDS drug tender is the largest by value, at R15.5 billion. It is followed by vaccines at R8 billion and the solid dose tender, covering pills and capsules, at R7 billion.
Local share of HIV/AIDS medicine tender drops sharply
Pharmisa’s analysis shows that local drugmakers secured more than 70% of the HIV/AIDS drug tender by value in 2008. By 2025, that share had fallen to 24%.
The decline by volume was even more severe. Local manufacturers supplied more than 90% of the tender volume in 2008, but this dropped to 22% in 2025.
Several local companies that had previously supplied the state were excluded from the latest HIV/AIDS tender altogether. This raises fresh concerns about the future of domestic medicine production.
The solid dose tender shows a similar decline. The volume awarded to local manufacturers fell from 55% in 2014 to 14% in 2026. Over the same period, their share by value declined from 60% to 15%.
Industry warns of lost skills and manufacturing capacity
Nicolaou said the decline in products awarded to local manufacturers could lead to the loss of critical pharmaceutical technology, specialised skills, and production capability.
The concern is particularly strong regarding the solid-dose tender. Local companies won contracts to supply only 42 products in 2026, compared with 152 products in 2014.
Pharmisa said this trend runs counter to the government’s post-COVID-19 commitment. The government had pledged to reduce dependence on imported medicines and strengthen domestic pharmaceutical production.
The industry argues that local manufacturing is essential for medicine security, especially during global supply disruptions. It also supports employment, industrial development and the retention of technical expertise in South Africa.
Tender scoring system under scrutiny
Pharmisa has also raised concerns about the Department of Health’s use of preference points linked to historically disadvantaged individuals.
Nicolaou said this approach has unintentionally disadvantaged JSE-listed pharmaceutical companies. This is despite these companies’ contribution to tax revenue, employment, and supply chain resilience.
He argued that listed manufacturers pay corporate tax, VAT and levies. They also employ thousands of workers. Moreover, they are often better positioned to ensure a stable supply of medicines because of their scale.
Government tender bids are scored out of 100, with up to 90 points awarded for price and up to 10 points for preference. However, according to Pharmisa, the solid dose tender did not allocate preference points to listed companies or other local manufacturers.
Health department defends medicine procurement
Department of Health spokesperson Foster Mohale rejected claims that local manufacturing is being ignored in public procurement.
He said the government continues to support measures to strengthen local manufacturing. At the same time, the government aims to balance value for money and sustained access to essential medicines in a constrained fiscal environment.
Mohale said the department recognises the importance of local pharmaceutical manufacturers in supporting medicine security and industrial development. However, he said its primary responsibility is to ensure uninterrupted access to safe, effective, quality-assured and affordable medicines.
He added that the department has moved away from using historically disadvantaged individual scores. Going forward, it will use broad-based BEE scores for preference points in future tenders.
Read the Original Article (May require a subscription)