Local drugmakers sound alarm: Import policies gutting SA medicine manufacturing base

Local pharmaceutical manufacturers in South Africa, represented by Pharmaceuticals Made in SA, are warning that government procurement policies are increasingly favouring imported medicines over local production. They argue that this shift, driven by large state tenders such as HIV/AIDS drugs, vaccines and solid-dose medicines, is reducing local manufacturers’ market share, threatening jobs and weakening national medicine supply security. Industry analysis shows steep declines in local participation in key tenders over the past decade. The South African Department of Health disputes the claims, saying it is balancing affordability, access and local manufacturing support within constrained budgets and policy priorities in practice..By Tamar Khan.Local pharmaceutical manufacturers have sounded a warning over the health department’s growing reliance on imported medicines, saying it threatens jobs and the country’s security of supply.Over more than a decade, importers have gained a steadily increasing share of two of the health department’s biggest tenders at the expense of local drug makers, according to analysis by Pharmaceuticals Made in SA (Pharmisa).“It completely flies against the country’s policy of localisation. Public procurement of pharmaceuticals is actually favouring and growing imports,” said Pharmisa chairperson Stavros Nicolaou.Public sector contracts account for about 70% of the pharmaceutical products purchased in South Africa, according to Pharmisa. The health department’s Aids drug tender is the biggest by value (R15.5bn), followed by vaccines (R8bn) and the solid dose tender (R7bn) for pills and capsules.Pharmisa’s analysis shows that local drug makers won more than 70% of the Aids drug tender by value in 2008 but just 24% in 2025, while their share by volume plunged over the period from more than 90% to just 22%. The latest Aids drug tender saw several local firms that had previously supplied the state shut out completely.For the solid dose tender, the volume awarded to local manufacturers shrank from 55% in 2014 to just 14% in 2026, while their share by value fell from 60% to 15% over the same period.Nicolau said the sharp drop in the number of items supplied to the state by local drug manufacturers carries risks, as it potentially means the loss of crucial technology. The trend is most acute in the solid dose tender, which saw local pharmaceutical manufacturers win contracts to supply just 42 products in 2026, compared with 152 products in 2014.After the Covid-19 pandemic, the government expressed its determination to reduce reliance on imported pharmaceuticals, but the data shows the opposite is true, he said.Pharmisa is particularly concerned by the health department’s adoption of a score for historically disadvantaged individuals (HDI) in the preference points it allocates to bidders, as it has unintentionally excluded JSE-listed companies, said Nicolau..Listed companies make outsized contributions to the fiscus through corporate tax, VAT and levies, employ thousands of people, and offer superior supply chain resilience due to their scale. Yet the solid dose tender did not allocate preference points to any listed companies or to any other local manufacturers, he said.The health department scores bids with up to 90 points for price and up to 10 for preference points.The health department disputed Pharmisa’s charge that local manufacturing is not being considered in public procurement.“Government continues to pursue a range of measures aimed at strengthening local manufacturing capability while balancing the need to maximise value for money and maintain sustainable access to essential medicines within a constrained fiscal environment,” said department spokesperson Foster Mohale.While the department recognises the important role played by local pharmaceutical manufacturers in supporting medicine security and contributing to South Africa’s industrial development objectives, its primary responsibility is to ensure patients have uninterrupted access to safe, effective, quality-assured and affordable medicines, he said.The health department has moved away from using HDI scores to allocate preference points and will in the future use broad-based BEE scores, he said..This article was first published by Business Day and is republished woth permission.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Local drugmakers sound alarm: Import policies gutting SA medicine manufacturing base

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