Government has made poor decisions on ARV procurement, says Aspen exec

Stavros Nicolaou, Aspen Pharma's group senior executive, this week criticised poor procurement decisions by government departments, saying products including antiretrovirals (ARVs) could be produced locally to benefit the economy.

Speaking at the annual Black Business Council summit in Kempton Park, Ekurhuleni, this week, Nicalaou urged government departments to consider procurement decisions based on the impact on the economy instead of solely on price considerations.

Nicolaou, said South Africa has the world's highest HIV rate but imports most of its ARVs, which is counterintuitive.

“It is insane. Every month we consume 5.5-million packs of ARVs in the public sector. Our capacity is 3-million packs a month, and we have capacity to install 2-million capacity. We import most of the products, on simple yet illogical pricing decisions.

“Instead of looking at what constitutes the best value for money, we will say we are saving R1 a pack because we are importing from India, but we forget we are losing R3 a pack in terms of the multiplier impact back into the economy. It does not make sense. That is a terrible decision and unfortunately there are departments in our country, not only in my sector but across the board, that are making these illogical procurement decisions”.

He said as a result of poor procurement decisions, South Africa's trade deficit in pharmaceuticals was growing year on year, to the extent that pharmaceuticals and medical devices are now the fifth biggest contributor to the country's current account deficit.

“The decision we take in these departments is that we are going to save R1, and we are going to be heroes. But you know what, we will lose R20m of economic activity. It is nonsensical. I implore you to be industrial activists, let us hold our government to account for poor procurement decisions. They deny you the opportunity to enter the space and many other sectors,” he said.

He called for guaranteed offtake opportunities for black entrepreneurs with longer terms. 

“Let us start giving our black entrepreneurs offtakes. It is of no use saying we have a tender for two years, and a black industrialist comes in and wins the tender, but then they lose it two and half years later and are retrenching people. What is the sense of that? Other countries in the world do not do that.”

Business leaders also told the summit crime was one of the biggest threats facing business.

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