The South African government will have to decide whether it wants to compete with pharmaceutical companies on the production of antiretroviral drugs or back them up.

This is according to Paul Miller, CEO of Cipla South Africa, speaking to Business Times on the sidelines of the 21st International Aids Conference in Durban this week.Miller was responding to news about the government's plans involving its own drug company.Speaking at the same conference this week, Science and Technology Minister Naledi Pandor said the fully integrated pharmaceutical company, Ketlaphela, had a focus on the local manufacture of ARV drugs.It would initially service South Africa and later expand into the Southern African Development Community region , said Pandor.story_article_left1In February, during his state of the nation address, President Jacob Zuma said the company would take part in the supply of the drugs to the Department of Health from the 2016-17 financial year.Cipla is one of India's largest generic manufacturers and supplies one in three African patients on ARV therapy. In 2012 Cipla was awarded an ARV tender of R1.4-billion. In 2014 it won part of a R10.3-billion tender to provide ARVs to South Africa between 2015 and 2017.Cipla's share of that tender was R2-billion. The other companies involved were BEE firm Sonke Pharmaceuticals (a R3-billion share), global pharmaceutical firm Mylan Pharma (R2.8-billion) and local company Aspen Pharma (R2.5-billion).Miller said it had taken Cipla decades to become a reliable, high-quality and affordable manufacturer. "The question is does the government want to back up these companies or do they want to be destructive by entering a space that took 80 years for one pharmaceutical company to build expertise in," said Miller.He said it would be risky to rely on the government for the supply of ARVs because it "may or may not have expertise. We could find ourselves challenged."The Department of Science and Technology said this week that the main objective of Ketlaphela was to initiate the manufacturing of the active pharmaceutical ingredients for ARV drugs."South Africa is totally dependent on the importation of the [active pharmaceutical ingredients] for the ARVs. Ketlaphela will enter into agreements with local manufacturers for the formulation of the Ketlaphela-branded tablets," it said.The government is in the process of establishing a pilot plant in Pretoria, which should be up and running by mid-2017."This project is a strategic investment by government to diminish South Africa's vulnerability when it comes to ARV procurement," the department said.The state-owned pharmaceutical company was originally set up as a joint venture between state-owned firm Pelchem, the Industrial Development Corporation and Swiss pharmaceutical manufacturer Lonza, in 2007. Lonza pulled out of the project in 2013 after the joint venture failed to attract investors.block_quotes_start We believe that if we are treating people in Africa we should set up manufacturing facilities in Africa block_quotes_endMiller said pharmaceutical companies had worked hard to get the price of ARVs right and the challenge now was to get the volumes up."At the moment the three suppliers of ARV treatment in South Africa are committed, they have built up scale and most have demonstrated the ability to supply and have also demonstrated that they can provide high-quality supply," said Miller.To put one patient on ARV treatment used to cost R180,000 a year - it now costs the government just more than R100 a month, he said."What we have achieved is not just to manufacture HIV treatment at just $1 a day, but even 60% cheaper than that," he said.While pharmaceutical companies' profitability from these drugs was very low, Cipla believes pushing up volumes will be a game changer. Hence its expansion plans in East and North Africa.Miller said Cipla had invested R500-million over the past few years in its manufacturing facility in KwaZulu-Natal, and was now eyeing other parts of Africa.story_article_right2This week, Cipla announced its plans to establish manufacturing facilities in Morocco and later in Algeria. The company said negotiations with governments and business people in these two countries were at an advanced stage.Miller said the expansion would increase the manufacturing capacity of ARVs, among other drugs, in Africa."We have recently launched a new facility in Uganda which produces ARVs for treatment of approximately 250,000 patients, which has been a successful business model and we hope to replicate this in the north of the continent," said Miller.The facility in KwaZulu-Natal has had its capacity increased from 28% to 90% as Cipla extends its reach in the SADC region.At the Uganda facility, the company plans to increase production from 80 million tablets a year to 120 million tablets, which will supply countries such as Kenya, Tanzania and Rwanda."We believe that if we are treating people in Africa we should set up manufacturing facilities in Africa," said Miller.Aspen declined to comment. Sonke Pharmaceuticals and Mylan could not be reached for comment.magwazan@sundaytimes.co.za..