THE government has put in place measures aimed at reviving the waning pharmaceuticals production sector, Trade and Industry Minister Rob Davies said on Friday.

Addressing journalists in Pretoria, he said this included the issuing of a tender valued at R2,5bn for two years of local procurement of oral pharmaceuticals.

"This is not an opportunity for ransacking," he said. "It is an opportunity for local manufacturers to put a toe in the door and to be pressured to become competitive."

Mr Davies added: "This tender will require that at least 70% of that procurement should come from local manufacturers. The remaining 30% is on an open tender but can go to local manufacturers as well."

To guard against excess product pricing by manufacturers, the minister said a reference pricing model was being drawn up in conjunction with the Department of Health.

"We have indicated that the designation process is not an opportunity for ransacking or ripping off the state ... we will have to operate according to that reference pricing system," he said.

Mr Davies said many jobs had been lost over the years due to a decline in production in the pharmaceuticals sector. By using imported products, the government had not been getting "good value for money".

He said pharmaceutical imports were among the biggest contributors to the national trade deficit, which could be countered by stimulating local production.

"There is considerable ground we have lost; our export figures show quite a sharp drop over a period of about 15 or 20 years," he said. "We have been importing large numbers of products that we previously manufactured."

Health Department director-general Precious Matsoso said that apart from losing capacity in pharmaceuticals production, vaccines production had also been dealt a blow over the years.

"We used to be one of the main vaccines suppliers, at least on the continent, and now we have lost out in the areas of diagnostics, pharmaceuticals and vaccines," she said.

The procurement will be part of the government's "second wave" of the designation exercise in terms of amended public procurement regulations aimed at stimulating local manufacturing.

The regulations - passed in terms of the Preferential Procurement Policy Framework Act - allow the Department of Trade and Industry to designate certain sectors and products for local procurement by local municipalities and government departments.

The "first wave" of designations, which came into effect from December last year, covered power pylons, rolling stock, buses, canned vegetables, clothing, textiles, footwear and leather products and set-top boxes (to be used to convert digital broadcast signals for viewing on analogue TV sets).

Mr Davies said the oral pharmaceuticals covered by the recent designation was the second-largest acquisition by the public health sector after anti-retroviral drugs.

Earlier this week, the National Association of Pharmaceutical Manufacturers complained it had been sidelined by the Department of Trade and Industry as it drew up plans for the preferential procurement for domestic medicine makers.

The association is one of several local trade bodies for pharmaceutical companies and represents about half of those selling generic drugs, many imported from India.

Its complaint, which has flatly been denied by the department, highlighted how high the stakes were for small importers of medicines.

SAPA with TAMAR KAHN