JSE-listed pharmaceutical companies are gearing up to bid for the Department of Health’s latest AIDS-drug tender, which manufacturers estimate to be worth between R6bn and R9.5bn.

The two-year tender potentially offers good news for businesses and patients, with new measures that give preference to local manufacturers and a commitment to providing patients with three-in-one pills that have until now been unavailable in the state sector.

Triple combination drugs are easier to take, and mean patients are less likely to skip doses.

Although margins on AIDS drugs are relatively low compared to other medicines, the volumes involved make it an attractive business. There are currently 1.6-million adults on treatment, and the government is aiming to reach 2.5-million people by the end of 2014, according to Aspen, South Africa’s biggest manufacturer of generic AIDS drugs.

Adcock Ingram and Cipla Medpro are also expected to make strong bids for a slice of the contract, due to start on January 1.

"I think we are fairly well positioned," Aspen Pharmacare’s head of strategic trade, Stavros Nicolaou, said yesterday. "We have fixed-dose combination and single pills, and an excellent supply track record. But the proof is in the pudding when you get the award."

Mr Nicolaou estimated that the contract would be worth about R6bn.

The tender takes account of the Department of Trade and Industry’s designation of the pharmaceutical industry as one in which preference should be given to local manufacturers. It contains new provisions that allow a three-month transition period when the government switches suppliers.

This transition period is one of several measures the Department of Health has apparently taken to try to ensure that there are no stock outs, and no repeat of this year’s nationwide shortages of Tenofovir. The stock outs were partly due to the logistical challenges created for local manufacturers which had won the supply contract for Tenofovir after the government switched to and from donor-funded supplies.

Donor funds could not be used to buy drugs from Aspen Pharmacare and Sonke Pharmaceuticals as their products were not approved by the US Food and Drug Administration, and they were unable to immediately meet demand when the government suddenly placed orders again for unexpectedly high volumes.

The tender documents provide greater clarity than before regarding the Department of Health’s methodology for assessing competing bids, enabling companies to plan better, Adcock Ingram CEO Jonathan Louw said yesterday.

He estimated the contract would be worth about R9.5bn, and welcomed its provisions to boost local manufacturing. "Our country desperately needs some good news and economic activity that will create jobs," Mr Louw said.

Adock Ingram had just been awarded about 75% of the Department of Health’s tender for "large volume parenterals", which include items like saline drip bags — a contract worth about R288m.

Médicines Sans Frontières’ (MSF) head of advocacy Donela Besada welcomed the government’s decision to provide fixed-dose combination pills, but said MSF was concerned that they were not being given greater priority. The tender said fixed-dose combination pills would be purchased if they were priced lower than a combination of individual pills.

"The decision should not be based on price alone. Adherence with FDC s (fixed-dose combination pills) is better and they ease the load on healthcare workers, which cuts long-term costs," Ms Besada said.

The health department was not available for comment yesterday.