By Fakir Hassen, IANS,
Johannesburg : The South African Treasury has indicated that it will oppose a court application by Indian pharmaceutical company Aurobindo, which is disputing the awarding of a $400 million supply contract to two local firms despite Aurobindo’s tender being the lowest.
The Indian giant, a leading producer of anti-retroviral drugs (ARVs), has alleged that its tender to supply ARVs was on an average 30 percent cheaper than those of South African manufacturers Aspen and Adcock Ingram, to whom over half the tender was awarded in 2008. The rest went to other local manufacturers.
Treasury spokesman Lindani Mbunyuza told the Afrikaans daily Beeld here Tuesday that the reasons for awarding the tender had already been provided: “We stand by our decision. The process is now with the courts.”
Mbunyuza added that the implementation of the contract would not be delayed by the legal action.
Stavros Nicolau, chairman of the local pharmaceutical producer’s trade association Pharmisa, said the tender awarded to local companies was in compliance with national policy. “It should not have come as a surprise to Aurobindo or anyone else.”
Nicolau said the policy was necessary because South African manufacturers, unlike their counterparts in countries like Brazil, India and Mexico, were not protected by import tariffs on pharmaceutical products.
“We don’t want alms, we just want to compete on an equal footing,” Nicolau said, adding that India’s import tariffs were as much as 36 percent.
Analysts here were confident of the Treasury winning its case, particularly since the tender documents had made provision that the contract would not necessarily be awarded to the lowest bidder.
The policy on local preference also has strong support from the government, with the pharmaceuticals industry being one of the strategic sectors identified for growth and development.
The decision by Aurobindo to move court follows barely a week after the company announced plans to start building a $10 million plant here before the end of the year.
The announcement was hailed by local industry as a major boost to the South African economy and for the expected resultant job creation.