Two pharmaceutical companies awarded a share of South Africa’s latest Aids drug tender are in business rescue and have struggled to consistently supply the state. Avacare Health subsidiaries Barrs and Innovata each won portions of the core contract to supply TLD. Most HIV patients use this three-in-one antiretroviral pill. Both entities entered business rescue in December. Therefore, this raised concerns about supply continuity in a tender that began on 1 December.
The National Department of Health said that Avacare and its subsidiaries failed to inform it of the business rescue process. Department spokesperson Foster Mohale said neither Barrs nor Innovata has met the tender obligations. He attributed the disruption to “manufacturing constraints” that have reduced their ability to supply.
The department has responded by seeking continuity measures. It has agreed to a request from Barrs to supply an alternative product. Innovata has indicated that its supplier restarted production after the holiday shutdown, but the company has not confirmed when deliveries will resume.
AIDS Drug Tender: Health Department Moves To Prevent Treatment Disruptions
The department has also engaged other contracted suppliers to increase production to protect availability while the two suppliers address constraints. This matters because disruptions to TLD supply can increase the risk of treatment interruption. That, in turn, can raise the chance of patients developing drug resistance.
Aspen Pharmacare, one of the companies that won a share of the TLD contracts, said it is willing to help close any gap. Aspen’s head of strategic trade, Stavros Nicolaou, said the company will work with the department to resolve any shortfall that arises.
The TLD contracts are the most significant component of the broader tender. The two TLD contracts are worth R12.6bn out of the R15.5bn total. This makes them strategically important for both public health delivery and local manufacturing stability.
Tender Controversies Deepen As Legal And Competition Issues Continue
The supply concerns add to a growing list of disputes around the tender. When the Department of Health announced the awards in August, it excluded several established local manufacturers from contracts to supply monthly and three-monthly TLD packs. These companies include Adcock Ingram, Cipla and Sun Pharmaceuticals.
Meanwhile, Hetero Drugs’ South African subsidiary launched legal action, alleging that the Department unlawfully excluded it despite it submitting lower prices than all but one successful bidder. The Competition Commission has opened an investigation into Hetero for alleged collusion, following a referral from the health department.
Business rescue consultant Karl Gribnitz said the Avacare-linked companies had accumulated supplier debt “north of R250m”, but remained going concerns. He said two investor groups plan to recapitalise the businesses after the rescue process. Creditors approved a business rescue plan for Innovata, and they expect to sign off on Barrs and Supra Healthcare imminently. The practitioners anticipate an exit from business rescue by the end of next week. Reports indicate that the companies offered creditors up to 50c in the rand.
Mohale also warned that the issues extend beyond HIV medicines, citing shortages across multiple items. The state lists Barrs as its sole supplier of morphine powder, and the department confirmed it is currently supplying stock to clear outstanding back orders.
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