New plan to help SA firms compete

Cape Town - Aspen [JSE:APN] Pharmacare , South Africa's biggest pharmaceutical company, says the latest Industrial Policy Action Plan could help South African companies compete better with Indian businesses for state tenders.

India has overtaken Germany as the biggest exporter of pharmaceutical products to South Africa, says Stavros Nicolaou, an executive director at Aspen Pharmacare. On Wednesday he made a presentation to the Portfolio Committee for Trade and Industry on this Industrial Policy Action Plan.

The plan provides for South African companies to have the opportunity to match a foreign competitor's tender price if the foreign company's price is lower.

He said that only 47% of the R4.4bn total tender value for the pharmaceutical industry is awarded locally.

Aspen supplies about 70% of the state's oral contraceptive medicines, but in November the company lost a government tender for some 8m package of these pills to a "subsidised" Indian company on the basis of price.

For Triphasil tablets (28) the Indian company was 51c cheaper per package and for Nordette (28) it was 64c cheaper per package.

Nicolaou says National Treasury may save almost R3m, but the cost to the economy, in terms of retrenchments that Aspen is considering at its East London factory, involves a direct loss of R10m.

If the proposed plan had already been in operation, and Aspen had been able to match the tender price, this difference could have been taken off its margins, Nicolaou explained.

He said the industry is excited about this provision, but National Treasury is concerned that it may not be constitutional. Legal opinion indicates that it would not be unconstitutional, Nicolaou reckons.

In two weeks' time a decision will be made on a major tender for possibly 10m packages of antiretrovirals. This could be lost to the local industry simply because a foreign company is 15c cheaper per package.

- Sake24.com

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