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Pretoria - An antiretroviral (ARV) tender worth R4.3bn over two years has been awarded to 10 pharmaceutical companies, Health Minister Aaron Motsoaledi announced on Tuesday.
This represented a R4.7bn saving over what the government had previously paid for rolling out ARVs.
"South Africa can now afford to treat twice as many people with the same amount of money," he told reporters.
"It is notable that these tender price reductions have been achieved through the same suppliers that are contracted in the current tender."
The new tender starts in January 2011 and runs for two years.
He attributed the lower tender price from the same suppliers to increased competition and a better tendering process.
Asked why the same suppliers were able to provide ARVs at a lower cost, he replied: "Perhaps it was our mistake in government, perhaps we were sleeping."
He said he was not at this stage contemplating a "witchhunt" of suppliers which had overcharged. Some of them had claimed that at lower prices there would be substantial job losses, he said.
"I called their bluff. There are more profits in pharmaceuticals than in oil. My message to pharmaceuticals is that they are in a sector that is very sensitive. They mustn't fish from our troubled waters."
He said the government hoped to replicate the success of cutting the cost of procuring ARVs when it focused on the tender process for tuberculosis drugs, vaccines and drugs for the treatment of diseases related to maternal and child health.
Earlier on Tuesday, South Africa's second-biggest drug maker Adcock Ingram Holdings [JSE:AIP] suffered a sharp drop in its share price after it said that it had secured a smaller portion of the lucrative HIV/Aids drug supply contract.
Adcock said it would supply R166.5m worth of drugs under a two-year contract awarded by the government, or just 4% of the total, compared with a share of 21% under the previous deal.
The company had hoped its Zidovudine and Efavirenz treatments would win at least 25% of the new contract, but gave no reason for the shortfall.
"It's not disaster for them ... ARV (antiretroviral treatments for HIV/Aids) is not the bulk of their business but it is disappointing," Michael Canterbury, an analyst at Sanlam Investment Management, said.
Shares in Adcock fell as much as 5.1% to R58.51, putting the stock on course for its biggest one-day decline since November 2008.
In morning trade the stock was trading 4.3% lower, lagging behind its closest domestic rival Aspen Pharmacare Holdings [JSE:APN], which gained 2.3%.
Aspen, Africa's biggest generic drug maker, said it won about 40% of the value of the tender, also below the more than 50% it won in previous tender.
Aspen drugs that will be supplied to state-run hospitals under the contract include Efavirenz, Nevirapine, Abacavir and Tinofovir.
South Africa, which has one of the world's heaviest HIV/Aids caseloads, also has one of the world's largest treatment programmes.
