Health Department: Local Pharma’s Woes Are Regulatory, Not a Failure of Procurement

The National Department of Health has pushed back on claims that public procurement is hollowing out South Africa’s pharmaceutical manufacturing, saying the industry’s real grievances are regulatory rather than the result of tender decisions.

The response follows Syenza News’ report on the sector’s warning that roughly 2,500 jobs are at risk as government tenders favour imported medicines over locally made products. In documents shared after publication, the Department argues the debate has been steered by “selective statistics, emotive messaging and claims presented without the necessary context.”

The Department’s central contention is a reframing of cause. In a cover note to Syenza News, the Department said the challenges being raised by industry “are primarily regulatory in nature, particularly the SEP adjustment and SAHPRA enforcement actions resulting in the closure of manufacturing sites,” and are “not related to public procurement.”

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That distinction matters because the two sides have been talking past each other on a definition.

The Department disputes the core figures

Pharmisa, the body representing local manufacturers, has argued that the share of procurement awarded to locally made products fell from 72% to 28% on the antiretroviral tender and from 56% to 18% on the solid dosage form tender. The Department does not accept those numbers, saying they are “based on a definition of local manufacturing that is inconsistent with the Department’s procurement framework and therefore present a misleading picture.”

Instead, the Department offers its own volume-based tally. On the solid dosage form tender, it says, locally produced quantities rose from 38% in 2023 to 45% in 2026. On the ARV tender, the comparable figures moved from 67% in 2022 to 70% in 2025.

The gap between the two accounts comes down to how “local” is defined, and to whether value or volume is the right yardstick. The Department argues procurement values alone are not a credible measure of industry health, since lower contract values often reflect successful reforms that cut prices while maintaining supply.

The Department also has a specific answer to the argument that the figures misrepresent what is genuinely manufactured locally. It says it evaluates bids on the information and declarations bidders themselves submit, and that it is “disingenuous to challenge procurement decisions after the fact by applying different definitions or questioning information that bidders themselves submitted during the procurement process.”

Regulation, not tenders

The Department’s stronger claim is that the closures now alarming the industry are a regulatory story, not a procurement one. It points to the single exit price adjustment and to enforcement by the South African Health Products Regulatory Authority as the immediate pressures.

It also levels a criticism at the industry itself. While many manufacturers have invested in upgrading to evolving Good Manufacturing Practice standards, the Department says, “others have been slow to modernise their facilities or implement the upgrades necessary to remain compliant.” In some instances, this has left manufacturers “unable to continue operating certain production lines or to compete effectively in an increasingly regulated and technologically advanced market.”

The remedy, in the Department’s view, cannot come from tender preference alone. “Industry competitiveness cannot rely indefinitely on public procurement preferences alone,” it argues, and government procurement “should not create an expectation that government will indefinitely serve as the guaranteed end market for locally manufactured products.”

A warning on regulatory capture

The most pointed section of the Department’s response is aimed at the lobbying effort itself. It cautions against attempts to shape procurement policy “primarily around the commercial interests of incumbent manufacturers,” citing international experience on the risks of regulatory capture, where institutions meant to protect the public interest become influenced by the industries they regulate or procure from.

Such capture, it warns, can produce higher medicine prices, reduced competition and barriers to entry for new manufacturers. “The Department will not allow its procurement approach to be shaped by lobbying aimed at protecting market share rather than improving patient access, health outcomes and value for money.”

What the two sides agree on, and what remains contested

Beneath the dispute there is common ground. Neither side questions that the SEP adjustment is a genuine financial stressor, and both want a strong local industry. The Department says it supports local manufacturing and has worked with the Departments of Trade, Industry and Competition and of Science, Technology and Innovation, alongside the Industrial Development Corporation, to strengthen domestic production.

What remains unresolved is attribution and remedy. Pharmisa sees procurement policy and the SEP as the cause of factory closures and job losses. The Department sees regulatory compliance and the industry’s own investment decisions as the driver, and procurement preference as the wrong fix. Whether the dialogue produces a shared account of the numbers, and a shared plan for the sector, is a key question that remains open. Stavros Nicolaou, Pharmisa Chairperson, and Sara Norcross, Novo Nordisk South Africa Vice President & General Manager, did not respond to requests for comment.