The health department’s unexpected decision to purchase pneumococcal vaccines from the local subsidiary of Indian generic pharmaceutical company Cipla instead of local vaccine manufacturer Biovac will save the government R2.4bn, Cipla said on Wednesday.
Biovac entered into a partnership with pharmaceutical giant Pfizer in 2015 to help make its pneumococcal vaccine, in the expectation that it would supply the state with the shots produced at its facility in Pinelands. But in a surprise move, the health department announced last week that it had switched to Cipla for the next three-year contract, which begins in 2024. Cipla’s SA subsidiary signed an agreement with the Serum Institute of India in 2015 to import its vaccines into SA.
“Considering the current economic challenges in the country, the impact and importance of savings on this tender is really significant. Cipla has also proven over many years that it is able to ensure uninterrupted access and supply of affordable, high-quality critical medication,” said Cipla SA CEO Paul Miller. Cipla has a long history of supplying medicines to the state, including HIV treatments and measles vaccines.
The health department, which had not responded to Business Day’s request for comment at the time of publication, is facing immense budget pressure.
The Treasury instituted unprecedented cuts to the health budget in 2021 as it sought to rein in government spending in the wake of the economic turmoil caused by the coronavirus crisis. While extra money was given to the health sector in this year’s budget, it was not enough to counter the effect of these cuts. The health budget grows by a nominal 2.7% over the medium-term expenditure framework, well below projected inflation, which means it shrinks in real terms.
Cipla said its estimate of the savings the health department had made by switching to its pneumococcal vaccine was based on a comparison of the estimated value of the contract it had won with Biovac’s current pricing applied to the new contract's estimated volumes. The health department has contracted Cipla to supply 12.6-million doses of a 10-valent pneumococcal vaccine at R97.06 per dose. Biovac has been supplying a 13-valent pneumococcal vaccine, branded Prevnar, at R288.32 a dose.
Pfizer was not immediately available to respond to Cipla’s estimate of the savings to the government.
Biovac CEO Morena Makhoana said the health department’s move was at odds with long-standing government policies to support the development of a local vaccine manufacturing industry, and with President Cyril Ramaphosa’s efforts to promote African vaccine manufacturing. The coronavirus pandemic exposed the risks posed to African nations by the continent’s lack of vaccine manufacturing capacity, and the Partnerships for African Vaccine Manufacturing has set a target of ensuring that by 2040, 60% of the jabs used in Africa are produced on the continent.
Makhoana said Biovac had written to Ramaphosa expressing its dismay at the outcome of the tender and asking him to intervene. Biovac also wrote to the health minister, the minister of trade, industry & competition, and the minister of higher education, science & technology. It had yet to receive a response to any of these letters, he said.
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