Health department defends R15.5bn HIV drug tender in court

The health department has pushed back against pharmaceutical manufacturer Cipla’s legal bid to scrap its R15.5bn Aids drug tender, arguing in court papers that officials ran a fair and rational process to determine which companies should be allocated a share of the lucrative contracts.

The row centres on the core contracts to supply the government with the daily pill taken by most HIV patients, which took effect on December 1 2025.

Despite having previously supplied the state and invested in local production capacity, Cipla was excluded from the awards to supply monthly and three-monthly packs of pills combining tenofovir, lamivudine and dolutegravir (TLD).

The R7.25bn TLD contract for monthly packs was split between eight companies, while the R5.38bn TLD contract for three-month packs was split between seven firms.

Cipla launched an application in the Pretoria high court in February seeking to overturn the tender, arguing that officials failed to give due consideration to local manufacturing, allowed the participation of firms that should have been disqualified, and made mistakes in the way they split the contract between winning bidders.

Its application has been opposed by the health department and almost all the firms that won a share of the TLD contracts.

Now in the final stages of exchanging papers, the parties are expected to argue the matter in court in September.

The health department emphasises the financial impact of its decisions, disclosing the details of competing bids, and pointing out that Cipla’s prices were higher than those of the winners.

Cipla had been afforded the opportunity to reduce its prices during negotiations but had not improved enough to make the final cut, the health department’s chief director for sector-wide procurement Khadija Jamaloodien says in papers.

A supporting affidavit filed by MacLeods Pharmaceuticals estimates that if Cipla had been awarded a share of each of the two TLD contracts at its bid prices, it would have cost the government R75m more than it had agreed to pay Aspen Pharmacare, which was not the cheapest supplier.

Cipla’s argument that the tender should be declared invalid on the grounds of allegedly collusive tendering, bidding by related entities and an irrational division of the award only affected Barrs and Innovata and not other successful companies, says Jamaloodien.

Read: Pharma sector tender rules ‘defy logic’ as industry suffers

Barrs and Innovata, placed in business rescue in December, together won 25% of the TLD contracts.

Jamaloodien rebuts Cipla’s argument that Barrs and Innovata should have automatically been disqualified for failing to indicate their related-party status, saying they had disclosed they were subsidiaries of Avacare.

They did not have any shared directors and were therefore not precluded by the tender rules from bidding, she says. There is no evidence of collusive conduct or co-ordinated dealing between Barrs and Innovata, and Cipla had not provided any evidence to back up its allegations, she says.

Cipla says in its papers that while Barrs and Innovata did not share directors, they did share two key shareholders — Grace Job and Daniel Tshimbombo — who each held an 11.38% stake in both companies.

It questions why both companies had used a commissioner of oaths located at the same address and why their prices differed by just R1.50, arguing the health department should have referred the two companies to the Competition Commission for investigation for suspected collusion, as it had done with Hetero SA.

Jamaloodien says officials had no evidence of collusive conduct or co-ordinating bidding between Barrs and Innovata during the tender process and hence no grounds to refer them to the Competition Commission.

Job says in papers that as subsidiaries of Avacare, Barrs and Innovata had access to the same support services but shared no bid-sensitive information and had submitted their bids independently of each other. Their prices were similar due to market conditions, she says.

In response to Cipla’s complaint that the health department had not considered local manufacturing capacity in awarding the TLD contracts, Jamaloodien says the health department had in fact applied preference for local manufacturers by conducting two rounds of price negotiations in which they were invited to improve their offers.

Business Day