Aurobindo sues SA govt over AIDS drug bids

Written by BV Mahalakshmi | Agencies | Hyderabad, Johannesburg | Updated: Jun 30 2009, 07:38am hrs
Hyderabad-based Aurobindo Pharma has sued the South African government after failing to win a $400-million tender for medicines to treat AIDS. The company claims its quoted price was 30% cheaper than the locally manufactured products.

Six Indian companies, including Aurobindo, Cipla and Ranbaxy, had participated in the tender but none could win the contract for around six products to treat HIVAIDS. Aurobindo is one of the largest producers of generic anti-retroviral drugs for HIV/AIDS and their active pharmaceutical ingredients.

According to a news report from South Africa, 60% of the contract, floated last year for the supply of drugs, was awarded to local companies Aspen and Adcock Ingram. The balance was awarded to the patent holding companies. The formulations offered by the Indian companies were genericthe patents on them had expired. Since the matter is now in a court, Aurobindo officials refused to comment. The companys shares were down 1.74% to close at Rs 492.25 on the Bombay Stock Exchange on Monday.

The South African government had earlier cancelled a tender for Efavirenz, in which Aurobindo had a clear edge over branded makers, without giving any explanation. Sources said the price quoted by Aurobindo for Efavirenz was 120% less than the local product available in the South African market. While there was no independent corroboration for the estimate, the sources said it could have meant a savings of rand 178 million over the two-year contract period for the government.

About 12 companies, including MNCs like Roche, Bristol Meyers Squibb and Abbott Laboratories and Indian companies such as Cipla, Ranbaxy, Matrix, Aurobindo and Hetero Drugs were in the race for the global contract. However, officials from Hetero Drugs said that they withdrew from the tender.

When contacted by FE, Pharmaceutical Export Promotion Council (Pharmexcil) officials said the South African government had delayed the tendering process due to bureaucratic problems.

Sources point out that the health ministry of South Africa is trying to give an impetus to local manufacturers that supply anti-AIDS medicines. Even though the African market is a regulated one, we suspect there is vested interest working there, a source at the Council said.

The generic market in Africa has become a big battle ground between companies from India and those from the US and others like Switzerland. Keeping in view the mood in the African countries, the government of India plans to take a high-level delegation to the continent, as part of a brand building project. It will be in South Africa on July 22. Incidentally, officials of Aurobindo are also participating in this meeting, though they claimed it was a routine affair.

With high trade barriers on pharmaceutical supplies in major competing markets like Mexico and Brazil, the South African market was perceived as relatively open by Indian drug companies. There is no import tariff on finished product and raw active materials attract duties between 10% and 15%. Local manufacturers have, therefore, demanded a level-playing field. South Africas industrial policy action plan, released in August 2007, moots leveraging anti-retroviral tenders to expand local capabilities, by giving preference to local manufacturers in tender awards.

The South African tender was for supply of both active pharmaceutical ingredients and finished dosages at an affordable price. Ideally, these products are the first line of therapy, which has resistance for the first three years and are cost-effective. In fact, Indian companies had firmed up joint ventures with African companies to participate in the tender. Matrix had teamed up with Aspen Holdings, Ranbaxy with Sonke Pharmaceuticals and Cipla with Medpro Pharmaceutical. Aurobindo has its own office.

WHO figures show South Africa has over 1,50,000 HIV-affected patients. About a fourth of the worlds AIDS population is in South Africa.