Adcock Ingram, the country’s second-largest drug maker, was pushing for a meeting with the National Treasury director-general for better clarity regarding concerns it raised about the outcome of the antiretroviral (ARV) tender, Jonathan Louw, the company’s chief executive, said recently.
Last year, the listed pharmaceutical firm wrote to the Treasury after the R4.2 billion tender was awarded because it had concerns in respect of efavirenz 600mg tablets and stavudine 200mg capsules. The two drugs are part of the regime of the ARV cocktail.
Adcock asked the Treasury for information on the tender, including the application of the criteria used to asses the tenders involved.
The tender for the supply of Aids treatment is issued every two years.
Louw said the firm felt that the government got its black economic empowerment (BEE) status wrong. But a response from the Treasury earlier this year said Adcock’s BEE status was not considered as it was a listed company.
Last week, Treasury spokeswoman Lindani Mbunyuza said according to regulations of the current Preferential Procurement Policy Framework Act, listed companies might not be awarded preference points for historically disadvantaged individuals.
“Publicly listed companies’ shares are traded on the stock market on a daily basis and therefore shareholding changes hands daily. As a result ascertaining historically disadvantaged individuals equity ownership for the purposes of evaluating tenders would be difficult,” said Mbunyuza.
“However, listed companies may still claim preference points allocated for other goals such as local content. Further, it is important to distinguish between shareholding and directorship.”
But yesterday Louw disagreed, saying this argument did not apply to the firm.
“It does not hold true for us because our BEE partners are locked in and they are not going away for at least a decade and we explained this to the Treasury. We uplift people who are historically disadvantaged, our BEE deal is very philanthropic and no one is making money out of this,” said Louw.
Sixteen months ago, Adcock concluded a R1.3bn BEE deal when it sold 13 percent of its stock to Kagiso Health Consortium, Kurisani Youth Development Trust and to its permanent black employees.
The transaction was funded through cash contributions from the partners and vendor financing. The company’s total empowerment shareholding is more than 25 percent.
Louw said that had Adcock’s BEE status been considered, it would have earned it another 2 percentage points “which is substantial on a very marginal business”. But he could not quantify it, saying it would depend on the product price.
Adcock secured only 4 percent of the current tender, compared with 20.9 percent of the previous tender, which was valued at R3.6bn.
Its local rivals, Aspen Pharmacare and Cipla Medpro South Africa, won 40.6 percent and 15.2 percent respectively of the current contract.
Mbunyuza added that preference points for historically disadvantaged individuals included points allocated for women equity (regardless of colour), equity by people who had no franchise prior to the 1983 constitution or the interim constitution of 1993 and people living with disabilities.
He said these regulations were being revised, noting that the director-general’s office had not received a meeting request from Adcock.
Louw would not say what action the company would take if it was still unhappy with the explanation after meeting the director-general.
Adcock shares rose 0.5 percent to close at R54 yesterday. - Business Report