Ten years, millions of rand later, state drugs firm exists ‘only in name’
Blade Nzimande details the long list of blunders and failures that have led to the venture being a complete non-starter
Since 2011, the government has tried at least three different approaches, and spent millions of rand, to establish a state-owned pharmaceutical manufacturer — but has completely failed.
The company Ketlaphela was part of a vision to make active pharmaceutical ingredients (APIs) for drugs against the most problematic diseases in SA, particularly HIV/Aids.
Now, however, a decade on, it exists “just in name, without assets and no funding was inherited from the establishment process”.
This is according to a written parliamentary response by higher education, science and innovation minister Blade Nzimande. He was responding to a question by DA MP Chantel King, who wanted to know whether the state-owned pharmaceutical company had been established — and also asked for other related information.
Nzimande said the company was established as a subsidiary of Pelchem SOC, a subsidiary in turn of the SA Nuclear Energy Corporation (NECSA).
“This was part in a process of many other activities and investigations into the sustainability of such an entity, which included a number of studies, establishment of public-private partnerships seeking expert and legal opinions. Much work in this regard was done between 2011 and 2014. In total, the process was done in three phases,” he said.
The first phase entailed a partnership with Lonza, a Swiss company. But Lonza withdrew, citing its new management team’s global “focus and deliver” strategy, which it said would not align with the Ketlaphela partnership.
After Lonza’s withdrawal, the cabinet approved a process to find a new technology partner. This was referred to as phase 2 of the Ketlaphela project.
The need to find yet another partner was based on the fact that all APIs used in drug formulations in SA are imported and, as such, a technology partner would facilitate technology and skills transfer. This phase was implemented through open calls for expressions of interest.
“Unfortunately, no bidder could meet the minimum qualifying criteria,” said Nzimande.
The collapse of this phase ushered in the third phase of the process, which entailed a more pragmatic approach, by which Ketlaphela-branded antiretroviral tablets (ARVs) would be introduced into the national health care system through a collaboration with local ARV producers, while a small-scale manufacturing plant for APIs for selected niche products, including new ARV APIs, would be established.
The rationale for this phase was to tap into existing contracts between the health department and ARV suppliers to produce and supply Ketlaphela-branded ARV tablets to the department of health.
To incentivise ARV suppliers to collaborate with Ketlaphela, there was a need for a letter of intent between the department of health and Ketlaphela on a long-term supply agreement.
The request for proposal was therefore drafted for existing ARV suppliers wanting to partner to allocate current supply of their volumes to Ketlaphela in exchange of a long-term contract, said Nzimande.
In this regard, the department of science and technology at the time was to provide financial support for the development of new manufacturing approaches through research and development.
Nzimande said the third phase could not proceed as the letter of intent for long-term supply contract “could not be secured”.
“However, the research, development and innovation aspect under the department of science and technology continued and the small-scale manufacturing plant for API manufacturing has been established. As from 2017, the Pelchem board decided to take the process forward by finding an international technology partner to provide finished products under the Ketlaphela brand. The department of science and innovation is not part of this process as it does not follow the original aspect of local development and manufacturing of APIs,” he said.
Nzimande added: “It is important to note that for the period 2011 to 2015, all activities for the three phases were funded by the then department of science and technology to an amount of R13,747,152 to support the establishment of Ketlaphela.”
An unspent amount of R4,836,272.29 was, however, refunded in March 2017.
“Ketlaphela was, therefore, left existing just in name, without assets and no funding was inherited from the establishment process. The process currently being pursued by Pelchem and the department of energy and mineral resources to take the process forward in a different format seem to have stalled. With the department of science and innovation not being part of that, the department is therefore not in a position to provide an update on the latest developments,” said Nzimande.
President Cyril Ramaphosa announced in December that the ANC's national executive committee, in response to SA’s attempts to acquire Covid-19 vaccine stocks resolved to expedite the party’s resolution to establish a state-owned pharmaceutical company.