State’s cheap shot at Biovac

• SA vaccine firm snubbed for Cipla • Shots will have to be imported

SA’s state-backed vaccine manufacturer Biovac has been dealt a blow by the department of health after it switched to a cheaper supplier of shots to protect children against deadly pneumococcal diseases.

While the move may save money for the department, it is at odds with government policies to support domestic vaccine manufacturing capacity and improve the security of supply for both SA and the rest of Africa. The region’s lack of vaccine manufacturing capacity was cast into sharp relief during the pandemic, as it was relegated to the back of the queue when Covid-19 shots became available and governments that had manufacturing capacity prioritised their own populations.

Biovac is a public-private partnership established 20 years ago to revive SA’s human vaccine manufacturing capabilities. It entered into a partnership with Pfizer in 2015 to make the global pharmaceutical firm’s potentially life-saving Prevenar13 vaccine at its Pinelands facility, in the expectation that it would supply the shots to the SA government.

Biovac won the contract in 2019 and was expected to continue to supply the government for its next three-year tender from January 2024.

But the latest tender, published last week, gives the supply contract for pneumococcal vaccines to Cipla, which has no local manufacturing capacity and is expected to have to import the shots from the Serum Institute in India.

The tender documents show Cipla was awarded 99 out of a possible 100 points, 9 of which were for its BEE status and 90 for price, and has been contracted as the sole supplier of 12.6 million doses of a 10-valent pneumococcal vaccine at R97.06 per dose.

Biovac’s BEE status is 10, which means its bid price must have been higher than Cipla’s.

However, it provides a 13valent vaccine, which protects children against 13 different strains of pneumococcal disease. In the 2019 tender, the department of health paid Biovac R288.32 per dose for Prevenar 13.

“We are stunned,” said Biovac CEO Morena Makhoana.

“My number one headache now is how am I going to strike any further deals?

“If you snub a company like Pfizer, which other investor will see this a worthwhile [enterprise] to invest in?” he said. Pfizer has invested R855m in the partnership with Biovac.

While the department of health might be saving money on its next tender for pneumococcal vaccines, it comes at a significant cost to jobs and the economy, Makhoana said.

He expressed concern about the lack of opportunity to institute talks. In previous tenders, Biovac was given an opportunity to negotiate on price, but this time around there was “no discussion at all”, he said.

Pfizer Sub-Saharan Africa CEO Kevin Francis said the department of health’s decision came as a “huge surprise”, given that the department had several years ago asked Biovac to invest in the production of Prevenar-13 and that the department of science & innovation and the department of trade, industry & competition were promoting SA as an investment destination for biopharmaceuticals.

“There is no alignment between government departments,” he said. The department of health’s move threatens Biovac’s expansion plans, and raises tough questions about Pfizer’s future investments in SA,

MY NUMBER ONE HEADACHE NOW IS HOW WILL I STRIKE FURTHER DEALS?

Francis cautioned.

“It puts us in a precarious position. How do we consider future investments going forward in SA?” he asked.

The department’s decision to move from a 13-valent shot to a 10-valent jab is a retrogressive move with important public health implications, as the new jabs will offer infants less protection, he said.

Trade association Pharmaceuticals Made in SA (Pharmisa) said procurement decisions by the government need to strike the balance between price and economic value.

“Sensitive national pharmaceutical procurement decisions require the inputs of both the line departments and those of the economic cluster in order that procurement decisions constitute best value for money rather than what at face value appears to be the cheapest price” said the association’s chairperson, Stavros Nicolaou.

The department of health had not responded to Business Day’s request for comment at the time of publication.