Addressing journalists in Pretoria, he said this included the issuing of a tender valued at R2,5 billion for a two-year local procurement of oral pharmaceuticals.
"This is not an opportunity for ransacking, it is an opportunity for local manufacturers to put a toe in the door and to be pressured to become competitive," he said.
"This tender will require that at least 70% of that procurement should come from local manufactures. The remaining 30% is on an open tender but can go to local manufacturers as well," he said.
To guard against excess pricing for the products by manufacturers, Davies said a reference pricing model was being worked out in conjunction with the department of health.
"We have indicated that the designation process is not an opportunity for ransacking or ripping off the state... we will have to operate according to that reference pricing system," he said.
Davies said many jobs had been lost over the years due to a decline in production in the pharmaceuticals sector. By using imported products government had not been getting "good value for money".
He said importation of pharmaceuticals was one of the biggest contributors to the national trade deficit, which could be countered by stimulating local production.
"There is considerable ground we have lost; our export figures show quite a sharp drop over a period of about 15 or 20 years," he said.
"We have been importing large numbers of products which we previously manufactured. Also, we have not been exporting as we used to do," said Davies.
Health department director general Precious Matsoso said apart from losing capacity in pharmaceuticals production, vaccines production had also been dealt a blow over the years.
"We used to be one of the main vaccines suppliers, at least on the continent, and now we have lost out in the areas of diagnostics, pharmaceuticals and vaccines," she said.
The procurement would be part of government's "second wave" of the designation exercise in terms of the amended public procurement regulations.
The regulations, passed in terms of the Preferential Procurement Policy Framework Act, allow the trade and industry department to designate certain sectors and products for local procurement by local municipalities and government departments.
The policy is aimed at stimulating local manufacturing.
The "first wave" of designations which became effective from December 2011 covered power pylons, rolling stock, buses, canned vegetables, clothing, textiles, footwear and leather products and set-top-boxes (which would be used to convert digital broadcast signals for viewing on analogue TV sets).
Davies said the oral pharmaceuticals covered by the recent designation was the second largest acquisition by the public health sector after anti-retroviral drugs.
Source: Sapa
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