South Africa will set up a R1.6-billion plant to manufacture active pharmaceutical ingredients (APIs) for antiretroviral medicines (ARVs) in a joint venture with Swiss group Lonza, Science and Technology Minister Naledi Pandor announced on Friday.

The project, dubbed Ketlaphela, would be jointly funded by Lonza and a number of State institutions, including the Industrial Development Corporation and Necsa subsidiary Pelchem.

The project is a joint initiative by the departments of Science and Technology, Trade and Industry (DTI), Health and Economic Development. Pandor said its initial focus would be on HIV/Aids, tuberculosis and malaria, while noncommunicable diseases such as diabetes, hypertension and cancer would later be added.

“The project is in line with government’s goal of addressing HIV/Aids through the local and cost effective-production of ARVs,” she noted.

The facility, which will be 50% State-owned, will be constructed at Pelchem's Pelindaba site, near Atteridgeville, outside Pretoria, and is expected to create 2 200 direct and indirect jobs in the formal and informal sector.

Construction is expected to start in early 2013.

"Ketlaphela will reduce the country's dependence on imported drugs and will provide security of supply of priority drugs, stable pricing with less sensitivity to exchange rates," Pandor said.

Trade and Industry Minister Rob Davies said South Africa consumed R25-billion worth of drugs a year, the majority of which are imported from the US and Europe.

“If South Africa were to continue to import ARVs at the current rate, in 2016, we would have to import 1 430 t of AIPs at a cost of R4.7-billion at current exchange rates. The new facility was expected to manufacture 40% of this in its first phase, a possible second phase would increase this percentage,” Davies stated, adding that the initiative was a big step forward in terms of South Africa’s manufacturing capacity.

The plant would also be in line with the DTI’s Industrial Policy Action Plan’s objectives, which encompass diversifying the South African economy towards higher value-added manufacturing, creating jobs and thus controlling the trade balance.

Economic Development Minister Ebrahim Patel said it was anticipated that about 60% of the capital expenditure of the project would go toward local sourcing. He referred to the local procurement accord signed by government last year in which an agreement was struck with the private sector to seek opportunities to purchase locally produced goods.

“There will be an active attempt to secure as much support as possible by buying local supplies,” he noted.

Further, Pandor enthused that Ketlaphela would leapfrog South Africa in terms of local pharmaceutical manufacturing and that it would provide opportunities for South African scientists and pharmaceutical companies.

She stated that the consortium had entered negotiations with the South African government with the aim of delivering the first locally manufactured ARVs from 2016.