Papers show the pharmaceutical companies applied for business rescue on 9 December 2025.
The Department of Health has assured the public that there is no shortage of antiretrovirals (ARVs) after reports that two companies awarded to supply the medicine used to treat HIV have entered business rescue.
Avacare Health subsidiaries Barrs and Innovata last year won a share of the tender to supply ARVs, alongside nine other companies. However, Barrs and Innovata both applied for business rescue nine days after the tender commenced.
Business rescue is a legal process that helps a struggling company avoid shutting down. When a company enters business rescue, it is placed under the control of a business rescue practitioner who tries to fix its financial problems, keep it operating, and protect jobs while a plan is made to pay creditors over time instead of all at once.
Business rescue after nine days?
According to the Department of Health’s website, under the ‘Pharmaceutical Contracts’ tab, the contract for successful suppliers started on 1 December 2025, and it will run until 30 November 2028.
However, papers show that both Barrs and Innovata registered for business rescue on 9 December 2025. The Citizen reached out to the department to confirm if the dates are correct, when the tender was advertised, and when the companies were appointed.
Foster Mohale, departmental spokesperson, said in a media statement that it is not uncommon for a tendered company to enter business rescue.
“The phenomenon of a company that has received a tender from the state or any other entity, public or private, going into some supply-related problems, be it business rescue, financial hardships or outright production failures, is not new and is well known.”
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Companies unable to provide ARVs
Mohale said awarding the ARV tender to multiple suppliers is a risk-mitigation strategy to ensure continuity of supply in the event of supply constraints by any individual contracted supplier.
There are 11 companies appointed to supply ARVs untill end of November 2028. “This approach enables the department to respond swiftly by engaging alternative contracted suppliers where necessary,” he said.
According to papers, the department has approved Barr’s request to supply an alternative product until the end of March 2026, as the pharmaceutical company is out of stock and cannot meet its tender obligations. There is no indication of when Innovata will be able to meet its tender obligations or what will happen in the meantime.
“Following notification of supply challenges experienced by the affected companies, the department immediately engaged with them to establish the causes and expected timelines for resolution,” said Mohale in a media statement.
“In parallel, the department has activated contingency arrangements by engaging other awarded suppliers to increase production and supply volumes to cover any shortfalls.”
Companies owe R250m
According to Business Day, the companies owe north of R250 million to their suppliers. Business rescue consultant Karl Gribnitz said two groups of investors intended to recapitalise the companies once the business rescue process is complete.
It is expected that the companies in questions to be out of business rescue by the end of next week, according to Gribnitz’s timeline.
Creditors have been offered up to 50 cents in the rand, according to business rescue practitioner Barry Urban, who was appointed to deal with the affairs of Avacare, Innovata and Barrs.
Barrs and Innovata’s problems extend beyond HIV medicines, said Mohale. “There have been stock shortages of multiple items from both companies,” he said.
Barrs is the state’s sole supplier of morphine powder, a cheap and powerful painkiller, according to the master health products list published by the Department of Health. Mohale said Barrs is currently supplying stock to address outstanding back orders of morphine.
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Enough medicine for patients
Mohale assured that there is enough medication for HIV patients. “Based on current consumption data and stock monitoring, provinces have sufficient stock of the affected antiretroviral medicines to cover approximately three months of expected demand,” he said.
“Stock levels continue to be closely monitored at national and provincial levels to ensure uninterrupted availability. Ongoing engagement with all contracted suppliers is underway to ensure stability of supply across the health system.
“The department is alive to the consequences of the country running out of ARVs and will never allow this to happen.
“Therefore, the department wishes to assure the public, healthcare workers and patients that we are not about to run out of ARVs and for that reason, patients must continue to visit their stations where they collect their normal supplies to receive whatever they need.”
Failure of due diligence
Julius Kleynhans, executive manager for local government at Organisation Undoing Tax Abuse (Outa), told The Citizen the situation raises serious failure of government due diligence.
“When companies appointed to supply life-saving medication collapse within days of being awarded a tender, it signals a serious failure of government due diligence,” he said.
“Patients should never pay the price for weak procurement systems. Further investigation is needed to determine whether money was paid to these companies and if action needs to be taken to recoup the funds.
“Critical tenders must include rigorous financial checks, performance guarantees, contingency planning and government needs to ensure that these service providers are up to the task.”
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