Medicine task team wins rare praise for department
September 25, 2009
It is not common to hear people, especially those in the private sector, applaud a government department. This week was one of those rare occasions. Stakeholders in the private pharmaceutical industry are pleased with the Department of Health's efforts to resolve the backlog in medicines registration.
It is not very clear how many products have been delayed or even how long they have been held up for.
Firms such as Aspen Pharmacare say they have more than 200 products delayed in the registration process by up to four years. The Health Department has formed the Medical Products Technical Task Team, headed by Nicholas Crisp of Benguela Health, to sort out the inefficiencies of the Medicines Control Council (MCC).
The industry has been asked to submit data on all the products awaiting approval, an exercise that will end next week. The task team was initially meant to work until the end of October but there are plans to extend its work to the end of November.
Hopefully by then it would have all the information that would make it easier for the MCC to fix the problem so that the firms can register their products, put them out in the market and increase competition.
The work of the task team is not expected to solve all the MCC's problems. The council will be replaced by the SA Health Products Regulatory Authority, which must register drugs by manufacturers within a year of application and generics within six months. Clinical trials should be considered within 30 to 60 days.
The local drugs industry has deteriorated over the years and become less competitive in all respects. Delayed product registrations haven't helped as investors want their products in markets quickly.
One hopes the momentum to make the MCC an efficient institution won't vanish when the task team completes its mandate.
Dinosaur print
If media group Caxton was interested in selling shares to black investors, buying out ElementOne in the complicated Afmed structure would have been a perfect opportunity for an empowerment deal as it would have helped the firm to maintain liquidity.
A week ago Caxton's managing director, Gordon Utian, said the company had no plans in place to sell equity. Caxton, which owns a string of community newspapers and magazines, is embroiled in a dispute with ElementOne, which owns a 33.6 percent direct and indirect stake in the group.
Negotiations are under way to resolve the matter, which could likely result in Caxton buying out ElementOne's direct shareholding of 16 percent. But ElementOne shareholders want a higher price as they believe the shares are undervalued.
If Caxton ends up buying back its shares from ElementOne, and warehousing them for black investors, it will avoid shrinking its liquidity. Caxton is known for prizing its control, so by doing it that way, it will retain that control. But Caxton may have a different view.
So potential black investors, don't hold your breath. Caxton has no plans whatsoever of any proposals at the moment. Its competitors, such as Naspers, have sold shares to black investors. This has not been at group level, but at subsidiaries - MultiChoice and Media24. If Caxton is at all interested in transformation it could separate its entities and sell shares in them.
Avusa is 25 percent owned by Mvelaphanda Group, and it will be interesting to see whether Avusa will be one of those assets offloaded by the investment group.
Independent News, the owner of Business Report, is also not empowered and it will be interesting to see what happens when the company resolves its financial problems.
The broadcast media is well ahead of the print media, and most privately owned radio stations are owned by empowered firms, including Kagiso Media and Primedia.
Bothers in arms
Armscor's board of directors says it has learnt "with concern" the latest inaccurate interpretation of its financial statements about the salary increase of chief executive Sipho Thomo.
The chairperson of the human resources committee of the board, SA Msibi, said in a statement that Thomo received increases of just 6.8 percent and 13.3 percent in 2007/08 and 2008/09, respectively.
The board added that the firm entered into a restraint of trade deal with the chief executive, which formed part of his employment contract. "This was based on the need identified by the board to protect the firm's interests given the nature of our business." He noted that 60 percent of the total restraint amount was awarded and paid at the start of his employment deal.
New DA defence spokesman David Maynier said this statement suggested there "is something crooked at Armscor".
He pointed out that the 2008/09 annual report revealed that Thomo received a salary hike from R1.22 million to R1.45m and a benefit rise from R108 624 to R1.39m. The increases collectively made up an 89 percent hike. Some crucial information was concealed, he argued. It does not disclose actual salary increase figures and whether annual bonus payments were made.
Maynier pointed out that in a year in which the state entity decided not to suspend Thomo "but should receive counselling for his management style" instead, he received performance bonuses. The resolution of a grievance lodged against Thomo by a senior manager cost R1.8m.
Usually restraint of trade payments were made to staff who were about to exit an organisation, Maynier pointed out.
Maynier has asked the defence and military veterans portfolio committee chair Nyami Booi to meet with Armscor chairman Popo Molefe, Thomo and the board of directors. They should bring Thomo's employment deal, policy documents on remuneration, annual bonuses, performance bonuses and restraint of trade payments and copies of minutes of board meetings where Thomo's pay was authorised.
There are, indeed, now more questions than answers.
Edited by Peter DeIonno. Contributions by Slindile Khanyile, Thabiso Mochiko and Donwald Pressly.
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