South Africa, which has the world's heaviest HIV caseload and its biggest treatment programme, has long complained that it pays too much to secure life-prolonging anti-retroviral drugs for state hospitals.
"This joint venture ... will establish the first pharmaceutical plant to manufacture active pharmaceutical ingredients for anti-retroviral medicines in South Africa," said Science and Technology Minister Naledi Pandor.
Active Pharmaceutical Ingredients, or API, refers to the main component in medicines, accounting for as much as 75 percent of the finished drug dosage.
South Africa wants to produce ARVs in the country by 2016, a move that could squeeze local players such as Aspen, Cipla Medpro and Adcock Ingram
Africa's biggest economy, which consumes 25 percent of ARVs in the world, has at least 5.7 million people infected with the deadly virus.
Health authorities said in in December 2010 10 companies that include Chicago-based Abbott Laboratories and India's Aurobindo Pharma would share in a 4.3 billion rand contract to supply ARVs.
The 1.6 billion rand venture will build a plant in Pretoria that will create 2,200 jobs, with an additional 3,800 jobs to be created during the construction phase.
