The biggest buyer in the market
For pharmaceutical suppliers, one buyer matters more than any other: the Medical Stores Department (MSD). It buys health commodities for public health facilities and for private facilities approved by the Ministry of Health. It’s also the country’s largest importer, sourcing about 80% of the medicines it supplies from abroad.
Winning MSD business can transform a supplier’s volumes. But a public contract is only good business if you can deliver it, get paid, and stay liquid in between.
The real worry
Most suppliers aren’t worried about winning. They’re worried about what happens after: stock bought upfront, guarantees tied up, payments that take longer than planned, and a “successful” contract that strains the whole business.
Here’s how to win public business that strengthens you rather than drains you.
Five things to know before you bid
1. No registration, no tender
MSD only buys products registered with the relevant regulators, such as TMDA for medicines. Your eligibility depends on registration being complete before the tender closes.
What it means: plan registrations around the tender calendar. A product approved a month too late can miss a year of public business.
2. Manufacturers come first
MSD prioritizes buying from manufacturers, local and international, with some preference for authorized dealers. Distributors need clear authorization from the manufacturers they represent.
3. Local production has an edge
Locally manufactured products can receive a price preference of up to 15%, and some tenders are limited to local suppliers. For importers, that changes how competitive a bid really is.
4. MSD is also a manufacturer
Since 2021, MSD has had the power to produce health commodities. Through its subsidiary, MSD Medipharm, it already makes gloves and masks. It also manages a pharmaceutical industrial park at Zegereni, Kibaha, set up to attract investors and joint ventures.
What it means: in some product categories, MSD may become a competitor. In others, it may be a partner. Your long-term strategy should account for both.
5. Shelf life matters
MSD checks that products meet approved shelf-life standards. Stock that sits too long, waiting for an award or a delivery date, can become unacceptable to the buyer.
Where the cash goes
A public contract ties up cash at every stage:
Stage | Where cash gets tied up |
|---|---|
Before bidding | Registration, bid preparation, and often a bid guarantee |
After winning | A performance guarantee, plus stock bought or produced before delivery |
During delivery | Transport, storage, and the risk of penalties for late or short delivery |
After delivery | Time waiting for payment, while suppliers and staff still need paying |
The key point: the risk usually isn’t whether the contract is profitable. It’s whether the cash lasts until payment arrives.
How to protect your cash
- Model the cash, not just the margin. Before bidding, map when money goes out and when it comes in, including realistic payment times.
- Fund working capital before you need it. Line up trade finance, supplier credit or invoice financing in advance, not after the cash runs short.
- Watch exchange rates. If you import and are paid in shillings, a weaker shilling between bid and payment erodes your margin.
- Plan stock around shelf life. Buy or produce in line with delivery schedules.
- Don’t let one contract dominate. Balance public business with private sales, so one slow payment doesn’t threaten everything.
Where suppliers get stuck
- The contract that drained the business. A large award required heavy upfront stock. Payment took longer than planned, and the supplier couldn’t fund its next orders.
- Registration missed the window. A product was approved shortly after a major tender closed, losing a year of public sales.
- The bid ignored local preference. An importer priced competitively, but lost to local products with the preference applied.
- Currency moved the margin. The shilling weakened between bid and payment, and a profitable contract became a loss.
- Stock aged out. Delivery dates slipped, and products no longer met shelf-life requirements.
What winning well looks like
- Registrations planned around the tender calendar.
- Bids priced with local preference, currency and payment times in mind.
- Working capital funded before the contract starts.
- Stock managed to delivery dates and shelf life.
- Public and private sales balanced, so cash flow stays steady.
- A clear long-term position: competing with, supplying to or partnering with local production.
That’s what turns public tenders from a cash risk into a stable, growing part of your business.
How Glenrich helps
Public procurement combines pricing, regulation, cash flow and long-term strategy. Glenrich helps suppliers get all four right. Our investment advisory, tax and risk teams guide you in three steps:
- Bid with the full picture. We model each tender’s cash flow, margin and currency risk before you commit, including the effect of local preference.
- Fund and structure delivery. We help you plan working capital, arrange financing and set up the right structure, including partnerships with local manufacturers where they make sense.
- Stay in control. We track stock, receivables and contract performance, and give your head office clear monthly reporting.
Supplying Tanzania’s public health sector? Let’s talk.
We work with international clients by video call, in English, around your time zone.
Glenrich Consultants, Samora Tower, Dar es Salaam
Frequently asked questions
Who buys medicines for Tanzania’s public health facilities?
The Medical Stores Department (MSD), which also supplies private facilities approved by the Ministry of Health.
Do products need to be registered before bidding?
Yes. MSD only buys products approved or registered by the relevant regulators, such as TMDA.
Do local manufacturers get an advantage?
Yes. Locally made products can receive a price preference of up to 15%, and some tenders are limited to local suppliers.
What’s the biggest risk in public tenders?
Cash flow: upfront stock, guarantees and waiting for payment. Model and fund working capital before you bid.
Further reading
- Building a Pharmaceutical Factory in Tanzania That Lenders Will Fund
- What It Really Costs to Enter Tanzania’s Pharmaceutical Market
About Glenrich
Glenrich Consultants is a finance and risk partner for investors and businesses in Tanzania. Our team of accountants, tax consultants, investment advisors and risk specialists supports clients from market entry through to compliance, reporting and protection, across Tanzania Mainland and Zanzibar.