18 January 2016

Ethiopia: Addis Pharmaceutical Signs U.S.$42 Million Agreement

The international partner 54 Capital now has a 40.7pc legal share in the company

Addis Pharmaceutical Factory (APF) signed a 42 million dollar partnership agreement with 54 Capital Ltd., a UK-based asset management equity firm, which has investments in different countries in Africa.

APF, one of the many businesses under the Endowment Fund for the Rehabilitation of Tigray (EFFORT), ceded 40.7pc of its equity in exchange for the indicated sum, which comes to 891 million Br.

"54 Capital can now play a role in technical production development and international market," said Shimelis Mamuye, general manager of APF.

The two were brought together through the intermediation of Ernst & Young which led to the financial auditing of APF by Deloitte before 54 Capital decided to invest in the company, Shimeles said. The transfer of equity to the UK firm came to a conclusion with a signing of an agreement between the two sides on January 1, 2016.

"We made a long term strategy looking for a potential partner and they have been making a feasibility study to invest in the pharmaceutical sector in Ethiopia, which has not grown yet," Shimelis added.

APF has now received 30 million dollars, according to Shimeles, with the remaining sum expected to come in the future. The company is aiming to use the money to expand production for domestic and export markets. It will also focus on meeting the criteria for good manufacturing practice (GMP) certification by the World Health Organization (WHO), which would enable the company to export its products.

"But it is also possible to engage in exports if the receiving country approves the drugs exported to it," Shimeles said, adding by way of explanation, "that is how we are now exporting drugs to neighbouring Somalia and South Sudan."

Exports to these markets were worth 20,000 dollars in the last fiscal year, Shimeles said as he expressed hope that GMP certification would help the company earn more from exports, which could enable it to cover some of its import bill. APF imports most ingredients, only sourcing inputs as sugar, ethanol and starch domestically.

Thirty million Birr will be spent on upgrading manufacturing technologies, which is one requirement of the GMP. The company has also made a request to Adigrat municipality in Tigray State for an additional 60,000sqm plot of land to build a new plant. The new plant will be used to manufacture new drugs, the General Manager said. APF has one plant in Adigrat, 898Km from Addis Abeba, and another in Addis Abeba, at Akaki Kaliti District, where it produces intravenous fluids.

It started out with 20 products, which increased to 91 over the years. Following the equity transfer to 54 Capital, APF will add another 36 products, which will also be new to the country.

"The types of the drugs will mostly be injectables," Shimeles said, but the details are confidential. "But we have made a study and the types are already listed and known," he added.

Addis Pharmaceutical Factory's products include antibiotics, gastro-intestinal drugs, central nervous system drugs, cardiovascular drugs, anti-diabetic agents, antihistamines, anthelmintics, analgesics, antiprotozoals, respiratory drugs, dermatological preparations, minerals and vitamins as well as large volumes of parenterals, according to the website of EFFORT Investments. The factory provides jobs for 720 regular and 200 temporary employees.


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