Adcock Ingram’s revenue rises by 30% in Zimbabwe

ADCOCK Ingram and other pharmaceutical companies in Zimbabwe are battling imported medications and rising interventions by donor communities, although the South African manufacturer’s unit in Zimbabwe has managed to raise revenues by 30 percent and enhanced profitability by 402 percent in the just ended financial year.

Adcock, which operates the Datlabs unit in Zimbabwe, said foreign currency constraints were also hurting operations for the Zimbabwean pharmaceuticals’ manufacturers.

Analysts were, however, less bullish of the prospects of the industry in Zimbabwe, saying there were limited opportunities in the country’s pharmaceuticals industry.

“Healthcare providers and multinational drugmakers in Zimbabwe will continue to be presented with extremely limited opportunities due to insufficient government funding to the healthcare sector, political uncertainty and an increasingly unstable fiscal position,” said the Zimbabwe Pharmaceuticals and Healthcare Report Q2 2017 by BMI.

Zimbabwe recently failed to pay for crucial antiretrovirals on time, with doctors’ groupings asking the central bank to speedily apportion foreign currency for this. Payments for locally manufactured drugs supplied to government health institutions have also been sluggish, which has started to impact on the viability of manufacturers.

“We supply a substantial number of products to Zimbabwe’s government institutions and they normally take a long time to pay us, which tends to affect the viability of some of our operations, like the critical care division that manufactures large volume parenterals (drips),” Adcock Ingram said this week.

Payment problems

Emmanuel Mujuru, the chairperson of the Pharmaceutical Manufacturers Association, previously said that “payment is the critical problem”, as hospitals were the “key customers and they don’t have money to pay” on time.

“We are also engaging donors to buy locally, because they usually procure their donations abroad and flood the market,” added Mujuru.

In the year to June, Adcock Ingram raised overall income by 7 percent to R5.9 billion, helped by firming performance from the Zimbabwe and Kenya operations. It declared a R1.39 dividend for the 2017 full-year period as after tax profits raced 213 percent to R561 million.

Adcock said the Zimbabwe operation has out-performed in the just ended reporting period. The strong revenue performance and profit position had come in spite of difficult conditions in Zimbabwe.

“Despite the difficult economic conditions Datlabs is operating in, they managed to have a revenue growth of about 30 percent and an increase in profitability of 402 percent in the just ended financial year,” Kavitha Kalicharan, a spokesperson for Adcock Ingram, said.

Zimbabwe has been pushing through an import substitution and restriction programme aimed at protecting local industries. But imports continue to be problematic as they are usually cheaper compared to those manufactured locally.

“Imported pharmaceutical products are always a challenge to the pharmaceutical industry in Zimbabwe,” the company said.