Rene Industries: The Largest Producer of High Quality Essential Medicines in Uganda

Interview with Khushboo Vadodaria, Operations Director at Rene Industries Limited

What is your background in the industry?

I am a pharmacist. I studied at the University of Nottingham and I registered as a pharmacist in the UK. I worked there for seven years. Then, I pursued an MBA with the London School of Finance and Business. I then came back home and it has been about seven or eight years now that I have been with the family business working as the Operations Director. As Head of Operations, I have to handle everything in the finance section from the operations in the factory, the production planning, the budgeting, etc. On the marketing side, I also handle the media and the PR. You have to dip your foot into everything.

What is the outlook for the economy and the pharmaceutical sector in Uganda, especially concerning the effects of the recent Coronavirus pandemic?

Definitely, like any other country, Uganda did suffer with the Coronavirus pandemic. There was a restriction on economic activity because of lockdowns, restriction of movement, government funds were being diverted to pandemic related activities. So, there were sectors that were not receiving enough funds for operations. There was also an increase in public debt which really hindered the growth of the economy. In 2019, we had a growth of approximately 5.5 to 5.8%. But for 2020, it is estimated at 0.4 to 1.8%. This was a drastic decrease in the GDP growth. Throughout 2020, we endured a number of high costs personally in the pharmaceutical sector because of logistics, which was our biggest hurdle last year because ports were shut down. The majority of our imports and raw materials come from India, China, and Europe and they scaled down on their production and on their shipments. We were fighting tooth and nail to even get active pharmaceutical ingredients into the country. Also, from Kenya to Uganda, imports have to reach the Mombasa Port and then cross into Uganda. There was COVID testing happening at the port and at the border so that was delaying shipments by 15 to 30 days. So, we really struggled a lot in the beginning with logistics. A lot of our sea shipments were diverted to air shipments so we had to pay heavy air freight on much of our imports. That increased our production costs by 8 to 10%, which is quite a lot, and production costs are quite high anyway. This caused quite a hurdle for us.

What has been the positive impact of these challenges? Have you seen new strategies or opportunities arise?

We are introducing several new products including antimalarials and steroids. In the pipeline, we have some cardiovascular drugs because Uganda is seeing an increase in cardiovascular diseases and lifestyle diseases such as Type 2 Diabetes, high cholesterol, high blood pressure, etc.

There are a lot of opportunities for local industries to thrive now because the imports from other economies of scale, countries like India and China, were hindered. Our local demand actually increased over the months. For example, when we were in lockdown in March and April, our sales were double, triple what it usually was because of the local demand. We also had the opportunity to introduce new products such as hand sanitizer, which we have developed according to WHO guidelines, and we had the opportunity to supply a lot of government and non-governmental organizations and institutions in huge quantities which would not have been possible if they were importing the hand sanitizer. We also increased our capacities because of the demand. Because of the knock on effect of March and April, the lockdown period, the demand had increased so much that it forced us to increase our capacities and procure more machinery, do extensions to the factory to accommodate the machinery, and increase our manpower as well. Definitely, we had a lot more opportunity in 2020 being in the essential health sector. Also, because of COVID, they were using a lot of the essential medicines that we manufactured such as vitamin C and zinc sulfate tablets. So, we also saw an increase in the procurement of those particular medicines. Exports throughout the East African region also increased for us, particularly South Sudan and Burundi. We were able to supply government organizations as well which was a big plus for us. We are the largest local supplier in terms of volume and all our supplies were consistent which the end user was very pleased about. Despite the hurdles, we managed to supply everything on time and we continue to do so.

Have you seen a long term change in your business model and your strategy? Is the pharmaceutical industry different now than it was before?

Our business model still remains the same: to produce high quality and cost effective essential medicines for the local and the regional markets. As for a long term strategy, we have developed new products such as alcohol hand sanitizer and we have introduced a few more products in the pipeline to do with cardiovascular health and antimalarials. In terms of a long term strategy, it definitely has put into perspective that we need to focus on building capacity and ensure that there is consistent supply of essential medicines to the government, the local market, as well as to export markets. It has given us a jolt to improve capacities to meet the demands.

Many companies and industries have seen similar. Crisis often creates creativity. Have you seen the effects of this?

The crisis definitely pushed us to be more assertive, more versatile. We had to be very innovative during the pandemic. We suffered with a lot of logistics issues. We have had to think outside of the box to drive further ideas on how to improve or streamline our logistics, which we have learned from. Since we had the hurdle in March and April, since June, we were much better at our logistics and timely delivery of our goods to the market. That is what actually has driven our growth. We have to think about further innovation that would not hinder our growth, but would ensure that we remain progressive with the times that lie ahead.

In order to focus on building capacity and looking for further innovation, are you interested in attracting investors?

Our company has been very lucrative. We have seen a growth of 20% just in one year, and during a pandemic no less. We will see how the pharmaceutical and essential medicine sector pans out when it comes to growth. When it comes to strengthening local production, Uganda is on the right track. In five years’ time, the turnover for the company will double and triple. We would definitely look for foreign investors. If something is interesting to us, we would welcome them with open arms. Having another perspective and another counsel would help drive the company to grow even further. We are open to any possible partnerships, investments, and possible ideas of investment.

What are some of the challenges you are facing as a company and how do you overcome these?

The challenges we face on a day to day basis, even prior to the pandemic, being a landlocked country involve logistics. Once you learn and perfect that, then it is very effective for the company. Other challenges are the high costs of production here. The utilities are quite high. Obviously, we have cheap imports coming from countries that enjoy economies of scale, such as India and China. There are high finance costs here compared to internationally because the risk to do business in Africa is very high and banks need that extra interest. There is heavy taxation on some pharmaceutical imports such as spare parts, importation of HVAC systems which are the heating ventilation systems that we use in the factory to ensure that there is no cross contamination of products which is a very expensive system to install. In order to comply with the National Drug Authority standards, we are mandated to install such expensive systems. Because it is very hot here and we must run them 24 hours a day, we have to introduce things like chillers and coolers to ensure that the temperature is perfect inside the facility. Everything is very expensive. We also pay taxes on lab chemicals that we use to test all our drugs. There are a few incentives with lobbying with the government and they are supporting us, but we obviously need to continue pushing for more incentives.

What are the current projects you are working on?

We are continuing to expand the industry to accommodate for new machinery in the compression and packaging lines. We recently opened up a new warehouse for raw materials. Storage is an issue because as our volumes grow, we require more space for storage. We are introducing several new products including antimalarials and steroids. In the pipeline, we have some cardiovascular drugs because Uganda is seeing an increase in cardiovascular diseases and lifestyle diseases such as Type 2 Diabetes, high cholesterol, high blood pressure, etc. So, Rene Industries is increasing more products in those specific therapeutic classes.

What makes a family business different?

A family business is definitely one of the more complex structures in business. Together with business acumen, strategy, and all of the business related activities, there is an element of emotion involved. Since I joined the family business, there has been a continuous learning curve and it has been a very positive experience. My father has a lot of experience and every day we learn so much from him. The knowledge that he has gained through years of experience, I still have quite a long way to go with stepping into his shoes. But because the stakes are in our favor and we own the company, it drives us to work harder. I work harder every day to save the company money or to be more streamlined with the logistics because any delay in production delays time to market, delays business, etc. Because it is personal, I work harder that way. It is my motivation, my drive to work harder every day. Also, because it is a family business and we are just three directors (my mother, my father, and myself) we make decisions very quickly. That drives the company to improve the processes and there is no hindrance from the outside, as opposed to corporate structures where you have a whole board of directors, someone in HR, someone in finance, the corporate secretary, etc. We do not have any of that. We have company meetings at our dining table. I am enjoying it. It has been such a positive experience for me.

What can the new generation bring to Rene Industries?

Since I joined, we have introduced more products to our product line range, we have had many various expansions to the factory, and there are more ideas and more innovation that comes with the younger generation. Although, with the older generation, you might feel like you need to show them and make your mark with them. Once you have overcome that hurdle, the way they welcome the ideas is phenomenal and that has been an inspiration to work for the older generation because you learn so much. Then, you can use those ideas and better them and come up with new ideas. Definitely, there has been new ideas, new innovation, new methods of working, and modernization.

Project yourself three years’ time, or even five to ten years. What do you want to achieve personally?

Personally, I would want to be a stronger Operations Director and perhaps be a better leader to my employees. I would like to take the company further and increase our export markets, and obviously, just grow the company as much as I can. There is a figure that I have in my mind. We definitely want to increase our growth and we need to increase our product lines meeting these capacities. We want to take over the entire region. My dream for now is to export to at least 90% of all the countries in the East African region and the sub Saharan region, including the DRC and we are working on that slowly. Currently, we are exporting to South Sudan, Rwanda, Burundi, and we are working on Zambia as well as we speak. I would like to open up more and more markets and you never know what the future holds. We might even open another industry in another country.

Is it different being a woman leading a company in the pharmaceutical industry in Uganda?

I do not know of any other woman in the pharmaceutical manufacturing sector with an exact position as myself. I am alone in a whole band of men. Sometimes, it is tough and there is a lot of balance required and a lot of sacrifice and compromise. But once you have made your mark and you have shown them that you are a force to be reckoned with, then the respect starts. For me, it took me a few years to get that. When I joined the company, I did not have this position. I actually worked in the factory in the production line and then I worked my way up into the position where I am today. So, I had to prove myself to a lot of people in my production line as well.

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