M and G Pharmaceuticals: A Leading Manufacturer of Pharmaceutical Products in Ghana

Interview with Gopal Vasu, CEO at M&G Pharmaceuticals

What are the current trends in the pharmaceutical sector in Ghana and West Africa? Is it a very competitive sector? Are there a lot of players in the market, both national and international companies?

Ghana achieved independence in 1957. At that time, there was no pharmaceutical products manufacturing industry in Ghana. Our first president, Kwame Nkrumah, had a vision to have industries throughout this country. So, he established sixteen industrial holding corporations known as the Ghana Industrial Holding Corporation, GIHOC, in different sectors of the economy: metals, electronics, meat processing, and foodware, including pharmaceuticals. The capacity of that GIHOC pharmaceutical was so large that it could supply pharmaceutical products not only to Ghana and the West African state, but to the whole of Africa. In 1989, when the British company the United Africa Company became Unilever, the production facility of their subsidiary, A. J. Seward, which was established to manufacture pharmaceutical and cosmetics products, was sold to the pharmacist who then established M&G Pharmaceuticals, Ltd. In 1993, the new management, through the GIPC (Ghana Investment Promotion Centre), acquired majority shareholding in the company and increased the production from four products to the eighty products we have today.

What is an overview of your competition? How many companies are local?

It is very true there is still room for investment in the pharmaceutical sector in this country since 70% of products are still being imported.

At the moment, there are 34 companies in Ghana manufacturing pharmaceutical products. They are scattered in the south and the north. Most of them are located in Accra, some in Kumasi, and some in the Brong-Ahafo region. Most of us are doing generic production only. In Ghana, we do not produce any product which is still under patent. Since Ghana is the signatory to the patent law, we only manufacture the products which are out of patent, such as tablets, capsules, syrups, and suspensions. Regarding the capacity of the 34 companies, local manufacturers are only able to supply 30% of the total pharmaceutical requirement of the country. The remaining 70% is still being imported from the far east, Asia, Europe, and the USA.

Does this mean that there is still huge growth potential for local companies to be able to supply this market?

It is very true there is still room for investment in the pharmaceutical sector in this country since 70% of products are still being imported. We are also trying to expand our capacity because the past and the present government have put the pharmaceutical sector in a priority area of investment. There are many incentives being offered now to the pharmaceutical industry. Recently, the EXIM Bank has given a loan on a very soft term to a few companies to expand their activity.

What is your overview of your products? What are your competitive advantages? How do you distinguish yourself from your competition?

At the moment, we are producing 80 products for 800 customers which include the Ghana Health Service, the Ministry of Health, private and public hospitals and clinics, pharmacy shops, and registered over the counter medicine sellers. We all have the same kind of product, but the way we market our product at M&G is slightly different. We go to the medical practitioners and medical assistants to promote our products. Although we also supply the public sector through tenders, we do about 40% of our sales in the private market. When we come out with new products, we do not follow the crowd. We prepare literature, attractive packaging, and give the doctors information on what the product can do.

What are the key products that you sell? Do you sell more of your own brands or generics?

One of our key products is our flagship product, the Polyfer, which is an Iron (III) Polymaltose. It is a very new molecule and most doctors prescribe this product. It is not branded, and there are many other companies also manufacturing this product. Another of our products is Zintab. We are the first company approved under the SHOPS project funded by USAID to manufacture a Zinc tablet, which along with the ORS is very effective for diarrhea in children who are under five years of age.

Where do you market yourself in Ghana? You also have a footprint in West Africa. What is your geographic expansion?

The pharmaceutical products that are made in Ghana are very much respected throughout West Africa. If a client has a choice between a product made in Liberia, Sierra Leone, Guinea, or Gambia, they will definitely prefer pharmaceutical products made in Ghana because of the quality and efficacy. People have trust in the products made in Ghana. We are currently exporting to Liberia and Gambia. We also plan to register our products in most of the francophone countries. It is easier to sell in anglophone countries because in French speaking countries, the registration is more cumbersome. Fortunately, like WHO, the West African states have implemented the West African Health Organization, WAHO, and they are working for the harmonization of the registration of these products. When it is done, it will be easier for us to export products to any of the anglophone or francophone countries.

70% of your turnover and sales are to the public sector. How would you describe the environment? Is it competitive? Is the tender process an easy process?

In the case of the public sector, because we have the Public Procurement Authority in Ghana, all the health institutions are supposed to come out with tenders every year. If our prices are competitive and we have performed very well in the past, we can win the orders. The tendering system is different from the private sector because only quality matters.

What awards have you received?

Fortunately, M&G Pharmaceuticals has been a member of the Ghana Club 100, proudly sponsored by the Ghana Investment Promotion Center, for the past 19 years. Our ranking might have changed from year to year, but we have maintained our membership. Our company was also named the best performing company in the pharmaceutical sector by the Association of Ghana Industries. M&G Pharmaceutical was a vice president of the Pharmaceutical Manufacturers Association of Ghana and the first treasurer of the West African Pharmaceutical Manufacturers Association.

How do you distribute your products?

We have offices in Accra, Kumasi, and Tamale. Because of oil and gas, the Takoradi region has come up very fast and very soon we will open an office there as well. Kumasi is the capital of the Ashanti region, Tamale the northern region, and Takoradi the western region. We have 21 medical representatives throughout Ghana who visit all the doctors. We have 7 delivery vans that supply the products. We have two marketing managers, one for the northern zone and one for the southern zone, who supervise the medical reps.

Are you interested in importing products or a line of products from any international countries here in Ghana?

Our major activity is the manufacturing of pharmaceutical products, but we do hold some agency from Indian companies in Ghana. One is the Serum Institute of India, Ltd., who is the manufacturer of vaccines such as Hepatitis B, Rabies, MR, DTP, Antitetanus, and Tetanus Toxoid. These are the vaccines we import from India and supply to the hospitals. There are one or two more companies whose product we bring in that we do not manufacture here.

Are you interested in importing more products?

Unfortunately, when Ghana adopted the Common External Tariff, which was introduced about a year and a half ago, all pharmaceutical products entering the west coast were made duty free. It is the biggest challenge to a country where manufacturing units are available. Ghana, Nigeria, and Ivory Coast all have the industrial base for pharmaceutical products but because we are all part of ECOWAS and those countries agreed to follow a Common External Tariff, we had no option but to accept it. We are presenting our case to the government that there should be some sort of import duty or restriction imposed on these products. Hopefully, in the next two years, those products for which the local capacity is available will not be allowed to be imported into the country.

Project yourself to the future, two to three years’ time. What is your vision for the medium term? What would you like for the company to have achieved if everything goes according to plan?

Quality is the most important thing in the pharmaceutical sector. There is a lot of pressure from UNIDO, who would like to see all developing countries manufacture their own products. Branded products are very costly and developing countries cannot afford them. The only solution is to let the country develop their pharmaceutical industry and manufacture generic products, those that are out of patent. Now, the Food and Drugs Authority in Ghana along with UNIDO have come out with a new plan. Those industries who were established 50 years ago when the area was a light industry area, but today the land has changed to commercial and residential, must move from that area into a green field. So, we are now in the process of establishing a green field factory with modern technology, quality control equipment, etc. Then, we will be able to export our product to almost every West African country and some of the multinationals may ask us to do their manufacturing on a contract basis.

Where will you move to?

We have acquired about four acres of land in Tema and, hopefully, within six months to one year, we should be able to come out with the final plan. We have a consultant from India and we are trying to establish a new factory. Hopefully within two years, we should be in a position to move there. We see the scope of pharmaceutical manufacturing is great. The cost of the branded product will remain very high, because they are spending money on research and development. Research and development in this country is non-existent. We can only manufacture products here when products are out of patent, after about 15 to 17 years. We hope that in the next two years, more products will come out of patent and we can manufacture the generic form.

How will you finance these new projects? Are you interested in attracting investors?

Borrowing from the local bank is very expensive. Today, the average interest charged by a commercial bank is about 30% per year. No company can survive borrowing money at that interest rate. And when you are looking for infrastructure, the rate is not feasible at all. Though we are looking for international investors, what we are looking for on the softer and long-term base is loans. The next stage will be to enter the stock market to borrow the money from the public. But we are not interested in putting shareholding in the share market. We would prefer a loan or a facility from an organization that can give us five or ten years. The Bill Gates Foundation is spending so much money through the Global Fund and supplying the finished product for HIV/AIDS, Malaria, and other diseases. We would like to see the Bill Gates Foundation provide funding, 50 or 60 million dollars, to developing countries through UNIDO or the government with a 0% interest rate for five to ten years, payable back in the local currency. By doing that, these industries will come up with the capacity and in three years, the Global Fund can purchase the product from a local company for the local people. So, rather than providing the money only for the finished product, where 25% of that amount is spent on buying this finished product from outside the country, they should invest it in the local industry of the country where they want to help. Just as India is well known for pharmacies, we want to make Ghana the pharmacy of West Africa.

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