Universal Corporation: A Kenyan Pharmaceutical Manufacturing Company

Interview with Palu Dhanani, Managing Director of Universal Corporation (UCL)

What is your assessment of the pharmaceutical industry in Kenya?

The pharmaceutical sector in Kenya amounts to 700-800 million dollars, of which about 28 percent is from local manufacturers. The remainder is import dependent. There are 35 manufacturers in Kenya. I chair the Association of Pharmaceutical Manufacturers, which is known as the Federation of Kenya Pharmaceutical Manufacturers. There is also the East African Federation, which is known as the Federation of East African Pharmaceutical Manufacturers. And we have also joined to make the Federation of African Pharmaceutical Manufacturers Association, also known as FAPMA. It is derived from the Pharmaceutical Manufacturing Plan for Africa, also known as PMPA, which has been consented to by the heads of state within the African Union.

Universal Corporation (UCL) is a Kenyan pharmaceutical company which manufactures over 100 formulations of human medicines. Could you give us an overview of the company’s history?

Our biggest success story is our pre-qualification by WHO Geneva. To achieve that as an African company is a big milestone. Very few companies in Africa have that certification.

We started as a family business in 1996 in a very small plant. In 2000, we joined with a Finnish investor who was the project director at Orion. With him, we started our new facility, where we still do business today. We began construction in 2001 and finished in 2004. It was a green field project. The first commercial production came out in 2005. Finnfund, which is a Finnish Fund for Industrial Development, invested a small amount and also gave us a small loan. During that process, we started upgrading the facility and increasing capacity. In 2008, thanks to the funds that Finnfund had devoted, they saw our progress and gave us more equity. This helped us to attain the WHO ARV pre-qualification level in 2011. The site was inspected and approved to show that we were working under the WHO GMP guidelines set forth by the WHO Geneva. Because of that inspection, we started getting orders from institutions like USAID and UNICEF, who have been very supportive of local African manufacturers. It is statistically known that accessibility is always better when aid and medicines are produced near the problem they are made to treat. That brought us into the area of funded programs, but only for opportunistic infection products, not for the ARV that we were pre-qualified for, which is only one among many that is required for ARV treatment. It is very difficult for African pharmaceutical manufacturers to compete with the large companies in India, which is where the main ARV supplies are currently produced. In 2015, Finnfund exited due to their own requirements. We have now merged with an Indian company known as Strides Shasun, which is also an ARV provider. In the future, we will have a portfolio of ARV products, malaria products, and other products in addition to the essential drugs and opportunistic infection products that we already manufacture. With the basket of ARV’s available we shall be able now to be more competitive and have better accessibility to the patients.

What are some of your main products and brands in the market?

We offer over 100 medications and drugs. We are quite interested in pediatric medicine. We offer a popular children’s diarrhea treatment kit, which is a combination of oral rehydration salts and zinc tablets. We have also developed a chlorhexidine gel for umbilical cord care. There are numerous advantages for the mother and child. The gel protects the umbilical cord and does not allow bacteria to penetrate it. Without it, newborns can die or suffer malfunctions in the body. It is truly a lifesaving product. We work on very low margins to make sure that it is readily available to people in Africa. Both of those products have been developed in conjunction with UNICEF. We are happy to say that we are among the market leaders in availability of good medicines at a very affordable price. We do not have many brand name products. A few of our well-known medications are Unibrol which is an anti-amoeba product, Dinac which is an anti-inflammatory for pain, Lolip for lowering cholesterol, and Lipilor which is a diabetes product that will be available soon. We are also developing six more different strategic products for diabetes, cardio, pediatrics, urology, dermatology and gynecology. We will be targeting these particular sectors over the next three to four years. Our strategy for the future is ARV and malaria drugs. Patients suffering from HIV not only need HIV medication, but they are also susceptible to and often get infections. So we provide opportunistic infection drugs, specifically, cotrimoxazole under the brand name Sulfran, which is widely used. Because of the merger with Strides Shasun, Universal will be able to supply the region through the tech transfer of ARVs and malaria products to increase affordability and availability.

What would you say are some of the company’s main success stories?

Our biggest success story is our pre-qualification by WHO Geneva. To achieve that as an African company is a big milestone. Very few companies in Africa have that certification. We are among the few who are indigenous, the rest of have had some support from other countries. Now, we have merged with an Indian company, but the start was all us. Although, it had its own challenges. Training our people and staff to that quality level was not an easy task, but it is much better now than what it was a few years ago. Today, people have recognized that there is quality that can be manufactured in Africa. There is a myth that we cannot be affordable in Africa, which is quite incorrect. We are very competitive compared to companies in India who have similar standards to ours. You cannot compare a company at different levels. If you do, we are more expensive. If you compare companies at our same level, we can be reasonably competitive.

How would you describe the philosophy of Universal Corporation (UCL)? What makes you different from the competition? Why should a customer choose you?

Quality isn’t always embedded in price. A cheap price does not mean it is a quality product. At the same time, an expensive price does not mean it is a quality product, either. Affordable is a relative term. Affordable does not mean cheap or expensive, it means that the price is within reach of the patient. When you combine affordability and quality, you get the best match. We are proud to say that we will assure our patients of affordable, quality products. A good example is the Zinc ORS combination and the chlorhexidine gel. There are almost 20 million treatments done in a year with the Zinc ORS. The gel has just started, but we have already done about 2 million treatments in only a few weeks.

Does Universal Corporation (UCL) do any type of actions in terms of CSR?

Yes, we do quite a number of actions. We sponsor a football league in the Kikuyu area. We donate to a number of medical camps and provide free drugs. We participate in tree planting within the region. We also deworm many children in this area. Talent development is a big issue in the region and the country. In the next six months, we hope to start a talent management program where we bring in students who cannot afford to pay fees, train them on the job, help them to earn their degree or diploma certificate over a period of time, and then they have the option of staying with us or getting employment elsewhere. Our universities do not produce students that are industry friendly, even though they are quite smart. That is the talent we need to create.

What are the main challenges to be faced by the pharmaceutical industry in Kenya and Universal Corporation (UCL)?

The biggest challenges involve government policies. For example, the Global Fund and PEPFAR are the major funders for ARV treatment programs. When they supply drugs to the government, those goods are exempt for all duties, levies and taxes; whereas if the same institutions were to buy from us, the government would first take a railways development levy and an import declaration fee. It is a small amount, four percent total, but it has a huge effect on competing with international pricing. That is one of the biggest challenges in getting orders, and in many cases, we lose orders because of this. If you do not get orders you cannot have a sustainable company. We are talking to the government, and hopefully they can help us resolve this issue. Also, when the Kenyan government buys medicine, they buy only registered products. They do not have any quality element built in to the procurement. The difference in price for our product and our quality comes from our certification. It amounts to no more than seven percent. This is not to say that others do not also offer quality, but they are not certified. There is also a lack of incentives. Every industry in Kenya is protected to give local manufacturers an advantage. There is no duty on imported products, including sugar, tea, stationary, milk, bread and a variety of other goods. But the government is scared of putting a duty on pharmaceuticals. They fear prices will increase, but that is not the reality. There are enough manufacturers here that will compete amongst themselves so prices will be maintained. The internal competition would increase our capacity. In any industry, if you run at 80 to 90 percent of your production capacity, your costs decrease. Today, most industries in Kenya run at an average of 50 percent capacity, or even less. The government is working on this regulation issue, but it needs to be solved quicker. Regulations need to be at a level playing field for all. The final challenge is human resources. The people we have in this part of the world are extremely smart, but they have almost no industry experience. To follow good manufacturing practices, or GMP, everything must be documented. The gap between doing and documenting is quite large. To train people to follow this is a challenge and it takes time. The education system and curriculum needs to change.

Universal Corporation (UCL) has a presence in most of the countries in the Region (Malawi, Mozambique, Zambia, Burundi, Rwanda, Congo, DRC, Sierra Leone, Somalia, Angola, Tanzania and Uganda). How would you define your strategy in terms of expansion plans?

We recently merged with Strides Shasun from India. Prior to that, our concentration was in five main countries although we are selling to 22 countries within Africa. Every year, we needed to bring in one or more new countries. This will be different because Strides Shasun already has six plants in Sudan, Mozambique, Botswana, Namibia, Cameroon and Nigeria. Universal Corporation (UCL) has a moderate presence in Rwanda, Burundi, Somalia, Zambia and Malawi. You can find our products in any chemist in these countries. Uganda and Tanzania are now our focus areas. With the Strides Shasun network, we are working on a strategy on how to leverage products from here into those manufacturing sites or repackaging sites to make us more visible by June 2017.

What is your vision for the future of the pharmaceutical industry in Kenya and Universal Corporation (UCL) in the next 5 years? What would you like to have achieved by then?

Regulation will definitely improve in Kenya and the Region. International institutions are training their regulators to improve quality levels. For us, it will be much easier. In the next five years, the entire pharmaceuticals dynamic will have changed. Only the serious players who want to invest in quality while maintaining affordability will survive. In five years, Universal Corporation (UCL) should be a reasonably sized company in terms of market access within Kenya, the East African Community (EAC) and the neighboring countries. ARV, malaria, and opportunistic infections will have a far bigger reach. By the year 2020, it is estimated that the number of patients living on ARV treatment will increase by 70 percent compared to today. Improved capacities and investments will be needed. We are ready for this growth and quality infrastructure. Without support from the international community it is very difficult to run such a plant and make such affordable quality medicines. The international community should look at Africa in a different manner, give support and expect a gradual growth. It cannot be done overnight, but it can be done. We are a real life example. We are proud to say we are among the first suppliers in Kenya or Africa who can now supply UNICEF projects through Copenhagen and USAID projects as well. In many cases, we are better on our delivery schedules than our counterparts in other parts of the world. We have helped to evade a number of emergencies simply because we are here in Africa and servicing this part of the world. We have supplied emergency shipments to Zambia, Malawi, Ethiopia, Somalia, Rwanda, Ivory Coast and Haiti. If these drugs had been coming from India or other suppliers, it would have required air lift and extra costs or suppliers might not have had the capacity to meet the demand in time. A lot of lives have been saved.