Quality Chemicals Plans $100m Expansion

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In short
Katongole noted that the planned investment will be about $100m sourced from company funds, investment from Cipla an Indian multinational drug company, borrowings and private equity capital. He also revealed plans to set-up a drug inputs plant, which he said would reduce the cost of importing ingredients for the manufacture medicine. Locally, the company purchases Artemisia from Kabale.

Cipla Quality Chemicals is to expand by adding another production plant in the Luzira Industrial Park, a company official tells URN. Emmanuel Katongole, the Executive Chairman Cipla Quality Chemicals revealed this expansion plan to URN on the sidelines of the Nordic Business Association forum, in Kampala on Thursday. He said the expansion is expected to increase the company production capacity from 6 million tablets to 18 million tablets a day targeting exporting drugs to as far as Angola.
 
//Cue in: It is now a larger market...
Cue out: ...being a continental player//
 
Founded by Katongole, George Baguma and Frederick Mutebi Kitaka nine years ago, Cipla Quality Chemicals produces, distributes and imports anti-retroviral drugs and anti-malaria tablets. It has a production facility in Luzira already employing close to 500 Ugandans. He says the new complex will more than double employment once completed.
 
Katongole noted that the planned investment will be about $100m sourced from company funds, investment from Cipla an Indian multinational drug company, borrowings and private equity capital.  Cipla is the majority shareholder in Quality Chemicals, after it increased its stake to 51percent in 2013.
 
Katongole did not reveal when construction of the new plant will start but noted the investment had been approved.
 
He also revealed plans to set-up a drug inputs plant, which he said would reduce the cost of importing ingredients for the manufacture medicine. Locally, the company purchases Artemisia from Kabale. Artemisia is used in the production of anti-malaria medicine.
 
Other inputs are sourced from India, China and Germany. If more inputs are processed and sourced from within Uganda, Katongole said it would lead to reduction in prices of medicine.
 
//Cue in: The impact will be huge...
Cue out: ...for us it is growth //
 
Cipla Quality Chemicals has enjoyed concessions from government, including tax breaks in order to reduce the cost of purchasing Malaria and Aids Drugs. One such concession is supplying medicine to the National Medical Stores.
 
The Luzira based plant in 2009 was accused by the IGG, in a leaked memo, for importing drugs from India and selling them to the National Medical Stores. According to the memo, this caused NMS a financial loss of $17million because Cipla Quality Chemicals had breached a Memorandum Of Understanding by selling NMS imported medicine at what was termed as inflated prices.
 
In 2011 however, the IGG cleared the company of any wrongdoing after failure to find evidence of any MOU. Katongole has built a profile of influential businessman in Uganda for setting-up quality chemicals.
 
He says after this expansion, the company will be listed on the Uganda Securities Exchange (USE) to allow Ugandans to invest in drugs manufacturer.