Cipla to widen product portfolio in new turnaround plan

The company’s share price has tumbled from Shs 256.5 during the IPO period to less than Shs100

Kampala, Uganda | ISAAC KHISA | Cipla Quality Chemical Ltd is considering widening its product portfolio as part of its new strategy to improve its fortunes in the medium term.

The company has already implemented various cost-efficient initiatives including replacing expensive short-term capital expenditure with a long-term loan to manage interest and save costs.

Cipla’s new CEO Ajay Kumar said the immediate priority of the business is to make it profitable in line with the focus on sustainable and profitable growth to achieve its short- and long-term goals.

“Another key aim is to improve business agility and we will strongly focus on ensuring a solid governance framework,” he said.

“We will expand our portfolio and invest in new therapeutic areas such as oncology and continue to focus on efficiencies in business.”

Cipla, one of the largest pharmaceutical manufacturers in the Sub-Saharan Africa (SSA), manufactures antiretrovirals, artemisinin-based combination therapies (ACTs) and Hepatitis medicines to treat HIV/AIDS, malaria and Hepatitis.

However, profit growth has remained elusive to the company’s executives since listing on the Uganda Securities Exchange in 2018.

The company recorded a Shs10.5bn loss for the year ended March 2021 citing non-payments from the Zambian government for the drugs supplied, increase in general and administrative expenses as well increase in finance costs. However, this was a drop in losses from Shs23.07bn for the year ended March 2020.

The company executives say Cipla has a receivable from the Zambia government worth Shs42.9billion which was fully impaired after recording an additional impairment allowance of Shs9.1 billion in the current period.

This has seen its share price on the stock market tumble from Shs 256.5 during the IPO period to less than Shs100 per share at the moment.

Last year, Cipla increased production capacity at the plant from 892 to 1008 million tablets, launched new product lines and widened export portfolio.

The company also secured a number of product registrations in West Africa (WAHO) and Southern Africa (ZAZIBONA) as well as increased the regulatory footprint from 16 to 31 countries across Africa.

The drug manufacturer made its first export sales to Nigeria, Sierra Leone, Niger, Botswana and Malawi as well as delivered on its long-standing commitment to enter the Ugandan retail pharmaceutical market by acquiring the importation and distribution business of the Cipla range of products manufactured in India.

CiplaQCIL Chairperson, Emmanuel Katongole, said they are optimistic that the company will turn around.

“Our focus is to ensure that the business meets the needs of its various stakeholders particularly our customers and shareholders,” he said adding, “We are confident that with the commitment to our strategy, mission, and vision our performance in future years will be much better.”

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