mPharma, a Ghanaian health startup, has taken a controlling stake in Uganda’s Vine Pharmacy for an undisclosed amount, marking the firm’s entry into its latest market in Africa.
mPharma disclosed to TechCrunch that it has acquired a 55 percent stake previously held by the Abraaj Group, a private equity firm that collapsed after investors, including the Bill and Melinda Gates Foundation, sounded an alarm over the administration of its $1 billion healthcare fund. Abraaj bought Vine Pharmacy in 2013 when it was the largest pharmacy chain in Uganda.
The Vine Pharmacy take-over comes two years after the health startup bought Kenya’s Haltons Pharmacy for $5 million marking mPharma’s foray into the East Africa region.
“Vine used to be the biggest pharmacy chain in Uganda. At its peak, it had about 36 stores spread across the country. But with Abraaj as its largest shareholder, the business had to resize once there wasn’t any more capital available for growth. We are buying out the stake that Abraaj held,” mPharma co-founder and CEO Gregory Rockson told TechCrunch.
Rockson said that he hopes to take Vine Pharmacy to its former glory, when it held the position of the biggest retail pharmacy chain in Uganda. Vine Pharmacy had 20 branches across Uganda when Abraaj took over and embarked on an aggressive growth plan that involved doubling its branches by 2018 – a feat it accomplished until the PE collapsed leading to the shutdown of several outlets. Abraaj also grew the pharmacy’s wholesale business, supplied government agencies and health institutions, and expanded to include personalized patient care through home visits.
mPharma was originally founded in 2013, by Rockson, Daniel Shoukimas and James Finucane, to manage prescription drug inventory for pharmacies and their suppliers. It currently runs retail pharmacy operations and provides market intelligence to hospitals, pharmacies and patients
It remains one of the well-funded startups across Africa, raising over $50 million since inception, including a Series C round of $17 million, led by the CDC Group, the U.K.’s development finance institution, last year. Other existing investors include Silicon Valley backer Jim Breyer of Breyer Capital, Shravin Bharti Mittal of the Bharti Global Limited, Social Capital and Golden Palm Investments. It also enjoys backing from Helena Foulkes, former president of CVS, the largest pharmacy retail chain in the U.S., and Daniel Vasella, ex-CEO and chairman of Novartis; both are members of the board.
“I can tell you Vine is a very profitable pharmacy chain. It’s been a family-owned business for almost 30 years, and so, we are really trying to use this moment to scale the business,” Rockson said.
“It’s a really exciting time for us and fortunately, Uganda is an exciting market. It may be like five years behind Kenya, but we think it is ripe for innovation and disruption,” he added.
mPharma’s recently announced that it was rolling out telemedicine services across its network of pharmacies in the continent in its efforts to bridge the doctor to patient gap by providing all-inclusive services. It plans to use its network of pharmacies to build what it describes as a digital primary care service that will offer all-in-one diagnostics services.
Earlier this year, mPharma entered Ethiopia after striking a franchising deal with Belayab Pharmaceuticals through its subsidiary, Haltons Limited. The Ethiopian pharmaceutical firm is part of Belayab Group — a franchisee of companies like Pizza Hut and Kia Motors — in the country.
mPharma plans to continue its franchising model when expanding into new markets. This, Rockson said, will help the startup to focus more on building and refining its infrastructure for a seamless sourcing and distribution system that would address the challenges facing the pharmaceutical market across Africa, including unpredictable supply chains, exorbitant prices and low orders.
Last month, mPharma set-up operations in Gabon after the West African country contracted it to build drug supply chain infrastructure, increasing the startups footprint in the provision of pharmaceutical systems and distribution networks across the continent. Ghana, Nigeria, Kenya, Zambia, Malawi and Rwanda are the other markets the tech startup has operations in.
The firm also partnered with Mt. Meru Group, a gas station operator in Rwanda, last November to establish pharmacy branches within its outlets.
“Within less than a year, we’ve been able to rapidly build the largest retail platform in the country. Today, Rwanda is a very promising market for us,” he said.
The African pharmaceutical market is expected to grow exponentially as the population balloons, thus providing a space for innovation and a market for startups offering mobile health solutions.
Across Africa, Deloitte says in a report, East Africa is the most promising region in terms of healthcare investment owing to its integration and the growing economy, supported by various sectors, including agriculture and tourism. The increased demand for services and products as consumers gain more spending power will also lead to an increase in healthcare and telecom spend, the report said – opportunities that mPharma hopes to tap.
Source: New feed