On September 24, CiplaQCIL will become the first privately founded Ugandan company to list on the Uganda Securities Exchange — arguably a milestone from its humble beginnings in Katwe slum.
The sprawling compound at Luzira where the plant and offices for the giant pharma now sit is a far cry from the congested slum of Katwe where it started about 21 years ago.
Indeed, it is in Katwe that Uganda’s most innovative artisans have emerged. Katwe is to many in Uganda a legitimate university that graduates experience rather than academic papers.
It is, therefore, no surprise that none of the six founders of Quality Chemicals Ltd (QCL), the firm that later partnered with the Indian giant Cipla to form pharmaceutical manufacturing company CiplaQCIL, is a medicine graduate.
CiplaQCIL manufactures antiretroviral, antimalarial and hepatitis medicines.
The founding directors of QCL, Francis Xavier Kitaka (who has since retired), Edward Martin, Randall Teiney, George Baguma, Frederick Mutebi and Emmanuel Katongole, initially set out to import generic drugs for both humans and animals into the country.
“The story of Cipla Quality Chemicals started 21 years ago in Uganda’s slum area of Katwe as a distributor of animal and human drugs,” says Mr Katongole, the chairman.
“None of us six partners is a medical person, we were businessmen, we hired technical people to assist us,” Mr Katongole adds.
The decision to focus on human medicine was driven by both business instinct as well as a response to the real challenges of the time.
“We chose to concentrate on human medicines because at the time the prevalence rate for HIV/Aids was very high, at least 400 people were dying of malaria on a daily basis and there was no one on the African continent who was providing these much needed medical interventions affordably,” Mr Katongole says.
He is keen to highlight the dramatic turn from agency to partnership with Cipla.
“The turning point was between the late 1990s and early 2000s when we started representing Cipla. We were their technical representatives in Uganda and this was the time when the world was fighting hard to make antiretrovirals available. We got a lot of support because the Ugandan government was taking the lead in global advocacy, so we started by seeking technologies that would enable us to produce the drugs here. That is what led to our joint venture with Cipla. We were later joined by two private equity firms,” Mr Katongole says.
Few enterprises survive beyond their first birthday while even fewer keep the same set of founding directors for 20 years — a feat that Quality Chemicals has achieved.
CiplaQCIL is floating 657 million shares at Ush256.5 ($0.07) each in the IPO, which was launched on Tuesday, August 14 and will run until Friday August 24.
Reaction to the IPO has been largely positive, with financial markets experts looking to its timing as the right dosage to pump new life into an otherwise sluggish bourse.
“We congratulate CiplaQCIL on taking this step up the financing escalator, which now increases the company’s financing options. This is a clear sign of the confidence our private sector has in the economy and in Uganda’s capital,” said Keith Kalyegira, executive director at the Capital Markets Authority.
“The benefits of coming to the market are immense — from capital raising though corporate debt issuance and secondary public offers, to offering an exit avenue to founder shareholders, and the immeasurable public relations value that comes with being a quoted company. We are glad that CiplaQCIL is taking advantage of these opportunities and we urge other Ugandan enterprises and family-owned businesses with ambitious growth plans, to consider market-based financing to fund their growth or refinance the expensive debt they may have obtained,” Mr Kalyegira said.
A poster at the company's front desk promoting the IPO invites people to take up “an opportunity to share in success inspired by vision, driven by excellence.”