Cipla Quality Chemical Industries explores IPO


Cipla Quality Chemical Industries Limited is exploring the possibility of listing on the stock market, and has appointed a book runner to manage the process.

The drugmaker said in a statement that its board is evaluating an initial public offering as part of the company’s growth strategy. Kenya’s Renaissance Capital was appointed as the official book runner. The transaction is subject to regulatory approval.

Charles Nsamba, the public relations officer of the Capital Markets Authority, told Uganda Business News that the regulator is aware of the possible flotation. Nsamba said the pharma company has to get approval from two regulators – the National Drug Authority, which regulates the pharmaceutical sector, and the Capital Markets Authority.

The drugmaker reported revenues of Shs164 billion ($45 million) in the financial year ended March 2016. Its financial statements noted that revenue grew by 30% compound annual growth rate (CAGR) over the last three years. In addition, revenue for the first six months of financial year 2016-17 was Shs94 billion ($26 million).

CiplaQCIL’s largest stakeholder, Cipla Limited of India, will “continue holding the majority stake and control” during the IPO process, the statement said, while other shareholders could sell “down part or all of their stake to enable sufficient free float and liquidity.”

Mr Nsamba said the possible flotation is a “commendable move by one of the Ugandan pharmaceutical companies.” The regulator has been calling for Ugandan companies to consider the securities market as a source of long-term funding, he said.

Currently, only 16 companies are listed on the Uganda Securities Exchange. Of these, eight are Ugandan while the other eight are cross-listed from Nairobi.

CiplaQCIL was established in 2005 as a joint venture between Cipla Limited and Quality Chemicals Limited, a drug importer and distributor founded in 1997 by four Ugandan businessmen and two foreign partners.

According to the company’s website, “the Government of Uganda reached out to Cipla Ltd, one of the world’s leading pharmaceutical manufacturers, urging them to partner with a local firm, Quality Chemicals Ltd (QCL), to enable the country to locally manufacture antiretroviral drugs to combat HIV/AIDS and anti-malarial drugs.”

It manufactures drugs targeting the “three major diseases that are widespread in Uganda and SSA;” malaria, HIV/Aids, and Hepatitis B. The company manufactures nine branded generic drugs, six of which are antiretroviral (ARV) drugs, one artemisinin-based combination therapy (ACT) drug, and two hepatitis B drugs.

Most of the company’s sales in the year to March 2016, 54%, were to the government of Uganda, while sub-Saharan Africa accounted for 24%, and the Global Fund 22%. CiplaQCIL says it is the only supplier of ACTs and ARVs to the Global Fund that is based in the sub-Saharan Africa region.

The drugmakers products are currently distributed in eight SSA countries – directly or by the Global Fund – from one in 2012, while its plant is approved in 12 (versus eight in 2015).

The company’s growth strategy focuses on exporting to more countries, entering new product segments – which would be supported by technology from its majority shareholder, Cipla, and expanding in its existing markets and drug categories.