Competition agency okays double buyout by drug companies

The Competition Authority of Kenya (CAK) has approved a multi-million shilling double acquisition by pharmaceutical firms, reflecting increased activity in the lucrative industry.

The regulator’s nod paves the way for acquisition of retail pharmacy brand Mimosa by Goodlife, which has embarked on an aggressive regional expansion plan.

CAK said the transaction would not affect competition negatively and that the two companies’ combined sales of more than Sh500 million is below the regulatory threshold.

“In exercise of the powers conferred … the CAK excludes the proposed acquisition of the entire business of Mimosa by Goodlife from the provisions of (takeover rules),” the competition agency said in a statement.

The regulator also exempted Mimosa from its proposed acquisition of Eldochem Pharmacy’s branches at Nairobi’s Green Span Mall and Mombasa’s Nyali Centre, with Goodlife being the ultimate acquirer in this transaction too.

This marks the continued takeovers by Goodlife which plans to have 80 pharmacy stores in the country by 2020. Goodlife, established in 2009, is a private equity fund backed by the International Finance Corporation (IFC), PE firm Catalyst Principal Partners and Mimosa founder Chris Getonga who was offered a minority stake in the company as part of his buyout by the institutional investors.

Other shareholders include Joshua Ruxin, David Zapol, Jeffrey McCormick, Tony McNally and Peter Barker who originated the Goodlife venture.

IFC in March lent Goodlife $4.5 million (Sh463 million) to help fund its growth in Kenya and the rest of East Africa over the medium term.

“Goodlife will supply affordable, quality healthcare products in Kenya, where there are few nationwide chains, and an estimated 30 percent of drugs are counterfeit,” IFC said in a statement.

READ: Mimosa Pharmacy eyes Sh405m from IFC for new stores

The international financier said population and income growth are driving increased demand for reliable healthcare products in Kenya where many of the country’s 6,000 small-scale pharmacies are unlicensed.

“Africa has among the highest medicine prices in the world and there are few branded, quality-controlled pharmacies in Kenya — a gap that Goodlife seeks to fill.”

Goodlife chief executive Tony McNally said the firm would expand rapidly in East Africa, opening pharmacies at convenient locations in retail centres, petrol stations, and near health clinics.

Besides Mimosa and Eldochem, Goodlife also acquired the Dove brand of pharmacies in Kenya, expanding its presence in the country’s health and beauty sector.