Companies

Drugs giant GSK to exit Kenya in 2023, turns trader

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Workers at the GSK factory in Nairobi. FILE PHOTO | NMG

Pharmaceutical giant GlaxoSmithKline (GSK) has clarified its earlier statement over the firm’s exit from Kenya amid the global overhaul of the multinational.

The firm, which mainly deals in prescription drugs and vaccines business, reiterated that it was exiting Kenya and instead adopt a distributor-led model to supply the country with its products.

It clarified that operation at Nairobi’s Industrial area plant will remain open under GSK’s stand-alone affiliate Haleon, a consumer healthcare venture that deals in products like Sensodyne and Panadol.

GSK in July spun off the consumer healthcare business and listed it separately as Haleon in shake-up to focus on the lucrative prescription drugs and vaccines business, which has brands like Augmentin, Zentel and Ventolin.

The firm was reacting to a Business Daily story that indicated the exit would lead to closure of the Industrial area plant.

“The production facility in Kenya is a Haleon facility, and is not the subject of the update that GSK gave in Kenya this week,” GSK said Thursday in a second statement.

“The announcement we made was that for our GSK business, we would move to a direct distribution model. This means that instead of having a GSK commercial operation in the country we will supply our medicines and vaccines through a third party.”

Initially, the firm did not offer details in reference to the exit including that Haleon will continue to make and sell over-the-counter products from Nairobi.

The exit of GSK comes as the firm races to overhaul its global business in shifts that led to the spin-off the consumer health unit.

GSK turned down a £50 billion bid from Unilever for the unit at the end of last year, arguing that it undervalued the company.

The review of the Kenya operations comes nearly five years after the pharmaceutical giant announced it was cutting back operations in Africa.

It stopped marketing medicines to healthcare professionals in 29 sub-Saharan African markets but continued running local operations in Kenya and Nigeria while retaining representative offices in Cote d'Ivoire and Ghana.

“Yesterday, we informed employees in Kenya that we will move to a direct distribution model and our operations will be transferred to third-party distributors,” GSK said in a Wednesday e-mail response to Business Daily.

“We will continue to supply our needed medicines and vaccines in Kenya, and we will work with our distribution partners towards a smooth transition in 2023.”

In Kenya, GSK has made a bigger impact with its malaria and HIV/Aids drugs and antibiotics such as Augmentin and Panadol.

The pharma created the groundbreaking malaria vaccine, Mosquirix, which was piloted in Kenya last year, aimed at taming deaths, especially among children.

Its exit follows disappointing sales for many multinational pharmaceutical companies in the region in the face of competition from cheaper generics from India and locally manufactured medicines.

While Kenya has struggled to retain and attract multinational manufacturers, it has recently become a magnet for technology firms and financial service companies seeking a hub for a larger share of the African market.

Global tech giants, including Microsoft, Alphabet Inc and Facebook, have been increasing investment in Kenya in recent years to take advantage of growing economies with rising access rates to the Internet by a youthful population.

Read: Kenyan firms hit as Microsoft, Google talent war raises pay

But industrialists, especially multinationals, are constantly on the hunt for bargain production locations much like they do tax havens.

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Editor's Note: The story has been updated to clarify that while GSK is exiting Kenya, its factory will remain open under its stand-alone affiliate Haleon.