Habib Bank funds drug firm’s expansion

Lab & Allied CEO Suprakash Mandal during the unveiling of the firm’s Sh2.2 billion investments plans in Nairobi on August 3, 2015. PHOTO | DIANA NGILA

Nairobi-based drugs company Lab & Allied has secured a loan from Habib Bank to part-finance a Sh2.2 billion expansion plan expected to double its production capacity and enter new markets by early next year.

Lab & Allied, a family-owned business, also announced Tuesday that it would start producing new medicines to boost its income streams.

The new investment will be funded through a mix of borrowing and internal cash, with part of the funds going to setting up presence in Ethiopia, Angola and Democratic Republic of Congo (DRC).

Swiss-based Habib Bank through its local operation is expected to fund 40 per cent of the expansion spend. The company projects a growth of at least 25 per cent after the expansion and new market entries.

“The Sh2.2 billion has already been spent in putting up two production units, (including) the general manufacturing plant. Part of this investment also includes investment in machinery and people to service and strengthen our presence in our existing geographical coverage of Kenya, Uganda, Tanzania, Rwanda, Mozambique, Malawi and Zambia,” said Nitya Patel company’s business development manager at a media briefing on Tuesday.

Mr Patel said the new investments would be broken into various components ranging from increasing the production capacity, packaging and making inroads into new markets.

“30 per cent of this fund will be used to increasing the capacity, 30 per cent in packaging and new product range to do with lifestyle diseases and high-end anti-biotics while 40 per cent will be in expanding our geographical area into Ethiopia, Angola, DRC, Zimbabwe, Botswana and Namibia – this investment will cater for inspection of relevant drug authorities and product registration,” said Mr Patel.

The expansion is expected to create 1,400 new jobs both directly and indirectly.

Lab & Allied currently has 350 employees, with a projection to employ between 450 and 500 staff per year.

The plans by Lab & Allied Company comes at a time when the local healthcare sector has been flooded with counterfeit drugs sold at a lower price compared to the genuine ones, eating into genuine manufacturers’ profits and also causing diverse negative side effects to consumers.

Kenya’s healthcare market is dominated by GlaxoSmithKline, Beta Healthcare, and Cosmos Limited, with the government being the biggest buyer of drugs.

Lab & Allied currently sells its products to Uganda, Tanzania, Rwanda, Burundi, South Sudan, DRC, Swaziland, Mozambique, Malawi, Botswana as well as Somalia.

It has an annual turnover of approximately Sh1.5 billion.

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