Form 4 graduate who built a top drugs company

Mr Palu Dhanani: Stopping at Form Four does not bother me. PHOTO | DIANA NGILA

What you need to know:

  • Today, the company based in Kikuyu township is World Health Organisation-compliant and produces 144 types of drugs.

Palu Dhanani’s curriculum vitae does not include a college certificate or a university degree but that has not stopped him from building a successful pharmaceutical company.

The 52-year-old is the managing director of Universal Corporation Ltd (UCL), a company he started in 1996 as a small drugs manufacturer based in Nairobi’s Industrial Area producing five products.

Today, the company based in Kikuyu township is World Health Organisation-compliant and produces 144 types of drugs. One of the drugs is also certified by the WHO. UCL manufactures off-patent generic anti-retroviral (ARV) drugs for HIV, anti-malaria drugs, paracetamols, antibiotics, and others that treat opportunistic infections like antifungal and antivirals.

“None of us (immediate family) is a degree holder. The most educated is my younger sister who studied until Form Six,” Mr Dhanani told Enterprise when we visited his factory last Thursday.

“I stopped schooling after my national exams (Form Four) at Aga Khan High School but it does not bother me. Our drive to grow is why we are here today.”

The company last year posted a turnover of Sh2.2 billion, a 16 per cent growth from the previous year’s Sh1.9 billion on the back of manufacturing about 900 million tablets. UCL exports its products to 22 African countries, including South Africa, Uganda and Zimbabwe.

It also exports drugs to Belgium, North Korea and Afghanistan. The State’s Kenya Medical Supplies Authority is among its top local customers.

It is this stellar performance and promise that recently saw the firm accept a 51 per cent stake sale to India’s Strides Shasun for Sh1.1 billion. The majority stake purchase is meant to give Strides Shasun, which is listed on the Bombay Stock Exchange, access to the multi-billion shilling drugs market in East and Central Africa.

Other leading pharmaceuticals in the region are GlaxoSmithKline and Beta Healthcare.

Products and expertise

Mr Dhanani told Enterprise that the deal, which is expected to be completed in May, brings onboard Strides Shasun’s wide variety of products and expertise which would have otherwise taken UCL long to develop and market.

To develop one new quality WHO-approved drug, he said, requires about $4 million (Sh400 million) in research and development.
He added that the merger will see UCL gain access to new technology which will enable them to produce better drugs to treat cholesterol, hypertensive and diabetes-related illnesses.

“They are a big and successful company and they did not want to settle for anything less,” said Mr Dhanani, adding that he will still oversee day-to-day running of the company.

“Royalty payments for installed technology are costly. Our new partner is saving us all that trouble.”

Mr Dhanani’s business experience started at age 14 when he was employed at a general retail business in Industrial Area in which his father had shares. This was in the late 80s.

In 1996 his family saw a gap in manufacturing of medicines and bought the idea.

Upon realising the business was viable, the family bought land in Kikuyu, Kiambu County, and in 2000, built a bigger factory there.

Finnfund, a Finnish development finance company, injected 400,000 Euros (Sh45 million) into the venture for a 10 per cent stake in 2005 and lent them $1.5 million (Sh150 million), enabling UCL to produce its first batch of drugs from the new base.

In the formative years, UCL had about 50 employees but this has now grown to more than 500. “In 2008, Finnfund gave us an additional $10 million (Sh1 billion) in their second financing round for a 39 per cent stake in the company.

They however exited UCL last year,” said Mr Dhanani. UCL’s Eureka moment came in 2011 when the company’s anti-retroviral drugs were certified by the WHO, giving them a break into the lucrative export market.

Lamozid, an anti-retroviral drug, was pre-qualified and included on a list of about 255 drugs approved for the Global Fund financing. The fund spends over Sh2 trillion annually on combating malaria, Aids, and other diseases.

The approval made UCL the first local manufacturer to tap into the fund, joining the likes of South Africa, Uganda and Zimbabwe as the only countries in Africa with pre-qualified drugs.

Father of two

After WHO’s re-inspection of the pharma in 2014, the company was handed the all clear for another three years.

Generics have helped reduce the cost of first-generation HIV treatment to less than $86 (Sh8,600) per patient annually from $10,000 (Sh1 million) in 2000. The use of generic drugs — the cheaper but effective variants of patented drugs — is estimated to account for most medicines sold in Kenya.

Mr Dhanani, a father of two, said he does not regret his decision to sell off a majority stake in the company since the deal will help the company to grow faster than.

“An opportunity lost does not come back often. Market dynamics will also be different, and having Strides Shasun as our partner is a plus,” said Mr Dhanani.

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