VENTURES: Cipla On High Growth Prescription
Recent Western Cape Business News
CAPE TOWN-based pharmaceuticals distributor Cipla Medpro – which specialises in generic applications – is starting to build impressive critical mass with its revenue nearing the R1.8 billion mark in the year to end December 2011.
Cipla Medpro – which holds brands like Airmune and Ciplaton - now ranks as the third largest pharamaceutical company in SA by value (behind market giants Aspen and Adcock Ingram). Profitability is most impressive too, posting some R518 million in pre-tax profits in the past financial year.
The company, which has its head office in Bellville, finished 2011 with 399 generic products registered as well as 79 veterinarian bands in SA. It also has 146 products registered in Botswana and 279 in Namibia.
Cipla Medpro’s growth ambitions are clear from an investor document, which shows that the company has registered another 20 new products for 2012. Even more impressive is that 273 Cipla Medpro dossiers – al sourced from its Indian partner – are pending registration at the Medicines Control Council (MCC).
The nerve centre of Cipla Medpro’s fast growing operations are two distribution centres in Cape Town, where all the southern African business flows are managed off 8 500 square metres of space.
Around 3.5 million to 6.5 million units are picked, sold and supplied each month with between 400 000 kg and 550 000 kg of generics distributed across South Africa.
Cipla Medpro CEO Jerome Smith says the company improved both distribution centres’ internal flow of stock with one distribution centre now only used for ‘receiving’ and the other only for ‘despatch’.
He says this initiative generated around 2 000 square metres of additional space, “which we can use to absorb growth temporarily”.
“Absorb growth temporarily” might be a key phrase in the financial year ahead considering Cipla Medpro’s chances of seeing better flows on the government anti-retro viral (ARV) tender, the launch of an oncology division in late 2011 and the possibility of expanding into African markets.
Smith notes that while the ARV business did not materialise the numbers expected in 2011, he anticipates greater volumes in 2012.
He expects a good trading year for the new oncology division, which has already made inroads into the market.
A shift into African markets (beyond the current presence in Namibia, Botswana and Swaziland) will have longer-term implications for Cipla Medpro, especially in terms of volumes distributed out of the already busy Cape facilities.
In his investor presentation, Smith disclosed that a CEO had been appointed to oversee African expansion.
All things considered CBN would not bet against Cipla having to spend a fair amount to upgrade the Cape Town distribution facilities… perhaps even having to acquire further space.
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