Investing in the pharmaceutical business in Uganda: cry and reap

Before putting pen to paper for this article, I called my mother. Shortly after trading Christmas jokes, I quickly got down to business (she said she was playing Monopoly with the family and needed to get back to Euston Road), and I asked her point-blank:

“Is the pharmacy business profitable?”

You will see at one point in your business career that you ran a pharmacy and supported 7 children at the time. Drug names like Magnesium Tricylicate and Penicillin V therefore easily slipped off my tongue from early childhood. Therefore, I believed that she would help me.

His simple answer (in my mother tongue):

“Yes, but pharmacies always play cat and mouse with the authorities and you have to watch out for drug theft.”

In her simple layman’s terms, and without a pharmacy degree or formal training, she had established the key risk factors to consider if she is going to invest in this business.

Why invest in the pharmaceutical business in Uganda?

The title of the article highlights the double risk of this sector.

Cat and mouse: government vs hospitals, where are the drugs?

You cry (or cry) for our beloved country because it seems that many reports indicate that while the Government constantly allocates money to hospitals to buy medicines, when you arrive at the hospital the doctors tell you that there are no medicines in stock and you will have to buy them in another place.

Thus, it appears that Ugandan hospitals have evolved into diagnostic clinics that identify patients’ underlying health problems and then send them out for drugs. Doctors claim that there are no medications available. Therefore, it is common for patients in Uganda to go to government hospitals, receive a diagnosis of their illnesses, and leave without even the basic medication of painkillers. The government claims they send the drugs to hospitals, but the hospitals claim they never receive them, so the big question is where do the drugs go?

The pharmacy sector: More crying.

According to the Uganda Pharmaceutical Society, the body responsible for the sector, there are currently 465 qualified pharmacists, of whom 70 are abroad, leaving about 395 practicing within the country.

With a population of approximately 34 million people, this represents a pharmacist-to-population ratio of 1: 88,000, which is well below the World Health Organization (WHO) recommended ratio of 1: 2,000.

The chronic shortage is being addressed by the pharmaceutical society in conjunction with the universities to, among others, increase the number of pharmacists in training, but in the meantime, illegal pharmacies, cat and mouse games with the National Drug Authority continue to appear (NDA), the regulator. , continue and meanwhile the population suffers as a result of the imbalance.

So this presents an opportunity to invest and therefore reap (while crying over the sad situation).

When I took a closer look at the state of the pharmaceutical sector in Uganda, I noticed a number of key things to consider:

1. While many press reports put the number of clinics in the country at over 10,000, there are only 414 registered pharmacies in Uganda (registered with the regulatory body).

2. Of these 414 registered pharmacies, more than 292 are located in Kampala, the capital, and in the central region. This is a huge imbalance considering that Uganda’s population is distributed almost 25% equally across the four regions (North, East, West and Center).

3. Therefore, the opportunity is to invest in a franchise or network of pharmacies that go to the cities of the interior of the country.

However, before investing, there are a few key considerations:

1. Drug license. You must be licensed and your approved pharmacist must be regulated by the pharmaceutical society.

2. Retail Business Considerations. Like any retail outlet, you need to consider retail business risks, such as location and stock controls (as my mother alluded to). Many medications come in tablet or pill form and as such the amounts can be difficult to control. Therefore, it is important to understand the drug classes first (in Uganda this is mostly class B and C) and then understand how to ensure proper controls are in place.

3. Return of investment. According to my estimates, the profitability of investing in this sector is an income of Shs. 187 million and a return on investment (ROI) of just 0.87 months.

Final word

In a country characterized by the limited availability of drugs in government hospitals, more and more pharmacists and entrepreneurs see the opportunity to open independent pharmacies. They do so because of the unmet demand for drugs from patients who do not obtain them in hospitals.

It’s a business where we all cry for the state of our country, and then those who see an opportunity to help create change (while making money) harvest (perhaps with a little gnash of teeth).