The company remains strong to deliver good performance going forward, officials say
Kampala, Uganda | JULIUS BUSINGE | The Kampala-based drug manufacturer, Cipla Quality Chemical Industries Ltd, has recorded a Shs36bn loss for the financial year 2019/20 compared to a profit of Shs7bn recorded in the previous year.
Company officials attributed the loss to additional impairment allowance, drop in gross margins and increase in interest on overdraft.
According to the financial results released on June12, the company’s impairment allowance on the financial assets increased by Shs3bn to Shs 32billion due to delayed payment for drugs supplied to the Zambian government.
“The board, with the help of the Government of Uganda, has engaged the GOZ to expedite the settlement of the outstanding balance. The GOZ has confirmed its intent to settle these receivables as soon as possible,” said the company’s Chairperson, Emmanuel Katongole, and the CEO Nevin Bradford in a joint statement.
Bradford told The Independent in an interview on June 12, that they are optimistic that negotiations regarding this money will yield results and that their relationship with Zambia will remain strong.
He said that the company remains healthy, strong and on a firm ground to continue manufacturing and supplying drugs to Uganda and the outside markets.
“Furthermore, management is also exploring other avenues to recover these funds…any reduction in outstanding balances from GOZ will result in a reversal of the impairment allowance to that extent.”
The company’s gross profit reduced from Shs53.48bn to Shs 36.94bn during the same period under review due to change in product mix in the new orders received after suspension of sales to Zambia and increase in orders from international health organizations and increased competition in some of the product ranges, which in turn, placed pressure on pricing to remain competitive.
However, local drug sales increased by 18% in FY2019-20 due to increased orders from international health organisations for delivery within the country. Similarly, cash flows from operations increased from a deficit of Shs49bn to Shs23billion as a result of improved collections.
Officials said that payments to suppliers increased due to increased purchases of stock in the previous year to manage risks associated with dependence on imports from China.
This development comes when the company’s share price on the Uganda Securities Exchange is trading at Shs 101 down from Shs 256.5 per share during the IPO period two years ago.
This year, Cipla completed its Shs8billion quality control laboratory at its Luzira site. The new laboratory incorporates analytical machinery expected to provide sufficient quality testing capacity to enable it meet its ambitious growth targets. The space vacated by the old laboratory will be utilised to enhance manufacturing capacity.
The drug company also received a renewal of its World Health Organization Good Manufacturing Practices (WHO GMP) qualification for a further three years. This is the fourth time the company’s WHO GMP qualification has been renewed.
In addition, the company received GMP approval from Zazibona (the grouping of nine Southern African countries) and SAPHRA, the South African regulatory body. This was followed up with SAPHRA’s step to approve the Cipla’s two ARV’s, Tenofovir, Emtricitabine, Efavirenz (TEE) and Tenofovir, Lamivudine, Dolutegravir (TLD) for supply to South Africa.
Similarly, forty-five regulatory filings were made during the year in the fifteen countries of the Economic Community of West Africa States regional grouping in West Africa. The company also had product regulatory approvals in 15 African markets: five in East Africa, two in West Africa and eight in Southern Africa.
It started operations in 2005 as a joint venture between Quality Chemical Limited (QCL), a Ugandan company dealing in the importation and distribution of pharmaceutical drugs, and Cipla Ltd, a leading Indian pharmaceutical company specialising in manufacturing anti-retroviral drugs (ARVs) and Artemisinin-based Combination Therapies (ACTs) to combat HIV/Aids and malaria respectively.
Since then, the firm has initiated multiple capacity expansion programs and portfolio expansions, including the launch of new therapies.