As Africa’s second most populous country, Ethiopia’s healthcare industry holds significant potential. According to Dr Mohammed Nuri (42), founder and CEO of local pharmaceutical company Medtech Ethiopia, the industry commands more than 18bn Ethiopian birr (about US$881m) in annual sales. In recent years imports from abroad have risen, while foreign investors have entered partnerships with local players.[hidepost=9][/hidepost]
Medtech was established in 1998 as an importer and distributor of various medical supplies and equipment. Today it distributes products for 26 global companies, particularly from India and the Middle East. In the last few years the company has also diversified into pharmaceuticals manufacturing.
“Health expenditure and health awareness among the people is growing day by day. We are seeing growth in the adoption of health insurance, and when people are covered their expenditure in the sector increases,” says Nuri.
In 2013 Medtech entered a joint venture with the UAE’s pharmaceutical giant Julphar to open a 170m Ethiopian birr ($8.3m) production plant. Last year it also acquired the previously state-owned Ethiopian Pharmaceuticals Manufacturing Factory (EPHARM) for $25m. The oldest drug manufacturer in Ethiopia, EPHARM has eight manufacturing lines for various products.
“There is big opportunity for pharmaceutical manufacturing [because] nearly 85% of the Ethiopian demand is covered by imports,” says Nuri. “At Julphar Ethiopia, for instance, we have taken orders from the government that we will supply over the next six months. We cannot take any more orders. So for the next six months we are working 24 hours, seven days a week to service that order. You can see, for a new investor, this is really an attractive area.”
Destined to become a businessman
Nuri also runs a general hospital called Zenbaba, two pharmacies and a pharma wholesaler. He graduated from medical school at age 23, and later gave up an opportunity to lecture at his university to start his own small business.
“I knew my destiny was to be a businessman,” he explains.
He credits his success in entrepreneurship to not making rushed decisions when upset, or when facing challenges. And crucially to respecting his employees and treating them as family.
“I also reward good performance.”
A potentially lucrative industry
The medical doctor-turned-entrepreneur says the heath sector is one of the “most lucrative and profitable” industries in the country, and one that also enables him to touch peoples’ lives.
But he warns that pharma, by nature, is a “highly sensitive venture”. For starters, it requires heavy capital investment.
“One of the main challenges is to maintain quality, and to do so you need skilled experts. Although there are locals who have those skills, a lot of them left for Europe or the US. Due to the brain drain, talent is one area where we have very big difficulties. We have to bring back some of that expertise and engage in knowledge and technology transfer.”
Securing raw materials on time is also a headache. Nuri’s factories import 99% of their inputs, mostly from Europe, India, China and the UAE. These are flown in by air or shipped via the port at Djibouti. To navigate logistical challenges associated with a landlocked and vast country, Medtech operates offices in six major regions across Ethiopia and a fleet of 40 trucks that deliver its goods.
“To transport goods from Djibouti to Addis Ababa takes almost two days, but a new railway is coming up soon. By next year [getting goods here] will be a matter of hours,” he says.
The future looks positive for the Ethiopian healthcare industry, notes Nuri, citing the country’s stable and secure environment, availability of cheap labour, affordable electricity and a government opening up to foreign investment.
“Many foreign investors who neglected Ethiopia before, especially in the pharmaceutical sector, are now eager to come. Companies like ours have shown them this is a really lucrative venture. In the future I’m sure the market will continue to grow.
“There are some Indian companies that are coming. Branded multinationals are also on the way. There is a huge gap, so there will be room for all of us. Ethiopia needs more drug manufacturers.”
Nuri’s ambition is to grow his companies and eventually export to neighbouring countries. One step toward achieving this goal is already in the works. EPHARM recently acquired more land where it will undertake a $100m expansion project.
“Our vision is global,” he says. “We want to export.”