Private equity firm on why it backed a North African pharma producer

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Hichem Omezzine, director, Actis

Growth markets-focused private-equity firm Actis recently invested in Medis Group – a producer of generic pharmaceuticals in Tunisia and Algeria. Actis acquired the stake in the business from AfricInvest and the founding Boujbal family.

Medis’ products range from oral solid pharmaceuticals targeting chronic diseases such as diabetes and high blood pressure, to injectable pharmaceuticals – as well as branded medicines in therapy areas including pain, allergies and gastric reflux.

How we made it in Africa sat down with Actis director Hichem Omezzine to gain insight into the pharmaceutical sector in Africa and the strategy behind this latest investment.

What prompted the investment in Medis Group?

Let me first start with the sector. We see great potential for the pharmaceutical sector in Africa. The local pharmaceutical producers’ quality of manufacturing is improving and the population is growing more aware of the need for medication. This combination of improved quality and increased awareness is creating a growing market for pharmaceuticals branded ‘generic’, and a company that is able to provide good quality at an affordable price.

So we were looking around the continent for companies that had good quality products, as well as the potential to cover more than one country, because the African market is very fragmented. When we got to know Medis, we found an incredible company with terrific manufacturing capabilities, as well as an ability to build a regional business. They have one of the most sophisticated drugs in Africa and have very ambitious plans to enter into areas like oncology and biosimilars (copies of complex pharmaceuticals manufactured in living cells). They’ve been working on these plans for a long time.

They have a joint venture in Algeria which has been very successful, and they have also made strong strides in other parts of Africa and the Middle East. Additionally, they manufacture in Tunisia and Algeria and then export to a number of African countries.

So we found that the business – as well as its founder and management team – had all the qualities needed for us to back them for a broader and more ambitious story.

Where do you see growth opportunities in the pharmaceutical market?

The largest opportunity for growth, in my view, lies in the branded generic, and specifically the player that provides quality branded generics. Because here in Africa, we want quality. And if you can’t provide quality at an affordable price, you won’t make it.

The second opportunity is in sophisticated medication and branded generics for complex therapeutic areas. In this area there is a big opportunity for a quality provider such as Medis.

Actis will also inject further funds into the business to finance a buy-and-build strategy, which we hope will help lead Medis down the path of becoming a leading pan-African/Middle-Eastern pharmaceutical business.

What are your thoughts on the pharmaceutical counterfeiting problem in Africa, and how will you deal with it?

This is a big topic in Africa, and one that we have encountered before. I don’t think this is something that Medis can tackle itself. It needs the combined efforts of the different players, as well as governments. We have a duty to make sure that whatever is delivered to the patient is of quality, and so we obviously also have the duty to contribute to efforts to fight counterfeits.

Which geographic areas do you wish to see Medis Group expand to?

Tunisia and Algeria are the company’s main markets. But it is also making a big push in francophone Africa and the Middle East. I think the vision is for Medis to be a leader in the region, to keep the promise and the history of providing affordable, quality medicine to African countries.

My wish is obviously that the provision of affordable, quality medication is spread to as many people as possible, across the continent. And I hope Actis will contribute to some of that.

What do you think needs to happen to develop the African pharmaceutical industry?

Africa has some exceptional entrepreneurs. Though they’ve been working in very challenging environments, they have risen to the challenge and built superb companies. And I think that if these entrepreneurs are given the right opportunities and get to play in bigger markets – not just from country to country, but as much as possible in the continent, too – their companies will soon compete with the rest of the world.