Cipla’s Efforts to Convince Shareholders of a Turnaround

The company’s local sales increased by 18% during the year, and this helped to almost offset the the deficit left by the cessation of supply to Zambia, which has apparently defaulted on payment of whopping $12 million debt to Cipla for sullies made This growth however, is being affected by the growing local competition, which in some cases forced Cipla to cut prices.

Cipla Quality Chemicals Ltd, Uganda’s top manufacturer of medicines has in recent years faced declining profits occasioned by a fall in revenues, making Shareholders uneasy.

The Capital Markets Authority’s latest report shows that Cipla’s shares posted one of the biggest price fall on the Uganda Securities Exchange, alongside Uganda Clays Ltd. This comes at the time the company is implementing expansion plans, including the acquisition of Quality Chemical Ltd’s distribution arm of the Cipla India manufactured prescription medicines in Uganda.

The acquisition is expected to boost the company’s sales growth by expanding its product range while unlocking new business opportunities in the retail distribution market. The company hopes this will support its planned venture into the private sector market.

The CEO of CiplaQCIL, Nevin Bradford, says: “The businesses revenue streams have previously primarily been focused on government and donor-funded sales. This recent acquisition is an exciting entry for the business into the private retail pharmaceutical market in Uganda.”

Local production had mainly focused on HIV anti-retroviral and antimalarial drugs, but the Indian deal will see it also distribute medicines for treatment of asthma, chronic obstructive pulmonary disease (COPD), diabetes, infections, gastroenterology, and cardiovascular disease.

With these developments, Cipla hopes to respond to the discontent by shareholders over it’s profitability.

Last year the company made a loss of 23 billion shillings, down from a profit of sh 6.786 billion, resulting from the continued delay of payment by the Government of Zambia of a debt worth US$ 12 million (over44 billion shillings), for supplies made more than two years ago.

In their online engagement dubbed "facts behind the figures" arranged by the Uganda Securities Exchange, the company’s management expressed hope that it will return to profitability in the short term.

They say the Zambian debt is the cause of the big loss posted, after the company adjusted its books to include the provision for this debt as an expense.

This was after it was advised to follow the International Financial Reporting Standard (IFRS) 9. Under this, a company is expected to show the current value of an asset […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply