Goodlife acquire Greatness Pharmacy after CAK nod

International Finance Corporation (IFC) has backed Goodlife Pharmacy for a stake in Nairobi-based Africa Greatness Pharmacy sustaining its acquisition streak as it seeks control of Kenya’s retail pharmaceutical space.

The Nairobi-based Africa Greatness Pharmacy has a turnover of more than Sh1 billion and assets worth over Sh81 million with an office in Spring Valley.

“The Competition Authority of Kenya excludes the proposed acquisition of certain assets of Africa Greatness Pharmaceutical Consultants Limited by Goodlife Pharmacy Limited from the provisions of Part IV of the Act,” Competition Authority of Kenya director general Wango’mbe Kariuki said in a Kenya Gazette notice.

Move meets threshold

“The merger will not affect competition negatively and although the combined turnover for the preceding year, 2020, which is higher than the assets, was above Sh1 billion for the preceding year, 2020, the target’s assets were valued at Sh81 million which is below Sh500 million and therefore meets the thresholds,” CAK said.

The company was launched intending to provide high quality medicine at affordable prices as fake medicine and high prices were hurting low-end consumers. The founders include public health specialist Joshua Ruxin, Jeffrey McCormick and David Zapol formally launched Goodlife Pharmacy in 2014 using personal funds, the tapped private investors and an equity investment from regional private equity firm Catalyst Principal Partners.

Their thinking is that since building new stores and the necessary corporate infrastructure would be time consuming and capital intensive, so the company focused on acquisitions.

They secured four-store Mimosa Pharmacy chain and built on the goodwill and relationships that Mimosa had created in the industry leveraging these shopping mall locations to gain an instant presence in the market.

Catalyst offloaded its stake to another private equity fund manager, LeapFrog Investments, which has played an instrumental role through its capital and expertise.

IFC backed acquisitions

With the backing of IFC and Mauritius based Leapfrog, Goodlife had also acquired stores such as Dan Pharmacy and other players as Kenya’s pharmaceutical market emerge among fastest growing in Africa.

The company’s plan is to purchase medicine in bulk from manufacturers and wholesalers to lower procurement costs, offer discounts and ensure nationwide presence.

“Given the lack of coordinated distribution, numerous distributors and sub-distributors mark up prices, adding to the final price paid by consumers. Even the lowest-priced generic medicines in Kenya are estimated to be two to five times higher than their international reference prices,” says IFC.

The company had a target of 100 locations in Kenya and has since expanded to Uganda powered by high level investors.

The retail pharmaceutical industry has gained vibrancy in recent years with new players powered by foreign capital expand to take their share of the market. Players such as Haltons, Quinton, KAM, Malibu Pharmacy are some of the leading distributors.

Stiff competition

In the online space MyDawa and others are also giving them a run for their money.

Goodlife has recently been able to reduce the capex spending on its new stores by over 50 per cent.

Leveraging tools introduced by its private equity partner, Goodlife also improved in selection of sites. This has seen the time it takes for a store to break even reduce from over a year to less than five months.