The USD1.9 billion East African pharmaceutical market is being transformed by multinational companies attuned to the needs and desires of the region’s empowered consumers.  For long, the region’s pharmaceutical retail sector has been fragmented, often resulting in poor quality products and high prices for consumers.  But this is changing. Recently, a flurry of mergers and acquisitions, joint ventures, strategic alliances, partnerships and privateequity deals have seen multinational pharmaceutical chains battle for the region’s market share.

Kenya is the largest pharmaceutical market in the EAC, with a market size of USD720 million in 2014.

The new trend, according to market analysts, has seen an increase in attractiveness in the region’s pharmaceutical market to drug makers. In addition, the presence of multinational chains will be positive for consumers, with quality products and prices tailored to meet the needs of the entire income population. Pharmaceutical manufacturers are set to benefit from easier market access, compared with the current fragmented system.

A recent example is the entrance of Africa Chemist and Beauty Care (ACBC) with its Goodlife Pharmacy Brand which is based on the premise of “making the nation look and feel good, one person at a time” into the Kenyan market. ACBC jointly with private equity firm Catalyst Principal Partners, also bought a majority stake in Mimosa Pharmacy and also acquired the Dove chain which comprised of 4 stores, and 2 of the 4 Eldochem Pharmacies as its first local investment and have proceeded to rebrand them as Goodlife Pharmacies. The International Finance Corporation loaned Goodlife Pharmacy Limited USD4.5 million to open 80 pharmacies in Kenya and East Africa. The acquisition of the established pharmacy stores and the opening of new pharmacies in high population new malls, saw Goodlife create what is currently the largest, by sales, streamlined pharmaceutical chain in East Africa with 17 ( 16 in Kenya and 1 in Uganda) stores in just 15 months.

According to Mr Peter Barker, the Chief Operating Officer, Goodlife Pharmacy aims to bring pharmaceutical and beauty care best practices to East Africa, providing a range of products that address the needs of different consumers and revolutionize the way of doing business in the East African pharmacy market Kenya’s private healthcare sector has evolved over the last 14 years owing to increased public awareness of the need for investment in personal health. This has led to increased consumer spending in medical care, beauty and cosmetic products. Mr Barker says when he first arrived in East Africa, he was taken aback by the fragmented service in the pharmaceutical market. “The quality of Pharmaceutical services in some pharmacies offered could be improved and enhanced.”

Research by the company indicated the country’s pharm aceutical industry was the most advanced in terms of private sector participation and retail network. ACBC estimates the pharmacy industry in Kenya is worth about USD440 million (Sh39.4 billion) with an average annual growth rate of 22 per cent. The private sector accounts for half of the growth. A lot of Kenyans, Mr Barker says, have travelled and lived overseas, exposing them to high standards of pharmacy healthc are. “There was tremendous pent-up demand for better value at pharmacies as consumers seek high levels of customer service, trained and trustworthy pharmacy staff and international products.”

Barker says Goodlife stores are now offering well-equipped private consultation rooms, improving access and penetration of medical services.  He adds that clients will be able to seek and get advice from qualified professionals before and after buying drugs. In addition to blood pressure monitoring, blood glucose testing, malaria prophylaxis, testing and treatment, Goodlife is partnering with prominent manufacturing companies to improve the health of the nation. “Currently, customers can access close to 11,000 products on our shelves.”  Previously, Barker says, consumers were limited in terms of product choices when they visited pharmacies. They could not get certain brands they wanted. When they did, most of the time they ended up paying much more than the recommended prices.

However, Goodlife Pharmacy has been able to sign a range of deals with international manufacturing and beauty consumer companies to supply a range ofquality, reasonably priced products. “We have partnered with over 16 international and local beauty and health companies to provide world class products and professional services to our clients.” In addition Goodlife offers three-tier product offering. “Buyers appreciate choice. It shows that we respect them by responding to a variety of their requirements and price ranges.”  Choice, Barker says, gives buyers a basis for comparison because it  shows how the price changes when different features are added or subtracted. Barker says the company plans to invest USD18.2 millionin the next five years, targeting 150 pharmacies through a mixture of acquisitions and ‘greenfield’ ventures in East Africa.

These stores, he explains, will serve an estimated 2 million people annually and will be tailored to meet the needs of customers of varying income levels. He adds that the stores will be opened at convenient places such as major retail centers, petrol stations and near clinics. The EAC pharmaceutical market is forecast to grow at a compound annual rate of 8.3 percent to reach a market size of USD4.2 billion in 2024. Kenya is the largest pharmaceutical market in the EAC, with a market size of USD720million in 2014. Private healthcare expenditure currently accounts for 62 percent of the healthcare market in the EAC,and with much of the population not covered by health insurance, out-of-pocket payments at private facilities are still commonplace.

By 2024, a slightly lower 56 percent of healthcare spending will be private as health insurance coverage expands. For pharmaceutical companies seeking to capture Africa’s growth potential, Barker advises that they their first task, put simply, is to work out where to play: which markets offer the greatest opportunities, as well as good prospects for access. For ACBC and Goodlife, a mapping process was undertaken which clearly indicated areas the chain should be in as well as the timeframe. Barker, a pharmacist, says companies should also ensure that they develop a capacity to hire quality consumer focused staff and invest in their training and development to offer customers a better pharmacy and beauty care retail experience.

TONY MCNALLY, GOODLIFE PHARMACIES CEO, TALKED TO DRUM ABOUT HOW HE ROSE FROM REDUNDANCY AT THE START OF HIS CAREER, HIS UNDERSTANDING OF THE FEMALE PSYCHE, COUNTERFEIT DRUGS, HIS NEED FOR SPEED AND GETTING A KICK OUT OF STARTING BUSINESSES.
 
Tony McNally, Goodlife Pharmacies CEO, comes off as one who enjoys his work. When I meet him, his handshake is firm and his smile easy. Casually dressed, in a simple button down shirt and a pair of blue jeans, the man appears approachable. Born in Manchester, England, 55 years ago, Tony, love for rugby and football translates into his work as he uses changing room banter to assist in running the business. This, he says, encourages team spirit and a growth culture amongst his employees. I am eager to understand the mind of this successful businessman, groundbreaker and turn-around agent. McNally, who possesses a wicked sense of humour, easily opens up in a candid demeanour as he speaks of his ventures before Goodlife, family, guilty pleasures and his plans for the company in East Africa. 

I am an ex soccer and rugby player. I was born and raised in Manchester, very close to Manchester United, a very lively place. I played semi-professional soccer and I have always been a sporty person. At 26, I moved into a farm and one of the guys that lived there played for the rugby club. The team played football in the summer to stay fit. They invited me to play rugby with them as I used to make fun of the team. They told me if I thought I was good, I should play rugby. That, how I started, I was a winger, and worked my way up to the first team. We got to the final of the provisional cup, so I really enjoyed it. If you have ever been a team player, there is this thing about changing room banter, and that, how I like to run the team. There is a serious time, but there is also a lot of fun. 

I have been to numerous countries and have been immersed in different cultures. My wife was Danish. That was my first real involvement in a different culture. I am not married anymore but my wife, family is close to me. My mother is in the UK and one of my siblings lives there. I have family in New Zealand, my elder sister and her kids. I have connections to Denmark, too. I have worked all over Europe in countries like Norway, Sweden, Germany, Holland, Belgium and Austria. I have worked in the Far East and Thailand. I have done a lot of Safari in Africa, in places like the Okavango Delta, but not in Kenya. I went to Tokyo for the first time a couple of years ago. I would like to go back to Kyoto, Japan. I have been to Tahiti, Cook Islands and Pacific Islands. I have been to Singapore, which is squeaky clean. lt, good to find places with a vibe, Nairobi, Berlin Paris and London have that. Every culture is different. It, like Africa. Some people look at it as one country. Every country in Africa is very different in terms of culture and everything else. The key thing is to try to understand that culture and what make it different. Even people in Nairobi are very different from those in Mombasa or Eldoret. There are local cultures within an overall culture. 

I don’t have any kids – my wife didn’t want children. I thought she would change her mind but she didn’t. It, one of those things you live with. If you meet someone and that is the way they are, you accept it. 

PEOPLE THINK IN KENYA THERE ISN’T A GOOD CUSTOMER SERVICE CULTURE. I WAS IN HOLLAND AND THEY ARE A MILLION TIMES WORSE. THE CULTURE THERE IS ‘TAKE IT OR LEAVE IT: HERE THE CUSTOMER SERVICE CULTURE IS BUILDING. WE SPEND A LOT OF TIME TRAINING OUR PEOPLE, FIRST ON CUSTOMER CARE THEN PATIENT PA CARE. IF YOU GET THE CUSTOMER CARE RIGHT IN THE BEGINNING, IT MAKES A HUGE DIFFERENCE

 
When you understand the people then your business flourishes. Business is about people, processes and products, and it, the people that make the difference. People think that in Kenya there isn’t a good customer service culture. I was in Holland and they are a million times worse. The culture there is `take it or leave it’. Here, the customer service culture is building. We spend a lot of time training our people, first on customer care then patient care. Getting the customer care right in the beginning makes a huge difference. After that, you can start to build trust and loyalty because there, a saying that goes, “the most important phrase is your name on somebody else’s lips”. 

If I didn’t sell and make a profit, I would be long dead (Laughs).The products we sell at our Goodlife Pharmacies are affordable. We import some products while others are exclusive to Goodlife. We don’t use middlemen and this also helps stop counterfeits. We try to deal directly with the manufacturers whether it, L’Oreal from France, Nip and Fab from the UK, or manufacturers in the States. 

In less than six months, we have built 15 locations, bought two, integrated three and launched a new brand. It’s a bit like living on the edge – you either enjoy it or not. I love building brands and the challenges that come with it. Some people I know have never lived further than to miles from where they were born. I love a great challenge, and it is even better when it is in a different environment and different culture. 

We are upping the pharmaceutical game – we want the nation to look and feel good, one person at a time. We want to improve the pharmaceutical services in the country and across East Africa. We are in Kampala, Uganda, and are looking to venture into Rwanda and Tanzania. Kenya is the starting point. We are trying to build the Boots and Clicks equivalent for East Africa. A lot of the stuff that we are introducing is considered best practice from around the world. It’s our intention in the long term to offer Telemedicine through the consultation room. Our intention is to link you up with a pharmacist via something like Skype. We are also working on the Hello Doctor programme where, after signing up for about Ksh Soo, via phone, you get to talk to a doctor about your ailment. The programme is originally from South Africa and currently we are working as a facilitator for the information. However, the next step is to work with them so that if someone wants to come in and speak to a doctor face to face, they can do it through us. 

The pharmaceutical market in Kenya is not regulated in terms of pricing and margins. This is set up based on an old British system. In Europe and South Africa, the system is highly controlled by the government. In Kenya, there are rules but not everybody obeys them and this causes regulatory problems. The biggest challenge is having people on the ground to enforce the system. We hear that there are 6000 pharmacies and about g000 are not registered. The WHO report in 2005 talked about 25 percent counterfeit drugs. 

I want to leave a legacy that ensures people have the right skills and abilities to develop and run this business long after I am gone. As a leader, I am a great fan of Steven Covey. In The Seven Habits of Highly Effective People, he says You should seek first to understand and then to be understood. Therefore, if it, culture, people or a situation, seeking to understand should be priority. My boss who gave me the first chance to run a business was a good listener. When you join a company, understanding the culture is important. I believe in the growth culture, developing people and inspiring them to achieve the best they can. Investors are good at finances and figures, but the most important thing is being able to engage your people to deliver. !get a kick out of building and developing businesses and people not just sitting on top of them.

The journey to my success has had its ups and downs. Before being made redundant at the first company I worked for, I had learned a lot about building small businesses. The redundancy issue tells you `You have to get up and start again’. I saw something nice on Facebook the other day. Under ‘Education’, a tattoo artiste had written “school of hard knocks”. I thought that was brilliant. The University of Life teaches you resilience and other things; you get to come back and start again. At my first job, when they said they couldn’t afford us anymore, it was a relief because we were working 47 to make the business work. I went on to work for GlaxoSmithKline (GSK) then Beecham. I also worked with Coca-Cola and Pepsi. I have been involved in building brands across Europe. After working for the big corporates, I did my MBA to get an overall business discipline. I have also worked for big brewing companies, hotels and, until recently, Alliance Boots, as the Managing Director.

I go to the gym to keep sane. If I can find a decent gym, I enjoy spinning, body pump exercises and Thai boxing. I do weights for fitness, not for bulking up. I am 55, but mentally I still think I am 35. At my age sometimes my brain says ‘Yes, go on, get down there really quick’ and then my body says `Haha, no way’. 

I like good wine and good food. I like the Zen Garden and you can always enjoy a good laugh at Brew Bistro. The beer at Brew Bistro is OK – I’m a rugby player, we have beer. There, a beer brand in the UK I like that, called Timothy Tayler. If you want something memorable, attend the October Beer Fest in Munich, you will love it. It’s fantastic. On the social side, I don, mix work with pleasure.

One of my guilty pleasures is my Blackbird two – its very fast, but I don’t go fast, obviously. I have three bikes but that’s the biggest. I also have a mountain bike and a road bike as well. I haven’t been out on the roads in Kenya but I like cycling, scuba diving and I do anything dangerous, or crazy. However, I am getting to an age where I can, do what I used to. Sport is still my way of relaxation. I have done motorbike tours around New Zealand and South Africa. I have Namibia on my list of places I wish to As motorbike touring. I also like scuba diving in Maldives. I am also a chocaholic – that, my main vice, but I try to eat well. My favourite food is curry, which I cook myself. I like Thai curry, but I do a lot of Indian and Sri Lankan curry too. My father was a butcher, so I am a meat man. There will be meat of some sort in whatever I order when I go to a restaurant. I hate cheese, even though I have tried it many times.

I am a simple man. My car in the UK is about 15 years old; I don’t drive around in a big, flashy car. A .r is something to get from A to B, not that I am not into comfort… but that, not the primary thing that drives me. I am not a big shopper. My watch – a diving watch – is 20 years old.

I can order beer in more languages than you can think of -I am a linguist. Whenever you are in any country, make an effort to speak a word in the local language, and people will in turn try to communicate with you in English. 

I won’t leave the house without a sense of humour. Seriously, you’d want the key to get back in. 
 

Article By: Mwamburi Maole

Photography By: Paul Mbugua

For Drum Magazine