The Comesa Competition Commission has given its unconditional approval to the acquisition of Cipla’s stake in Quality Chemical Industries by Africa Capitalworks. This eagerly awaited deal, first announced in April, is set to bring substantial changes to the landscape of lifesaving drug manufacturing in sub-Saharan Africa.
Background and delays
Cipla, a major player in the pharmaceutical sector, has long held a 51.18 percent stake in Cipla Quality Chemical. The planned share purchase by Africa Capitalworks, designed to promote regional self-sufficiency and enhance growth in Uganda and the wider region, had been initially scheduled for completion in May. However, it faced considerable delays due to regulatory approvals, primarily from the Capital Markets Authority (CMA) and the Comesa Competition Commission.
Finally, on October 31, the Comesa Competition Commission announced its approval without any conditions. The Committee Responsible for Initial Determination examined the deal and found that it would not significantly hinder competition in the Common Market or be contrary to public interest. Dr. Mahmoud Momtaz, the committee’s chairperson, noted that the transaction was unlikely to have adverse effects on trade between member states. Comesa had even invited stakeholders, including competitors, suppliers, and customers from the region, to provide their opinions on the acquisition earlier in July.
Deal details and market impact
This acquisition marks a significant shift in the industry, as Cipla will entirely exit Quality Chemical, a company it acquired in 2015. Africa Capitalworks will assume control and is expected to invest between $25 million and $30 million in this strategic move. The deal, originally estimated at $25 million to $30 million, went through multiple extensions to allow Comesa to complete its investigations. The approval process examined whether Africa Capitalworks’ entry would disrupt or bias the market in its favor, given its market shares in pharmaceutical markets in Comesa member states like Uganda, Zambia, and Kenya.
A boost for regional self-sufficiency
With this acquisition, Africa Capitalworks aims to bolster the production of essential lifesaving drugs within the region.
This move is anticipated to contribute to regional self-sufficiency, reduce dependency on imports, and potentially lower the cost of vital medications, addressing a critical need in the healthcare sector.