Barely six years old, Ghanaian pharmacy start-up mPharma, which manages prescription drug inventory for pharmacies and their suppliers, is sealing a deal on Kenyaan second-largest pharmacy chain, Haltons.

With this transaction, mPharma is entering the East African regional market for the first time, meaning that the young Ghanaian company will now control 20 Haltons stores spread across Kenya’s capital Nairobi and the second most populated coastal city of Mombasa. Baring any last minutes changes and subject to Kenya’s Capital Markets Authority’s approval, the deal would be sealed for a whopping a $12 million Series B funding round led by 4DX Ventures, an Accra/San Francisco venture capital firm, and Nairobi-based Novastar Ventures.

So far, the sum of $9.7 million has been paid and the full round is expected to be completed in a couple of weeks with other investors including Unbound Ventures, the VC arm of India’s Bharti Mittal Family office, early Facebook investor Jim Breyer and former Novartis chief executive Daniel Vasella, who has joined MPharma’s board. 

Key Facts To Note About The Deal

• The startup raised $6.6 million in Nov 2017 after raising a seed round of $5 million in 2015.
• MPharma was founded by Greg Rockson to primarily improve the efficiency of pharmaceutical supply chains in African countries. 
• Its proprietary Vendor Management Inventory (VMI) system is already being used in over 250 pharmacies in Ghana, Nigeria, Zambia and Zimbabwe.
• Rockson said the unusual deal came about as part of conversations to market its VMI platform to the chain, but realized there was an opportunity to prove just how much the efficiencies of managing both front end and back end could help African pharmacies drive down their biggest costs: inventory.
• The startup is taking control of Haltons from Fanisi Capital, a Mauritius-based private equity firm, but senior management at Haltons will retain a stake in the business.
• Last year, Haltons raked in $1.5 million in revenue, Mary Ngige, Haltons’ managing director said.
• mPharma is expected to meet a tough game in Kenya from the much bigger Goodlife Pharmacy which has 47 stores and is owned by South African investor Leapfrog Investments, which invested $22 million in 2016.
• At one point in its history, Haltons was the biggest pharmacy chain in the whole of Kenya with more than 50 stores but slimmed down, closing unprofitable stores and working on improving its service delivery. 
• Ngige says the aim is for its new ownership and better systems to work on methods to bring back to Haltons’ past glory.
• Ngige also says Haltons was attracted to the deal because the pharmacy desires to improve efficiency within its supply chain using better inventory management software which ultimately aligned with Halton’s own mission to improve drug accessibility and affordability. Consequently, they hope on mPharma’s business and their technology to help Haltons fine-tune their model and improve competitively.
• In the short term, mPharma’s team is focused on expanding its VMI and QualityRx platforms to over 14,000 community pharmacies in Ghana, Nigeria and Kenya, using those platforms to leverage more market power with pharmaceutical companies and also use its “‘just-in-time” inventory management to lower prices for its retail customers. 
• mPharma is also preparing to partner with African governments in order to help improve drug availability through better centralized systems, in the long term.

Rockson Is Using the QualityRx Franchise Model.

Using the QualityRx franchise model, which replicates similar features seen with co-operative retailers in the US and Europe, employing common branding, inventory systems and collective purchasing, mPharma is attempting to shake the market up a bit.

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“We’ve not always been able to control the customer experience and fully address the issue of drug affordability with our pharmacy clients particularly because they manage their profit margins,” says Greg Rockson.

“Through our QualityRx service, we’re starting to invest in improving the customer experience and pricing that patients get from pharmacies. Haltons will serve as testing ground for us to develop patient-centered services we can provide to our franchise pharmacies. This way we can encourage lower margins and pass the savings on to the customers.”

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.