Hikma Pharmaceuticals PLC announced that it has signed a joint venture (JV) agreement with MIDROC Pharmaceuticals Ltd., a member of Sheikh Mohammed Hussein Al Amoudi’s MIDROC Group (MIDROC), to establish a presence in the Ethiopian pharmaceutical market. The JV will be called HikmaCure.
Commenting on the transaction, Said Darwazah, CEO of Hikma said, “I am extremely pleased to be partnering with MIDROC to bring high quality, affordable medicines to the Ethiopian market. Expanding our presence into sub-Saharan Africa is a key strategic priority for Hikma and this is an excellent first step. We believe Ethiopia offers strong growth potential in the medium to long term and our investment at this stage will enable us to be well positioned in the market. We will continue to explore opportunities to build our presence in the sub-Saharan region.”
Ethiopia has a population of 94 million people, 64 percent of whom are under 25 years old. The Ethiopian pharmaceutical market is valued at over $500 million. It is growing at a compound annual rate of around 15 percent and is expected to reach approximately $1 billion in 2018, driven by increasing investment in healthcare infrastructure and improved purchasing power of patients. Currently the market is highly dependent on imports, which account for around 75 percent of the total pharmaceutical market.
Over the next five years, HikmaCure will establish an Ethiopian operating company, build a local manufacturing facility and will begin marketing and distributing pharmaceutical products in Ethiopia. In the short term, MIDROC will work with Hikma and HikmaCure to register, market and distribute Hikma’s products in the Ethiopian market.
Hikma and MIDROC will invest in HikmaCure in equal proportions and have committed to provide up to $22.3 million each in cash. The funds will be invested over time and will be used to build and fit-out a local manufacturing and distribution facility in Ethiopia and to provide working capital support for the operations of HikmaCure. The facility is expected to begin commercial production in 2017.
Date: September 18, 2013