Amid a challenging funding landscape, MeCure Industries Plc has defied the odds, demonstrating remarkable resilience and achieving significant growth.
The company strengthened its position with a 10 percent equity investment from Zrosk Investment Management Limited.
This strategic move comes at a time when healthcare businesses are increasingly seeking alternative sources of capital to mitigate the impact of high borrowing costs.
Last week, the Central Bank of Nigeria raised its benchmark interest rate from 26.75 percent in August 2024 to 27.25 percent in October 2024, raising the cost of borrowing to a record level.
The high interest rates have led more pharmaceutical companies, diagnostics firms, and hospitals to explore alternative financing through commercial papers, bonds, development finance institutions (DFIs), and equity investments.
The top pharmaceutical firm is one of the firms overcoming this hurdle by securing a significant investment to strengthen its capital base and accelerate its growth trajectory.
MeCure expects the deal with the investment, private credit, and asset management firm to boost its financial pool and operational efficiency, strengthening it to achieve expansion plans across Nigeria’s pharmaceutical chain.
Arjun Udani, Co-CEO of MeCure Industries Plc, said the investment signals confidence in the company’s long-term growth strategy and a commitment to delivering quality healthcare solutions.
“With Zrosk’s support, we are well-positioned to execute our ambitious expansion plans and continue making a positive impact on the healthcare sector in Nigeria and beyond,” Udani said in an official statement seen by BusinessDay.
Samson Esemuede, managing director and chief investment officer of Zrosk Investment Management Ltd said Mecure’s focus on domesticating pharmaceutical production and intellectual capacity despite the high cost of operation attracted his firm.
He described the partnership as proof of its belief that ownership of industrial capacity on the African continent should be indigenous.
Esemuede views the stock market as a theatre of such transition and sees Mecure Industries as a potential dominant player in the pharmaceutical value chain on the continent.
“From our analysis, Mecure Industries can deliver products in critical therapeutic areas at a unit cost that helps drive affordability across the population. We are thus proud to be a part of this journey and look forward to supporting Mecure’s ambitious current and plans,” Esemuede said.
Read also: MeCure secures 10% equity from Zrosk amid funding hurdles
MeCure Industries Plc has demonstrated resilience and growth over the past five years, defying the challenges faced by Nigeria’s healthcare industry.
The company’s strategic initiatives, coupled with a strong focus on innovation and quality, have propelled it to the forefront of the pharmaceutical sector.
It has consistently outperformed the industry average in terms of revenue growth. According to the company’s financial statements, revenue increased by approximately 15 per cent from 2019 to 2023, driven by a combination of market expansion and product diversification.
Despite the challenging economic environment, MeCure has maintained a healthy profit margin. The company’s profitability has been supported by cost-effective operations, efficient supply chain management, and a focus on high-margin products.
Its operating profit rose by 194 percent to over N6 billion between 2018 and 2023, while profit after tax jumped by 580 percent to nearly N3 billion within the same period, according to the company’s financial statement.
Also, by investing in research and development, introducing innovative products, and building strong distribution partners, MeCure’s market share has steadily increased over the past five years, analysts say.
“The company is well-run and has prioritised operational efficiency. They have increased their capacity over the years and are set to grow continually year-on-year, says Oluwafemi Olaleye, head of Health Banking at FSDH Merchant Bank.
“They have digitised their processes, so they are able to extract the most out of their active pharmaceutical ingredients. They have also cut down on business costs so as to reduce the effect of inflationary pressures on their margins.”
Based on its numbers, Abdulrauf Bello, a Lagos-based investment manager, said Mecure’s growth run in the past few years has featured strong and stable margins, positioning the company to capture more value in the long run given the emerging trends in the Nigerian pharmaceutical industry.
He also noted that the firm has made significant investments reflected by its net working capital (NWC) ratio of 41 per cent as of 2023 and capital expenditure intensity of 48 per cent.
“The good thing, however, is that those investments are likely to translate to significant value. The asset turnover and strong capital allocation ratios tell me that substantial value is likely to be created in the long run,” Bello said.
Despite persisting foreign exchange crisis, exorbitant energy, import and logistics costs which pose significant challenges for many healthcare companies in Nigeria, the company has addressed these by investing in its facilities and diversifying its product portfolio to focus on essential medicines.
In May, it secured approval from the National Agency for Food & Drug Administration and Control (NAFDAC) to begin the production of the first locally manufactured alternative Amoxicillin-Clavulanic acid tablets, Amoxyclav 625mg in the first quarter of 2024.
The Company recently introduced mobile applications such as the Smart Pill and Smart Buy applications under its Direct2Retail strategy to promote production distribution. These applications serve as online pharmacies that facilitate easy purchase and delivery of Mecure’s products to retail customers in urban cities.
It imports more of its production inputs from India and China in previous years due to the limited availability of the required raw materials locally but has now established its own Beta-lactam plant for production.
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