CAPS needs $6 million for recapitalisation

HARARE - CAPS Holdings, Zimbabwe’s largest pharmaceutical group, urgently requires $6 million in recapitalisation funds, with the drug-maker currently operating at five percent of installed capacity.

Government assumed control of the stuttering drug-maker in August after buying out ex-major shareholder Frederick Mtandah.

This was after CAPS’ faced a critical funding shortfall, with its property escaping a public auction aimed at amortising a $4 million loan owed to two major banks — CBZ Bank and FBC Bank. 

Government has since snapped up CAPS’ debts through the Zimbabwe Asset Management Corporation, a central bank unit set up to assume distressed companies’ debts to banks.

CAPS has since been delisted from the Zimbabwe Stock Exchange (ZSE).

CAPS is only operating one out of its four plants in the capital, Harare, as a result of lack of funding from new shareholders, government, leaving the country’s health institutions and donors with no option but to procure medicines, including intravenous drip water, outside the country.

All in all, the country’s eight drug manufacturers would need $40 million recapitalisation.

United Nations Industrial Development Organisation (UN IDO) pharmaceutical division project coordinator Ishe Nkomo said the $6 million would make CAPS regain its international acclaim, as well as make it meet the national manufacturing demands and standards.

CAPS is the parent company of a chain of drug-making and distribution units that include QV Pharmacies, CAPS Pharmaceuticals and Geddes Limited.

It used to run St Anne’s Hospital but was booted out this year after the property’s owners refused to renew the lease.

“We have been gathering information on how much the local eight manufacturing companies would need. We have done our own assessment and CAPS was also included. We need about $40 million to resuscitate local industries, of that $40 million, we could say around about $5 million to $6 million is about what CAPS would need to ensure that it’s taken to the next level of the international acclaim and accreditation and also that it’s able to comply with regulations,” Nkomo said.

He was speaking during a tour of the plant yesterday.

“So that’s the position we are and we are now finalising so that we get the funding for the different companies.”

The manufacturer produces generic drugs, with over 170 products registered locally and in the region, among them pethidine, paracetamol, flumel, cotrimoxazole, penicillin, syrup.

It used to produce a wide range of over-the-counter and prescription medicines, but is now only producing 25 of the products. 

With an 80 percent government shareholding, it currently has about 50 employees from about 320 in 2006, according to management.

CAPS has also appointed a new board headed by Abigail Shonhiwa, the permanent secretary in the Industry and Commerce ministry.

Government is struggling to ensure the drug-maker returns to viability.

CAPS chief executive officer Justice Majaka said the manufacturer has not been able to operate at full capacity as government was not funding it.

“Government is the majority shareholder after acquiring shares from the Mtandah family and currently looking for a partner. We have the penicillin plant which is not operational, then another plant in Sunningdale that manufactures small injections, also not operational, another dedicated to manufacture hospital drips, also not operational.

“We are waiting for recapitalisation since government has taken over and they are looking for funding, either directly or through an investor.” Majaka said.

Government claims it is in talks with potential local and foreign investors to partner it in breathing new life into the business

“...the company has the capacity to manufacture 7,2 million bottles per year of syrup, over a billion tablets, 6,5 million injections and 2,5 million drips per year.

“Our main customers (government through public institutions), especially for the drip plant, injectables and penicillin, was not been adequately funded for some time, so they have not been purchasing the product, so it has become difficult to operate the plants. And the donors have been importing the medicines and they have been a deliberate policy of not buying from local suppliers, I think, because of some historical issues that happened before.

“We want to modernise and look at current molecules that are in line with current trends, then we develop those ones and possibly replace the older molecules.”

Health and Child Care minister David Parirenyatwa, who was part of the entourage touring the manufacturer’s facilities, said it was a shame that Zimbabwe had to import medicines, including mundane drugs, with such capacities, and the best machines in the world. 

“Zvinonyadzisa, (it’s quite a shame) that we have capacity of making our own IV (intravenous) fluids, and we import this water, we need to be able to capacitate,” Parirenyatwa said.

“I have started with CAPS here but will be going round all the others. We are extremely keen that we see CAPS Holdings going far. We want to see how you as CAPS with the changeover that happened where you are, and what your challenges are and we help each other; what you are doing, which legislation is affecting you and how the regulator can help you.”

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