Govt completes CAPS takeover

HARARE - Industry minister Mike Bimha says government has completed the takeover of the country’s largest pharmaceutical manufacturer, CAPS Holdings (CAPS), which collapsed five years ago, in a bid to revive its operations.

At its peak, CAPS accounted for 75 percent of the local healthcare products market and was involved in the manufacture, wholesale distribution, and retail of pharmaceutical, consumer, and veterinary products.

At the time of its closure due to undercapitalisation, huge debt and allegations of mismanagement, CAPS was under the control of key shareholder and chairperson, Fred Mtandah.

“We believe for now that the Reserve Bank of Zimbabwe has completed the discussions with CAPS and that the central bank is holding onto government interests,” he told the businessdaily.

“The idea is that we must try to enhance the value of CAPS before we can ultimately invite investors and there are so many of them,” he added.

Mtandah, who has previously hinted at government involvement in CAPS, confirmed the latest development.

“Yes, the acquisition actually went through in January. But I cannot disclose more,” Mtanda said from Europe over a telephone interview.

This comes as Zimbabwe’s pharmaceutical industry has experienced a massive decline, with an estimated 90 percent of all pharmaceutical products being donor-funded and imported.

CAPS has ceased manufacturing drugs and failed to have its 15-year lease of Harare’s upmarket St Anne’s Hospital renewed in 2013, while its QV pharmacy chain has only recently returned to good health under judicial management.

The 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 struggling drug-maker in August 2016 after buying out Mtandah, however, the acquisition took longer than expected as the parties resolved outstanding issues.

CAPS recently 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.

Through its special purpose vehicle aimed at housing bad loans — the Zimbabwe Asset Management Corporation — government recently assumed the pharmaceutical company’s debts to financial institutions.

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.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.