mPharma is reportedly acquiring the Kenyan pharmacy chain Haltons in a cash deal. The acquisition is subject to regulatory approval and the successful closure of mPharma’s $12m Series B funding round. mPharma is a digital vendor management platform that manages prescription drug inventory for pharmacies and their suppliers.
Once the largest pharmacy chain in Kenya, with more than 50 stores, Haltons now has 20 outlets, two thirds of which are in and around Nairobi. It has two stores in Mombasa and a handful of stores up country. It has now been now overtaken by Goodlife Pharmacy which has 47 stores in Kenya and Uganda and received a $22m investment from Leapfrog Investments in 2016.
mPharma has operated for six years. It has attracted $11m in funding since 2015 and generates revenues from a commission on the drugs it purchases. In the past year it has grown its base of pharmacies in Ghana, Nigeria, Zambia and Zimbabwe from 110 to 250. Trendtype estimates it serves around 45,000 customers per month, offering them savings of 30-60%.
The deal value has not been disclosed but is believed to be around $5m – or $400,000 per store. This compares to Goodlife’s purchase value in 2016 of $1,150,000 per store.
mPharma’s strategic goal is to become the largest African drug retail support network outside South Africa in the next five years. It plans to roll out its platforms to 14,000 community pharmacies by around 2024, and use its buying power to leverage cost savings from pharmaceutical companies. It is not yet clear how the Haltons acquisition fits into that strategy.
Goodlife’s strategy is, at face value, more traditional: driving store rollouts and network expansion. in the first year after acquisition, the chain had grown from 19 to over 38 stores. With 47 stores now, it plans to expand to plans to expand to 100 stores by 2020. In July 2018 Goodlife signed a partnership agreement with Vivo Energy, the pan-African Shell service station licensee with over 2,000 forecourts in 23 African countries.
However, it is important to note that LeapFrog’s acquisition of the chain followed a 2014 investment of $18.7mn in leading Kenyan health insurer Resolution Insurance. It also has a stake in Pyramid Pharma, an East African medical equipment distributor, APA, an East African insurance provider whose portfolio includes health insurance, and several other companies operating in life insurance and the financial inclusion space.
As such, mPharma and Goodlife/Leapfrog both intersect at multiple points in the pharmaceutical value chain around the issue of [improving] access to healthcare, although their portfolio company services are not directly overlapping.
