In another shocking move to the African pharmaceutical industry and supply chain, GlaxoSmithKline (GSK), a British multinational pharmaceutical company, is exiting Kenya and switching to a direct distribution model.
The move comes just four months after successfully implementing the same in Africa’s largest economy, Nigeria. This departure is part of GSK’s global restructuring effort. Seems the company is riding the direct distribution model for its African operations into the sunset. At least for now.
GSK’s transition to a direct distribution model in Africa marks a significant transformation in its business operations on the continent. The company will now rely on third-party distributors to supply medicines and vaccines.
This move is expected to help streamline its operations and focus on core areas such as prescription drugs and vaccines. It will also impact some of its renowned brands like Augmentin, Zentel, and Ventolin.
Notable insights in GSK’s transition to direct distribution in Kenya
GSK clarified that its production facility in Nairobi’s Industrial area, a subsidiary under Haleon, will continue to operate.
Haleon, GSK’s stand-alone affiliate, focuses on consumer healthcare products like Sensodyne and Panadol. This underscores GSK’s commitment to maintaining a presence in Kenya’s consumer healthcare market amid the restructuring of its pharmaceutical business.
The decision to exit Kenya is part of a broader overhaul of its global business operations, aligning with the spin-off of the consumer health unit in July.
GSK recently turned down a £50 billion bid from Unilever for this unit. Although GSK stated that Unilever undervalued the business, it also signalled a commitment to maximizing the value of its prescription drugs and vaccines business.
Impact of GSK business in Kenya
Throughout its presence in Kenya, GSK has significantly impacted the healthcare sector. It was essential for the malaria and HIV/AIDS battle in the country, leading to antibiotics like Augmentin and Panadol. The company also developed groundbreaking drugs like the malaria vaccine – Mosquirix, piloted in Kenya last year to reduce malaria-related deaths, particularly among children.
However, GSK’s exit underlines the challenges faced by multinational pharmaceutical companies in Africa. As supply chains become more complex and competition from more affordable generic medicines and locally manufactured pharmaceutical products abound.
What is next for GSK and its business and supply chain operations on the continent?
GSK’s global strategy emphasizes efficiency, competitiveness, and growth in key markets. However, its departure from Kenya follows a five-year process of scaling back operations in Africa.
Despite ceasing the marketing of medicines to healthcare professionals in 29 sub-Saharan African markets, GSK continued local operations in Kenya and Nigeria, while maintaining representative offices in Cote d’Ivoire and Ghana.
As GSK adopts a direct distribution model, the ripple effect on Kenya’s pharmaceutical industry and supply chain will be closely monitored. The move reflects the evolving landscape of pharmaceutical operations in Africa, prompting companies to adapt their strategies to remain competitive in a dynamic market.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
