It only took little Mohammed Nuri three years to complete the six grades in elementary school. These were early signs of him being an extra-ordinary student. He lived up to those early expectations when he passed the Ethiopian School Leaving Certificate Examination (ESLCE) with flying colors and joined Jimma Medical School at the tender age of sixteen. A kid from a poor family of not well-educated parents who came to Addis Ababa from a village in rural Ethiopia, Mohammed always sought to one day change their lives. The prime motivator behind Mohammed’s decision to join medical school was the relatively higher pay it offered. Medical doctors received a salary of ETB835 back then as opposed to about ETB600 for B.A holders in some other fields. When he was just a freshman, however, his mother passed away after the medication she needed could not be found following a surgical procedure. That moment of grief dawned on him the importance of raising the availability of pharmaceuticals in the country. By the time he graduated, Dr. Mohammed realized that it would be difficult to change things around with that salary. He declined an offer to teach at Jimma University and went into business instead. He now owns Ethiopian Pharmaceuticals Manufacturing Sh Co. (EPHARM), MedTech Ethiopia and is the Ethiopian shareholder in Julphar Ethiopia (the Ethiopian chapter of the UAE pharmaceuticals company). Besides these huge pharmaceuticals manufacturing and importing companies, Dr. Mohammed has a stake in Zenbaba General Hospital. He also owns Enat Engineering, MedTech real estate and Konjo water. EBR’s Tewedaj Sintayehu spoke to the medical doctor turned businessman. Excerpts:
EBR – How did you go into business after graduation?
Dr. Mohammed: Ever since I lost my mom because of the unavailability of pharmaceuticals, I developed the conviction to change pharmaceuticals supply in the country. I felt that sticking to treating patients only was limiting myself. I graduated with that line of thought. Therefore, I declined an offer to teach at Jimma University and the alternative course of being assigned at a hospital in a remote part of the country. I wanted to stay in Addis Ababa because it is the economic hub with numerous opportunities. Therefore, I decided to work part-time at a clinic in Addis Ababa. By doing that, I took the biggest risk in my life. It was a shifting point in my life.
Parallel with my part-time work at a clinic, I joined a group of businessmen. The group mainly comprised of old friends who had already been in business. That is how my business career started.
EBR – Does that mean you agree with people who claim education does not pay?
Dr. Mohammed: No. Certainly not. Honestly speaking, graduating as a medical doctor has helped me a lot in my line of business. I wholeheartedly believe education is the base for everything, especially in this rapidly changing digital world.
EBR – How was your start in business?
Dr. Mohammed: It was really challenging. Before shifting into business, I had to convince myself first. Despite my family and friends incessantly pressurizing me and claiming I was crazy for shifting at that moment, I believed in myself to live my dreams. My strong belief in myself is probably one of the crucial elements that pushed me along this path. I remember saying back then that I had to set up a company that imports important pharmaceuticals ignored by others. I envisioned the MedTech I have now twenty years back. That is why MedTech was the first company in Ethiopia to import anti-HIV drugs. We now provide 20 medicines with low prescription rates and thus could not easily be found in the country. These medicines include those of cancer and dialysis.
When I started up in business, I joined a group of friends who went to Dubai to import some items they could sell here. So, I started out with a simple trading activity of importing non-pharmaceuticals products. When I went to Dubai accompanying my friends with help from my brother to study the items I could import, I met the company that produced ‘Fine’ tissue paper. I ended up being the first person to introduce that tissue paper in Ethiopia. I made some money off it and a year after I graduated, I opened a small pharmacy called ‘Royal’ near black lion hospital on the way to Teklehaimanot. I used to stand at the counter and sale pharmaceuticals in that pharmacy. The pharmacy grew rather fast as people started to appreciate the medical advice I gave them and preferred to buy from me. The medical profession also helped me identify which products to look procure.
EBR – After starting up a business, another challenge people find difficult is sustaining and expanding it. How did you manage that?
Dr. Mohammed: You see, you don’t have to use that word ‘difficult.’ The moment you think it is difficult, it becomes just that. That is an important point. For most of us, the problem starts from ourselves. We paralyze ourselves with simple thought. When we don’t have the courage to try new things, we say that thing is impossible. But anything new we have to learn faces us with difficulties. Having the mental stamina to face up to the difficulties is like getting through half of the actual job.
To come to your question, Royal pharmacy was a retail business. I bought imported pharmaceuticals and sold them with a bit of profit. After building up my financial capacity, I sought to import medicine myself. Then, I checked the regulatory bodies for the criteria I have to fulfil.
I travelled to Dubai quite a number of times by then and my new plan required that I go to the Far East. I organized a tour of nine countries; including: China, Hong Kong, South Korea, Malaysia, Indonesia and Singapore. The purpose of my one-month tour was to find companies that produced products fit for the Ethiopian market and that could accept me as their agent. I made a number of deals in that business tour although I did not start MedTech by then. Once I got in contact with all those companies and collected a huge data, I got back and started MedTech on a 75m2 plot of land in my father’s house with five stuff members with a registered capital of ETB500,000.
Once MedTech was established, we used the data and deals I had from my trip to import pharmaceuticals for Royal pharmacy and for others as well. I later opened another pharmacy. A year after that, I established Zenbaba General Hospital in collaboration with my friends.
Therefore, expansion of businesses requires that we first raise our financial capacity, know the next level of service or production we can venture into, find out about the regulatory demands, identify partners, forge working relations with them and invest in the expansion.
EBR – With the expansion of your businesses mature now, you have MedTech Ethiopia, Julphar Ethiopia, EPHARM, Enat Engineering, MedTech real estate and Konjo water. Managing a single company is daunting enough on its own; how do you live up to the challenge of managing all these companies?
Dr. Mohammed: You don’t manage all your companies on your own. You have to let others manage your company. Under such conditions, you don’t hire people to manage them; you hire them to manage your companies. We have a modern system in place and we have professionals to run the system. Professionals with the educational skill and personal attitude can work miracles in a modern system. With all these things in place, it is not as complicated as you think it is.
In a country like our where professionals are scarce, it is quite a challenge to put in place a system that optimizes your work. High level professionals, especially in the pharmaceuticals field, are very scarce in Ethiopia. Under such conditions, allotting due attention for your work and head hunting the right people to manage your company are very important. Once you get that person, you have to empower and motivate them to feel that they are managing their own company. I think that is one of my strong traits. I don’t treat people as employees but as part of my family. The rewards you give should not always follow the benefit schemes in one’s contract. The things you do for your family are not limited; therefore, going beyond the legal limit stated in the contract helps create a special relationship.
EBR – Do your engagements negatively affect your family life?
Dr. Mohammed: a tough question to answer but of course they do. If you are busy, you are using the time you could have spent with your family. As the time you spend on your job increases, therefore, you are taking off some time from your quality time with your family. But in another way, spending a lot of time at work might have a silver lining as children would feel proud about the success of their parents. The fact that they see me on Tv or on some publications, makes them feel like my engagements have been worthwhile. So, there are also a lot of positives in family life that come out of being busy. In general, being busy can have both negative and positive effects on family life.
In my case, I spend time with my children every day and on weekends. I budget my time to make sure that I have quality time with them. But I have missed some family trips because of business engagements and they understand that.
EBR – Are all your companies profitable on their own or do you juggle resources from more profitable ones to keep some afloat?
Dr. Mohammed: in business you make profit some years while you lose in others. As MedTech is the conglomerate under which the rest of the companies fit in, its profitability is the cumulative effect of the performance of all companies. MedTech is profitable. However, profitability in terms of numbers is only one part of my understanding on profit. For me, contributing something positive to the public, discharging one’s social responsibilities and creating job opportunity to citizens are also in the profit mix. Therefore, based on such parameters, all my companies are profitable. As we are living in a country that is one of the poorest by African standards and has an unemployment rate of above 20Pct, creating job opportunity for around 2,000 people who are my fellow citizens is a profit for me.
Appropriating resources from a profitable company to others that are not as profitable is one of the biggest problems a businessman needs to take caution of. Each company needs to be treated independently. If you take your gains from one company and dump it on another that is not profitable, the net effect will pull down the profitable company. We had that kind of experience but we have learned through time. Now, we run each of our companies independently.
EBR – What has been the role of your pharmaceuticals companies in fighting the Coronavirus pandemic?
Dr. Mohammed: A day after the first case of COVID-19 was discovered in Ethiopia, we started – not making – but selling sanitizers. For a company like EPHARM, the production of sanitizers is a very small-scale activity as it produces over 80 medicines. We also produce face masks. We provide 20pct of the sanitizers we produce for free while face masks are also given away for the needy.
EBR – Private local pharmaceutical companies have a very low performance rate in seeing out their contracts with the Ethiopian Pharmaceuticals Supply Agency (EPSA). The performance for most local pharmaceutical companies is below 50%. What is the reason behind the poor performance and what are you doing to change the situation?
Dr. Mohammed: In general, private local pharmaceuticals companies are not performing up to expectation. Local pharmaceuticals manufacturing companies produce almost 10pct of the pharmaceuticals demand in the country. 90pct of the country’s demand is fulfilled through imports. One of the main reasons for this fact is that there are only about 10 pharmaceuticals manufacturing companies in the country. Just to put things in perspective, Kenya has more than a hundred pharmaceuticals manufacturing companies serving its 40-45 million population. With over two folds of that population, Ethiopia has only 10pct of the pharmaceutical manufacturers.
Another key problem is that Ethiopia has an acute shortage of foreign currency. In pharmaceuticals business, nearly 95pct of the raw materials have to be imported. It is a pity that we don’t have a single pharmaceuticals raw material manufacturer in the country. Everything has to come from abroad.
On top of these fundamental problems, governmental expectations are illogically high. They expect the companies to cover 50pct of the local demand.
EBR – Pharmaceuticals along with Petroleum are the two priority import products in the country. It is common understanding that these products are prioritized in accessing foreign currency.
Dr. Mohammed – But the facts on the ground are different. I want to get the message across that we sometimes wait for over a year to access foreign currency. Although pharmaceuticals are among the priority list, the fact is that it is not treated along that line. We have a real problem of foreign currency. In the case of our company MedTech, we have been exporting non-pharmaceutical products such as live animals, cereals, lentils, Niger seed and others to secure some of our foreign currency demand. As only some portion of our foreign currency demand is fulfilled through such activities, we are not in a position to manufacture pharmaceuticals at an optimum level. That is one of the causes for EPSA’s frustrations. Our combined contract of about a billion birr a year has gone down significantly this year as local pharmaceutical manufacturers are not willing to take additional orders in this year of pandemic in relation with capacity limitation issues. Therefore, the issue is set to continue unless the government provides us with a huge support in accessing foreign currency. As a way out, I suggest the government focus on availing Active Pharmaceuticals Ingredients (API) either to be manufactured locally or to be availed through special foreign currency provision mechanisms.
EBR – Countries such as India have changed their local pharmaceuticals manufacturing around by kicking out foreign companies and providing local manufacturers with the chance to grow. India has since gone on to become the third pharmaceuticals exporting country in the world. Do you see any scenario in which the situation could be the same in Ethiopia?
Dr. Mohammed: the case is also the same in Bangladesh as they have taken huge steps to support local manufacturers. They have also banned pharmaceuticals that are adequately manufactured locally from being imported. Such policies have allowed local manufacturers to flourish. I believe our government needs to look at such positive measures by countries like India and Bangladesh and adopt them. About seven years ago when we opened Julphar Ethiopia, three or four local pharmaceutical manufacturers closed down because they couldn’t compete with imported pharmaceuticals from India and China. The governmental support was very poor and that spelled one of the worst times for pharmaceuticals manufacturers in Ethiopia. The fact that Julphar opened then raised the confidence in the sector and encouraged others to join the sector. The government later learned of the problems and decided to introduce some incentives. The business environment is not conducive these days as well; therefore, the government needs to provide incentives.
EBR – What recommendations do you make for the government to change things for the better?
Dr. Mohammed: As policy issues such as the prioritization of pharmaceuticals in accessing foreign policy are already there, I suggest they are implemented strictly. The pharmaceuticals roadmap formulated by the Ministry of Health is really good but there are implementation problems. Another point I want to raise here is that the government needs to find a way for Active Pharmaceuticals Ingredients (API) to be manufactured in the country. If it doesn’t find better arrangements, the government should invest in it itself.
EBR – Experts claim that some pharmaceutical products such as thermometers are easy to manufacture. Do you have any plans to venture into the production of such medical items?
Dr. Mohammed: We just started the production of not thermometers but other medical equipment and supplies. At MedTech, we also import laboratory reagents, hospital furniture, hospital supplies, medical equipment, x-ray and ultra sound machines. I always felt that some of the equipment are mechanical and can easily be made locally. For instance, hospital beds, delivery couches, IV stands, screens and the like can be easily made in Ethiopia. One of our sister companies, Enat Engineering, is designed to manufacture the long list of such products locally. We will have our products in the market in a month’s time. Through the process, we would be substituting our imports and saving our limited foreign currency for products we cannot manufacture locally.
EBR – The National Bank of Ethiopia (NBE) is preparing to launch a stock market in two years. Do you see your companies being enlisted on the stock exchange?
Dr. Mohammed: Yes. We are unlucky that we don’t have a stock market in Ethiopia. I hoped that stock market would be started by now. Stock market has got a lot of benefits to the business community in particular and the country at large. I took a training in stock market exchange which was organized by Lincoln University and hosted by Addis Ababa University. I’m one of the business people in Ethiopia who are eagerly waiting for a stock market to be launched. EPHARM and MedTech would surely be enlisted once it gets operational.
EBR – Have you laid off some work force after acquiring EPHARM through privatization? Has it been more profitable since you have acquired it?
Dr. Mohammed: We tripled EPHARM’s turnover in the first year of acquisition without laying off any employees. On the contrary, we raised the benefit packages of employees a minimum of 60pct and maximum of 150pct. Up on acquisition, we decided to keep all the workers and invest in new machinery. The change in technology was vital towards raising productivity and thus organizational turnover.
EBR – What is in stock for you pharmaceutical companies going ahead?
Dr. Mohammed: EPHARM’s vision is to become among the top three pharmaceuticals manufacturers in East Africa in the next ten years. That is an ambitious goal to set. Therefore, we are carrying out half a billion birr worth of expansion work that can potentially double our production capacity. We have hired an international consultant to make sure that we become a GMP approved company. GMP approval is vital in acquiring international recognition and our company is going to achieve that once the expansion work is completed. We want to start new production lines as well. We are also working on research and development to bring new products to the market and to EPHARM as well.
EBR – Finally, what do you think are the vital ingredients of success?
Dr. Mohammed: For me, the first thing is a strong belief in oneself. Then comes knowledge of the type of business to delve into. Being passionate about your job and commitment are also very important. One should also not be afraid to fail.
9th Year August 30 – September 30 2020 No. 90