Adcock eyes new opportunities

Johannesburg - South African drug maker Adcock Ingram is eyeing expansion opportunities in India and East Africa and is also planning to bolster its fast-moving consumer goods (FMCG) portfolio.

Adcock, which was unbundled from Tiger Brands in 2008 and in the process lost its FMCG products, is seeking new revenue streams after failing to buy its smaller rival Cipla Medpro.

"We're aggressively looking at East Africa for expansion," Jonathan Louw, the company's chief executive officer, told reporters at a briefing on Tuesday. The company plans to sell branded over-the-counter medicines in its Africa expansion drive.

Louw said that the company was also scanning India for expansion opportunities.

"We've been looking very closely at India in the past year," Andy Hall, the group's chief financial officer, said.

During the unbundling, Adcock gave up most of its FMCG items such as Ingram's Campher Cream and it is now planning to compete with former parent Tiger Brands in some areas.

"We cannot be like Tiger Brands but we'll compete with them on certain categories of FMCG," Louw said, adding the long-term plan was to double the sales contribution of FMCG to 20%.

Stepping stone

Adcock, the biggest over-the-counter medicine maker in South Africa, bought personal care and supplements business TLC earlier this year, which Louw said would be used as a stepping stone to launch other personal care products.

In June Adcock scrapped a R2.1bn plan to buy Cipla Medpro, dashing hopes to boost its share in the fast-growing generic market and bolster its respiratory portfolio.

The deal would have allowed it to compete more effectively with larger rival Aspen, which embarked on a string of deals aimed at strengthening its international operations.

The company, which reports year-end results next month, had seen its generic drugs business hold up well thanks to strong volume growth in anti-retrovirals, Louw said.

But sales of OTC products such as Compral came under pressure as a recession in Africa's biggest economy forced consumers to scale down in pack sizes or move to lower-priced brands, he said.

"When people can't afford, we saw a huge downtrading in OTC markets, but trusted brands such as Panado are doing well," Louw said.

Adcock, which has announced plans to sell a stake to black investors as part of a government affirmative action drive, would make an announcement by the end of the calendar year, Louw said.

The deal would include its own black staff as well as strategic shareholders, including black investment groups.

- Reuters