Interview: Emmanuel Katongole, Chief Executive Officer (Quality Chemicals Industries Ltd)

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Mr. Willy Mutenza talks to the Chief Executive Officer of Quality Chemicals Industries Ltd, the first African WHO-certified pharmaceutical manufacturing plant of malaria and HIV medicine, based outside Kampala, Uganda.

Promota: Why did you start Quality Chemicals and why particularly the Anti-viral drugs?

Emmanuel Katongole: I guess you mean why we started Quality Chemical Industries Ltd, which is the manufacturing concern and a separate entity from Quality Chemicals Ltd which is one of the major shareholder in Quality Chemical Industries Ltd. (QCIL)

The Quality Chemical Industries project was born of the cognisance that India, the biggest source of pharmaceuticals for Africa, will soon cease to be a reliable source of affordable essential medicines due to its ratification of the Trade related Aspects of intellectual property rights (TRIPS) of the world trade organisation (WTO). This changed status posed a very big risk to Uganda and Africa in their effort to provide medicines to their people. Africa needs low cost, efficacious, safe and relevant pharmaceuticals. India and China’s ratification of TRIPs threatened this.

So, Quality        Chemicals Ltd, working closely with the government of Uganda, secured a critical technology transfer agreement from a world class generic manufacturer Cipla Ltd. This enabled us as a least developed country (LDC) to take advantage of flexibilities within the TRIPS agreement that allow LDCs to copy patented drugs. This is how this project was conceived.

Promota: What did the Investment from TLG Capital mean for Quality Chemical Industries?

EK: Our biggest motivation to match up with TLG was not the money, though it was also helpful, but the added value we expected to gain. The following are the major reasons:

The investment from an experienced investor of reference reflects well on the company, its management and the country.
With Mr. Zain Latif joining our Board, QCIL would be introducing an experienced investment banker, knowledgeable regarding all aspects of international investment banking to assist with financial strategy.

In a nutshell, partnering with TLG raises our probability of success and this is the biggest reason we brought them on board.
Promota: What does the launching of a new ARV pill mean to the patient?

EK: The new ARV pill we hope to launch soon is the one pill a day fixed dose combination. This pill improves on the existing ones in the following ways:

  • It is a fixed dose combination consisting of 3 drugs in one pill. This helps reduce the pill burden because instead of taking 3 pills, one has to take only one.
  • It is taken once a day which means a lesser risk of forgetting to take it and hence improving on adherence to treatment which is key to successful therapy.
  • It is cheaper than if one bought the 3 pills separately. Affordability means It is utterly unrealistic to expect the very many competitors to collude to deny the masses a cure.

Promota: Do you think there is a conspiracy by drug manufacturers not to come up with a cure in favour of monetary  benefits?

I don’t believe this is so because:-

  • All companies are competing to be the first to produce a cure as the first to this milestone would reap huge benefits.
  • There is a lot of pressure from social groups to lower prices to the extent that AIDS drugs are no longer profitable. So, the monetary benefit is not that great.
  • Aids has many other social and economic consequences like the killing of the productive class, the orphaning of so many children and  the bankrupting of poor economies. So, denying people a cure may have even more severe negative consequences.
  • For us in Africa at the forefront of this war against AIDS, it would be genocide to put profits before lives. If ever such collusion existed, it would be a matter of time before the culprits are found out and brought to book.

Promota: Do you find patenting stringent or restrictive to third world countries?

EK: Patenting is a necessary evil if innovators are going to be motivated to keep investing in research and development. Coming up with a new cure is a very expensive business and innovators must be protected to enable them recoup this cost. However, for the third world, it is a fact that we cannot afford the innovator drugs. It is also, however, true that some of these new molecules are essential and critical also to the poor. So, flexibilities in the TRIPS law are designed to address this very problem.

Promota: How do poor people suffering from HIV afford your drugs?

EK: We have three categories of patients and it is along these lines that the market is segmented.

  • About 10% can afford out of pocket.
  • About 40% can afford with subsidies from employers, NGO or family.
  • About 50% cannot at all afford and depend on Government with the assistance of donors to help them with free drugs.

The government of Uganda has committed itself to provide free ARVs to all those in need of them but who cannot afford. This is a huge undertaking and it is crippling an already resource constrained economy.

Promota: How is the government responding to challenges of combating the Malaria and HIV/AIDS crisis in Uganda?

EK: Uganda was the first country to subdue the incidence of AIDS by bringing it from highs of 30% prevalence to the current 6%. This was achieved mainly through education and making a lot of noise.

  • Uganda was also one of the first countries to join the Roll Back Malaria initiative of the WHO. Through this programme it has managed to cover a huge portion of its population with insecticide treated mosquito nets.
  • Uganda was one of the first African countries to adopt the Anti-retroviral therapy strategy against HIV/AIDS.
  • Uganda is the first country to take full advantage of the flexibilities in the TRIPS agreement to locally manufacture drugs so as to ensure a sustainable supply of good quality, affordable medicines. This Ugandan plant is the first to be WHO pre- qualified in Sub-Saharan Africa.

So Uganda is doing very well when it comes to fighting these and other diseases.

Promota: A documentary on BBC TV portrayed Uganda as having the worst and most neglected health care structure and system in Africa How would you describe Uganda’s health care system?

EK: I have not seen many healthcare systems first hand in the rest of Africa but I would not say Uganda’s is that bad. Of course we lack the resources to put our health care system to the standard we would wish for. There is a lot we lack especially in terms of equipment and infrastructure. Salaries for healthcare staff also leaves a lot to be desired. I think the Government is doing the best it can within the resources it has. Past political turmoil in the country also meant that during a 20 year period we retrogressed while the rest in Africa was progressing.

Promota: What would you advise government to improve access to affordable drugs by its people?

EK: Government should create a vibrant private sector by proactively supporting private investors in health. Through a public private partnership, Government should help equip private hospitals with key equipments. Very few private hospitals can afford the kind of investment required to equip the hospital as the payback period is too long. Government would save a lot more by providing this equipment to proven investors.

Promota: Quality Chemical Industries Ltd was voted investor of the year. What did this mean to QCIL?

EK: It meant a lot because it means that people appreciate the benefit we are bringing to the country. Other than the reduction in the morbidity and mortality  due to the two deadly diseases, this project has other attendant benefits to the economy of Uganda including:-

  • Employment generation
  • Forex generation
  • Generation of taxes for national development
  • Creation of self reliance in the supply of these key remedies

It is the combination of these that drove the people of Uganda to recognize our contribution and we are very grateful and humbled.

Promota: To maintain standards of products from QCIL, how do you recruit experts. Do you source them locally?

EK: We have a lot of local talent and 90% staff are locally sourced. We however have a core 10% made up of expatriates from Cipla and their duty is to transfer technology and know-how to the local folks. After the locals gain the requisite experience, we shall gradually reduce the expatriate staff.

Promota: Do you produce adequate supplies for the local market to sustain QCIL?

EK: We are currently operating at 30% capacity and this is because the Ugandan whole market is about 50% of our current capacity but it is partly funded by donors who are yet to purchase from us. We hope to increase our capacity utilization by expanding to the region and once we reach our optimum, we shall expand the capacity by putting up the 2nd phase which would more than double the current capacity.

Promota: If you are appointed the Minister of Health, what three things would you change and why?

EK: I would refuse any donor aid that is not developmental in nature. I would say no to aid that does not make future aid unnecessary. The beggar culture has failed us and it must be rejected. We need a hand up, not a hand out and many donor programmes come with conditions attached which make us forever dependent.

  • I would co-opt the private sector more in the provision of goods and services. I would privatize government hospitals to make them more efficient and hence more effective.
  • I would re-introduce cost sharing by patients so that we remove those who can afford and remain with only those who can ill afford. Otherwise we are currently wasting the meagre resources on people who can afford.

Promota: How do you compete with cheap drugs from India and counterfeit products?  Is there any measure to help you combat this challenge?

EK: In real terms, India is not that cheaper than us. We are discovering that the cheapness is actually artificial due to the huge export subsidies the Indian Government and indeed China gives to its companies as a way of buying markets/ exporting unemployment. Governments in Africa have not been so keen to stamp out this as they needed very cheap drugs. However, as we start developing our capacities, we are insisting more on fair trade and African governments are coming up with measures to levy punitive taxes on countries that subsidise. As for counterfeits, we have a very strong drug regulatory agency that is fighting this.

Promota: How do you see Uganda in five years from now in terms of market expansion?
EK: Uganda has a lot of promise. Hoping that oil will not be a curse as is the case in many oil producing countries. We hope to use this to develop our infrastructure like roads, railways, air travel, utilities like electricity and water, etc all which will positively impact our cost of production. We shall then invest in our agriculture and industrialise our economy which will impact  household incomes, create food security and grow the economy. With regions integration and intra-African trade, we shall seek to sell to others more than we import from them. The natural resources we have are huge, we are a sleeping giant that is slowly waking up. Maybe a bit too slowly.

Promota: Would you like to use this opportunity to get any particular message across?

EK: To the rest of the world, Africa is the next frontier for investment. Nowhere else can so little investment go so far, and the returns be so great. The momentum is unstoppable and the time to invest is now. Come and invest with us.

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