Pharco Lab - Business Plan n0v. 09

PHARCO LABORATORIES (NIGERIA) LIMITED.
BUSINESS PLAN
FOR
REENGINEERING & EXPANSION
OF THE
PHARMACEUTICAL PRODUCTION PLANT
NOVEMBER 2009
PREPARED BY:
SOWANDE KAFIDIYA & CO.
[CHARTERED ACOUNTANTS]
7 SULE ABORE STREET,
OFF ISHERI ROAD, OJODU.
P.O. BOX 2858, YABA, LAGOS.
TEL: 08033032924, 08033161310
E-MAIL: sowkaf2005@yahoo.com.au
Business Plan for Pharco Laboratories (Nigeria) Limited
World of pharmacy
Sowande Kafidiya & Co.
Page 2
Upholding the Quality Tradition

Total
commitment to being a leading pharmaceutical

manufacturing company providing quality service and
products through utilization of appropriate technologies
and skills, as a basis for continued growth and optimum
returns to all stakeholders.
Page 3
CONTENTS
PAGE
1.0
Executive Summary
2.0
Background and Socio-economic Analysis
11
3.0
Technical Plan and Capabilities
18
4.0
Production Plan
24
5.0
Market Potentials and Marketing Plan
26
6.0
Management and Organisational Plan
33
7.0
Financial Plan and Analysis

Projected Cost/Finance
36
Projected Financial Position
37
Projected Operating Statement
38
Projected Cash Flow
39
Notes to Financial Projections
40
Financial Schedules
41 52
Industrial Analytical Review
53 55
Page 4
1.0
1.1
EXECUTIVE SUMMARY
Introduction
A recent study on the pharmaceutical and health care products market
in Nigeria revealed that the total drug market will increase from USD
655 million in 2008 to USD 695 million by 2013 representing a
compound annual growth rate (CAGR) of 1.8% in US Dollar terms and
3.24% with respect to Nigeria Naira. The main drivers for growth are the
various programmes that have been implemented to increase health
awareness and primary health care uptake. The promotion of the
national health insurance scheme (NHIS) is also expected to see
renewed drive from the government, which will further boost
pharmaceutical spending. It is expected that public health care
expenditure would rise from USD 7.3 billion in 2008 to USD 8.3 billion by
2013. Furthermore, Pharmaceutical Manufacturers Group of the
Manufacturers Association of Nigeria has set a target to locally
manufacture 80% of drug demand in Nigeria by year 2015.
The market operating environment and prospects have been improving
steadily in recent years with increasing capacity utilization and return to
profitability of many pharmaceutical companies. These have reinforced
the confidence of investors in the pharmaceutical industry as evidenced
in the continuous upward movement in the share prices as well as
considerable capital appreciation of the pharmaceutical companies
quoted on the Nigerian Stock Exchange. In addition, many multinational
pharmaceutical companies who were on the verge of collapse and/or
exiting from the country are now rejuvenated and doing very well in the
pharmaceutical industry in Nigeria.
1.2
Corporate Background
Pharco Laboratories (Nigeria) Limited (RC. 77162) was incorporated as a
private limited liability company under the Companies Act 1968 on 17 th
day of September, 1985 and commenced production in 1999.
The initial authorized share capital of the company was 500,000
ordinary shares of N1.00 each, but has been increased to 7,495,000 in
July 1989 and to 10,000,000 shares of N1.00 each in November 2005.
All the shares have been fully paid.
The companys main objectives are to carry on the business of
manufacturers, refiners and dealers in various kinds of drugs. The
company intends to concentrate on generic products which form a
higher percentage of Nigerian National Drug formulary and Essential
Drugs list.
Hitherto, the company was producing Pharco Paracetamol, Pharco
Vitamin C, and Pharco Ampicilin Syrup; and engaged in contract
manufacturing of products for other companies. Presently, the company
is undergoing reengineering and upgrade of all its facilities to enhance
Good Manufacturing Practices (GMP), quality and capacity.
Page 5
1.3 Project goal

At all levels of Government (federal state and local) in Nigeria,
healthcare continues to be a critical issue. The National Drug Policy sets
a target for 70% of the country's demand for drugs to be met by local
industry. Further, the recent ban on importation of some pharmaceutical
products by the Federal Government of has increased the demand gap
in the pharmaceutical industry.
Pharco Laboratories Nigeria Limited is poised to take advantage of the
growth in the pharmaceutical industry hence the need to recapitalize,
reengineer and reposition the company to the path of growth and
profitability.
The objective of this plan is to recapitalize the company for provision of
adequate working capital, reengineering the production process and
capacity, as well as expansion of the scope of operations; and as such
giving the company a quantum leap in income generation capacity.
These will include:
Completion of the second phase of the reengineering project

Equipping the second granulation suite
Large scale procurement of raw materials for production
Further enhancement of the quality control laboratories
Development and marketing of more products
Improved working capital
Expansion and enlargement of the market coverage
1.4 Technical Plan and Capabilities

The enforcement of strict quality standards is the basic factor setting
the pharmaceutical industry apart from other manufacturers.
The company will continually ensure that all processes covering receipt
of materials, production, packaging, repackaging, labeling, relabeling,
quality control, release, storage and distribution of drugs and the
related controls comply with Good Manufacturing Practices at all times
and for all products. Further, all manufacturing processes must be
validated and reproducible.
The factory and facilities have adequate space for the orderly
placement of equipment and flow of materials and personnel to prevent
mix-up or contamination. All equipment is of appropriate design,
stainless steel and suitably located for use, cleaning, and regular
maintenance. Control, weighing, measuring, monitoring and testing
equipment critical for ensuring the quality of products are calibrated
according to standard and verifiable procedures.
In view of the importance of quality maintenance and management, the
company has established effective system that involves the active
participation of management and appropriate manufacturing personnel.
The system revolves round the Standard Operation Procedures (SOPs);
Page 6

and an independent quality unit that fulfills both quality assurance (QA)
and quality control (QC) responsibilities.
Adequate facilities and materials are also provided for necessary
chemical and microbiological tests on raw materials and each batch of
products to determine compliance with specifications.
1.5
i.
Market
Global Situation
Today, modern effective drugs are available to combat virtually all
known diseases with exception perhaps of one or two. Drugs remain
the most effective technology used to manipulate the well being of
man, providing the means of diagnosing and treating diseases without
undue subjection to surgery.
Drugs now form part of a rational
approach to disease treatment that has spread throughout the world, to
the extent that, even in the remotest parts of the world, people
consume modern drugs.
The average growth rate in drug consumption in the world for the last
few decades was said to be 11.9 per cent annually. However, according
to WHO report, the value of world consumption of drugs increased
dramatically in recent years.
ii.
West African and Nigerian Pharmaceutical Market

West Africa sub-region comprising of Nigeria, Ghana, Cote D Voire, Togo,
Niger among others and with about 250 million people is almost a third
of the whole of Africa.
The West African pharmaceutical market is highly integrated with the
Nigerian market being a major distribution centre for the whole subregion. Although there is a strong presence of pharmaceutical
manufacturers in the sub-region, currently with over 200 active
manufacturers, imports of finished pharmaceutical products currently
accounts for over 60% of the pharmaceutical supplies.
According to IMS forecast, Nigerias pharma market alone is worth about
$2.5 billion serving 150 million Nigerians, while the pharmaceutical
market in the whole West Africa sub-region has been growing at
between 5% - 7% annually. The market is expected to rise steadily in
the next few years.
1.6
Marketing Plan
The company would have a marketing department that would
concentrate on marketing of the companys products and services.
Various strategies would be adopted in marketing the companys
products and services such as dividing the country into regions and
each region would have marketing teams selling and marketing the
companys products and services within their regions. Also the services
of drug distributors would be engaged to service the market.
Page 7

Our recent findings from a survey conducted in the open market and
inquiries from institutions revealed that the name Pharco is popular. We
intend to promote our products mainly by giving our customers
guarantees on the quality of the products.
We shall also encourage our distributors to buy large quantities, by
setting targets with accompanying rewards and by graduated discounts
allowed on volume sales.
These will be backed by aggressive advertisement and publicity
campaign to create continuous public awareness about the companys
products.
1.7
Management/Manpower
The directors of the company are respectable Nigerians who have
distinguished themselves in their professions and various areas of
human endeavours. Names of the directors are as follows:
Mrs. J. O. Lokulo-Sodipe
Mr. B. O. Alaka
Alhaji S. A. Olopoenia
Rev. E. A. Adeniji
- Managing Director
The Managing Director heads the management Executive Committee.

The committee is responsible for the daily operation of the company.
1.8 SWOT and Risk Analysis

i.
Strengths
World class stainless steel plant (new & fully refurbished) with sound,
dependable and high performance production technology.
High quality production practices and documented processes of
international standard.
Fully equipped laboratory and sound quality control processes.
Production of own plastic bottle packaging materials from existing
own plant.
Well known name in the industry and market goodwill with major
distributors.
Highly committed and experienced management
Experienced input procurement and technical (maintenance and
production) personnel.
Established local and international relationships spanning over 20
years within the industry.
Broad product base with additional formulations
Well documented processes
Loyal and dedicated staff
ii.
Weaknesses
Inadequate working capital for optimum utilization of material and

human resources and attendant low operating performance.
Loss of some experienced hands due to recent upgrade which is

nearing completion.
iii.
Opportunities
Page 8
Improving world and local operating environment and performance

prospects.
Government commitment towards local production of drugs as
embedded in the national drug policy which sets target of 70% local
production.
NHIS (National Health Insurance Scheme) directed towards
improving health care in the economy thus boosting drug
requirements in the country.
Ban on importation of certain drugs and concessionary tariffs for
pharmaceutical raw materials and equipment by the Federal
Government.
Improved vigilance, reinforced surveillance and controls by NAFDAC
against fake and counterfeit drugs being imported into the country;
and in ensuring good manufacturing practice by stakeholders in the
country.
Improving prospects/profile for the Nigerian pharmaceutical industry.
SMIEIS and similar arrangements for improved funding and
management support of small/ medium scale enterprises.
Future plant upgrade and expansion into production of major
international pharmaceutical brands under license.
Potentials for commercial production of plastic bottles for sale to
other pharmaceutical manufacturers and the public from existing
own plant.
Facility and potentials for the production of table/packaged water.
Partnership /Franchising with foreign leading pharmaceutical
companies across the globe
iv.
Threats
Porous Nigerian borders and loopholes in the Nigerian Customs
Service which can reduce the effectiveness of the ban on
importation.
Unstable/unfavourable/unpredictable government policies.
Vagaries in foreign exchange rate and attendant effect on
importation of raw materials.
Multiple taxes on manufacturers.
Lack of regular electricity supply and high dependence on diesel
powered generating sets with attendant increased operating costs
due to scarcity and high cost of fuel.
Finance industry liquidity crisis and global meltdown.
1.8
Project Cost/Finance
As reflected in the financial projections, the following are the
proposed financial requirements for the reengineering project
(See Section 7.0):
YEAR 0
N000
Initial expenditure on Assets:
Already acquired
YEAR I
N000
TOTAL
N000
655,732
655,732
Additional required
Initial
Working
77,090
Capital
50,00
0 127,090
188,000
Page 9

-
requirement
Total
920,822
188,000
50,000
970,822
The proposed financial arrangements are as follows:

YEAR 0
N000
Promoters Contributions
YEAR I
N000
553,930
Existing Term Loan
101,802
Proposed Additional Term Loan

Short Term Facilities
Total
553,930
(101,80
2)
77,090 150,000
188,000 1,802
920,822
TOTAL
N000
227,090
189,802
50,000
970,822
1.9 Financial Analysis

Detailed financial/economic projections and analysis are
covered under Section 7.0 of this report. Highlights of the
Projected Operational Performance are:
YEAR I
N000
YEAR II
N000
YEAR III
N000
YEAR IV
N000
YEAR V
N000
901,280
1,171,664
1,685,392
1,853,932
2,039,325
Operating Profit
52,975
111,418
212,325
238,305
264,530
Profit before tax
(19,817)
30,071
159,257
195,466
249,777
Profit after tax
(19,817)
19,546
103,517
127,053
162,355
(3.58)
3.53
18.69
22.94
29.31
Turnover
Earnings
(kobo)
per
share
1.10 Conclusion
Page 10

With additional injection of funds mainly for working capital purposes,
the project is technically feasible, financially/economically viable and
socially desirable.
These assertions are well supported and confirmed by the projections
and assessments in the subsequent sections of this Business Plan.
Page 11
2.0 BACKGROUND AND SOCIO-ECONOMIC ANALYSIS

2.1
Corporate Background
Pharco Nigeria Limited was established in 1959 and carried on business
as an overseas pharmaceutical manufacturers representative for about
35 years. Pharco Nigeria Limited had branches scattered all over
Nigeria, marketed and sold a variety of pharmaceutical products such
as Orheptal Tonic, Metakelfin, Sorbosan, Ultragrunovit, Milupa, EntroSediv, H115 antifungus e.t.c. which were imported from abroad. The
name Pharco is well known in the pharmaceutical industry.
Pharco Nigeria Limited had to go into backward integration by founding
a manufacturing company to service its trading outlets thus Pharco
Laboratories Nigeria Limited was borne.
Pharco Laboratories (Nigeria) Limited (RC. 77162) was incorporated as
a private limited liability company under the Companies Act 1968 on
17th day of September, 1985 and commenced production in 1999. The
initial authorized share capital of the company was 500,000 ordinary
shares of N1.00 each, but has been increased to 7,495,000 in July 1989
and to 10,000,000 shares of N1.00 each in November 2005.
The shareholders/directors and their shareholdings in the company are
as follows:
NAME
STATUS
Mrs. J. O. Lokulo Sodipe

(for Pharco Nigeria Limited)
Mr. B. O. Alaka
Rev. e. A. Adeniji
Staff of Pharco Laboratories (Nig.)
Ltd.
Total Shares Allotted (at February
Director
Director
Director
Director
Shareholders
28,2006)
SHAREHOLDIN
GS
4,000,000
2,500,000
2,000,000
500,000
1,000,000
10,000,000
All the shareholdings have been fully paid. Besides the usual restriction
on the transfer of shares in a private company, there are no unusual or
other restrictive clauses in the Memorandum and Articles of Association
of the company.
2.2
i.
Business Activities
Primary Objectives
The companys main objectives are to carry on the business of
manufacturers, refiners and dealers in various kinds of drugs. The
company intends to concentrate on generic products which form a
higher percentage of Nigerian National Drug formulary and Essential
Drugs list compared with specialty products and branded generics.
ii.
Current activities
The company until October 2007 was into production of the following
products:
a.
b.
Pharco Paracetamol
Pharco Vitamin C
Page 12

c. Pharco Ampicilin Syrup
The three products then contributed only about 20% of the total income
of the company. The income generated from the companys products
was low due to lack of adequate working capital to install the
uninstalled machines, finance own production and facilitate viable
utilization of plant capacity.
iii.
Contract Manufacturing
Pharco Laboratories Nigeria Limited also engaged in the manufacturing
of products for other companies for a fee and this contributed majorly
to the companys income. The company was then manufacturing for:
a. MEDFOD Nigeria Limited
b. NASDMU (Nigeria Army Small-Scale Drug Manufacturing
Unit)
c. Clenton Investment Nigeria Limited
d. Vitamedix Nigeria Limited
Services rendered to the contract customers include Granulation,
Tabletting, Blistering, Stripping, Encapsulation, and Packaging. The
following are the end products of services rendered.
Simol Paracetamol in Jars/1000

Simol Paracetamol in Blisters/96
Simol Paracetamol Caplets/Blisters/10 x 10
Bravotrim in Jars/1000
Bravotrim in Blisters/10 x 10
Bravogyl in Jars/1000
Bravogyl in Blisters/10 x 10
C-Quine in Jars/1000
Storest in Jars/1000
Mexazole in Blisters/10 x 10
Vitamofen Capsules Ibuprofen
The products highlighted above can be summarized into the following categories
using their generic names:
Paracetamol
Cotrimoxazole
Metronidazole
Chloroquinie
Vitamin C
Ibuprofen
All these products are well known in the market all over the country and
the companys name as manufacturer of these products are printed on
the packs.
However the major objective is to produce more of the companys
product with higher margins and contract manufacturing would only be
required when there is excess capacity.
2.3
Project goal
Page 13

Presently the companys factory in undergoing upgrade and the project
is divided into two phases. The first phase is about 70% completed. The
company has 8 lines of pharmaceutical production plant, which are:
Granulation line
Tabletting line
Capsule line
Powder line
Liquid line
Cream/Ointment/Paste line
Plastic bottle blowing line and
Packaging line
The granulation, tabletting and packaging lines are incorporated in the
first phase of the project which also includes administrative block,
factory maintenance facilities, utilities, laboratories, storage and
changing rooms. The second phase would incorporate the second
granulation suite, capsule line, powder line, liquid line, water bottling
line, bottle making line and further enhancement of the laboratories.
Recent health programmes instituted by federal and state governments
together with various initiatives of government and international
agencies on health in general and the pharmaceutical industry in
particular, a great demand gap has been created for pharmaceutical
products and Pharco Laboratories Nigeria Limited now intends to take
advantage of this conducive environment to reengineer and reposition
the company.
Improving NAFDAC regulatory efficiency in the pharmaceutical industry
coupled with government desire for growth and development of
industries has brought about increasing sanity in the industry. Drug
faking and counterfeiting is now at its lowest ebb. NAFDAC is also
encouraging local manufacturers by putting a ban on some
pharmaceutical products which local manufacturers have the capacity
to produce. The national policy on drugs has set a target of 70% for
local production of drugs in the country.
Further, importation of drugs is being made very unattractive by
increasing the custom duty threshold, thus making it more costly to
import.
The eight production lines are about 84% stainless (we plan to
ultimately achieve 100%). Hardly can this capacity/standard be found in
any other pharmaceutical company in Nigeria. Thus, this upgrade is
targeting an achievement of GMP of international standard.
The thrust of this plan is to further expand the production capacity and
make it international GMP compliant, thus giving it quantum leaps in
revenue generation capacity. These will include
Completion of the 1st and 2nd phases of the project

Equipping the second granulation suite
Enhancement of the laboratories
Page 14
Full installation remaining uninstalled machines
Development and registration of more products with NAFDAC
Expansion and enlargement of the market coverage
The company has commenced the process of registering the following

products with NAFDAC:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Paracetamol Syrup
Cotrim Syrup
Ampicillin Capsules 250mg + Suspension 125mg/5ml
Nifedipine Capsules
Clotimazole Cream
Salicylate/Menthol Balm
Paracetamol Caplet
500mg
Vitamin C (Chewable) Tablet 100mg
Chlorpheniramine Tablet 4mg
Vitamin B Complex
Tablet
Folic Acid Tablet 5mg
Magnesium Trisilicate Tablet
Metronidazole Tablet 200mg
Co-trimoxazole Tablet 480mg
Coated Tablet Multivitamins
Ferous Sulphate
Ferous Gluconate
16.
Artesunate
17.
Ampicillin/Cloxacillin/Amoxycillin Capsule 250mg + Suspension
125mg/5ml
2.4
Socio-economic importance of Pharmaceutics

Pharmaceutics is arguably the most diverse of all the disciplines in
Pharmacy and it traditionally encompasses:
i.
The design and formulation of medicines;
ii. The manufacture of medicines on a small scale (i.e. Drug
Compounding) and on a large scale (i.e. Pharmaceutical
Technology/Production); and
iii. The cultivation, avoidance and elimination of micro-organisms and
the distribution line/link of medicines up to the patients or
consumers.
Over the years pharmacy has grown in the form of pharmaceuticals
sciences through research and development processes. It is related to
product as well as to services. The various drugs discovered and
developed are its products and the healthcare it provides comes under
the category of services.
Pharmaceutical products are the fourth basic necessity of life after
food, shelter and clothing.
The pharmaceutical industry is very
important to the economy of every country. Pharmaceuticals, especially
drugs, are so priceless that no nation can survive without them and
every serious-minded government pays attention to drugs. Drugs are
so important that the World Health Organisation (WHO) recommends a
National Drug Policy for every country. Most progressive countries have
Page 15

formulated and implemented their drug policies, thereby ensuring good
health for their citizens and great wealth for their nation.
Dr. Nakajima of WHO once said: Without drugs, a health service has no
substance and no credibility. Every effort to ensure that the right drugs
are available where they are most needed in the primary health care
system at prices that are realistic, demands an alliance between a
sovereign government and pharmaceutical manufacturers.
Pharmacy involves all the stages that are associated with the drugs i.e.
discovery, development, action, safety, formulation, use, quality
control, packaging, storage, marketing, etc. This profession has a large
socio-economic relevance to the Nigerian economy. In Nigeria this
sector is among the future economic drivers. It is committed to deliver
high quality drugs and formulations at an affordable price, so that
majority of people can afford them.
Thus recent Federal government efforts in supporting the
pharmaceutical industry with improved customs tariffs and ban on
importation of some basic drugs that can be locally manufactured, are
very appropriate and highly welcome.
2.5 Conclusion
The project covered in this report has many socio-economic
contributions and developmental attributes which include:
More economic use of available material and human resources;

Promotion of local entrepreneurship, production of essential
pharmaceutical products and contribution to the improvement of
national health services;
Contribution to the immediate and potential economic and industrial
development of the country and its Gross Domestic Product;
Significant value added in terms of wages, taxes and duties within
the economy through the provision of jobs and creation of wealth for
suppliers, contractors, distributors, retailers etc. through the need
for various ancillary activities and services;
Substantial and secured employment for a large work force of
managerial, technical, supervisory, skilled and unskilled staff and
improvement to their earnings power and standard of living; and
Contribution to the technical and technological growth and exposure
of Nigerians.
Although many organizations of various sizes are already engaged in

the production of pharmaceutical products, the very large and growing
Nigerian population, Federal and State governments health promotion
programmes coupled with increasing urbanization and rising income
level guarantee continuous growth in demand for pharmaceutical
products with attendant reasonable return on investment.
Thus the project covered in this report
economically justifiable and financially viable.
is
socially
desirable,
Page 16
3.0 TECHNICAL PLAN AND CAPABILITIES

3.1
Plant Capacity
The company, Pharco Laboratories Nigeria Limited has 8
pharmaceutical production lines which are as follows:
Granulation line
Tabletting line
Capsule line
Powder line
Liquid line
Cream/Ointment/Paste line
Plastic bottle blowing line
Packaging line
The output of these production lines can be classified into tablets,
capsules, powder, liquid and paste.
The technical configuration and capacity of the foregoing
production lines are analyzed in Table 1 below.
TABLE 1
PLANT CONFIGURATION AND CAPACITIES
On the conclusion of this Reengineering Exercise, the Plant Configuration and
the capabilities of its production lines will be as follows:
S/N
1.0
1.1
1.2
1.3
1.4
1.5
1.6
PRODUCTION LINES
GRANULATION LINE
Double Planetary Mixer 200
Fluid Bed Dryer (Steam)
48-Tray Dryer (Steam)
Multi-Mill
Sieving/Grading Machine (Sifter)
Double Cone Blender
PRODUCT
Wet Mass (Kg)
Dry Granules (Kg)
Dry Granules (Kg)
Wet/Dry Granules (Kg)
Granules (Kg)
Powder/Granules (Kg)
CAPACITY
PER SHIFT/ANNUM
288,000
96,000
96,000
384,000
192,000
288,000
Page 17

1.7
Drum Mixer
2.0
2.1
2.2
2.3
2.4
TABLETTING LINE
Cadmach 27-Station Machine
Clit 27-Station Machine - 2
Cadmach 35-Station Machine - 2
One Single Stroke Machine
3.0
3.1
3.2
3.3
3.4
4.0
4.1
CAPSULE LINE
High Speed Semi-automatic Capsule-filling
Machine
Manual Capsule-filling Machine
Automatic Dedusting & Polishing Machine
Capsule Printing Machine
POWDER LINE
Automatic Single Head Powder-filling
Machine
5.0
5.1
LIQUID LINE
Automatic 4-head Filling Machine
5.2
Semi-automatic 2-head Volumetric Filling

Machine
6.0
6.1
OINTMENT/PASTE/CREAM LINE
Tube Filling/Sealing/Cramping/Code Stamping
Machine
7.0
7.1
8.0
8.1
8.2
8.3
8.4
8.5
PLASTIC BOTTLE-MAKING LINE

Blow Moulding Machine
PACKAGING LINE
Bulk Semi-automatic Tablets & Capsules
Counting and Filling with Dust Extractors
Elmach Pack Blistering Machine 200 - 2
Strip Packing Machine
Semi-automatic Ropp Capping and Sealing
Machine
Automatic Gumming/Labelling Machine
9.0
9.1
9.2
9.3
ELECTRICITY GENERATORS
300 KVA Perkins Generator
250 KVA Perkins Generator
60 KVA Dutz
10.
0
10.1
STEAM POWER GENERATOR

Automatic Packages Steam Generator
Powder/Granules (Kg)
Tablets
Tablets
Tablets
Extra large Tablets
(various sizes &
shapes)
Capsules
Capsules
Polished Capsules
Printed Capsules
Dry Powder in
Glass/Plastic Bottles
Syrup/Liquid in
Bottles
Syrup/Liquid in
Bottles
Ointment/Cream in
Tubes or Plastic
Bottles
5 Millilitre to 1 Litre
Plastic Bottles
Counting 20 1000
Tabs or Caps in
polybags and and
hard containers
Blister Units
Strip Units
Corked Bottles
Labelling Bottles
288,000
179,712,000
359,424,000
950,352,000
6,912,000
17,500,000
2,500,000
192,000,000
144,000,000
1,200,000
2,000,000
1,000,000
1,750,000
460,000
748,800,000
89,856,000
138,240,000
5,760,000
9,216,000
Power
Power
Power
Evaporation Output
NOTES
a.
Most of the machines can be operated at higher speed for greater

volume of production.
Page 18

b.
The various sizes of electricity generators are to guarantee continous

work flow at different levels of power needs without relying on PHCN.
c.
Fluid bed and tray drying, powered by steam are faster than electrical
heating process.
d.
The Granulation, Tabletting, Powder and Capsule lines are completely

installed.
e.
Only the Tabletting line can be worked to full capacity (single shift);
and order has been placed for two additional 35-station machines to
beef up its technical capacity.
f.
The Capsule and Powder lines are yet to be put into full use.
g.
The liquid, Cream/Ointment/Paste and plastic bottle blowing lines are

yet to be installed.
Page 19
3.2 Process Description

The Factory is divided into five sections briefly described below. The
quantity of drugs that can be produced would be determined by the
capacities of the machines used in these sections.
i. Storage: There are three storage facilities in the factory:
The raw materials are stored and weighed in the Raw Materials Store
according to product formulations and batch size for production which
is then transferred to granulation section for conversion into granules.
Packaging materials bought are kept in the Packaging Store
accordingly and are issued as the need arises.
Finished products are stored in the Finished Goods store.
ii. Granulation: This is where raw materials brought in from the Storage
section are converted into granules. These granules are input for the
Tabletting section.
The equipments in this section have the capacity to mix 13 batches in a
shift of eight hours and 26 batches in two shifts. In other words, the
granulation section has capacity for 1,950,000 tablets in a shift of eight
hours and 3,900,000 in two shifts of eight hours each.
iii.Tabletting: This is the section where granules are compressed into
tablets. These tablets are input for the packaging section.
The
tabletting section can compress 4,792,000 tablets in a shift of eight
hours and 9, 584,000 tablets in two shifts of eight hours each.
iv. Packaging: This is the section where tablets compressed by the
tabletting section are packaged either into blister or plastic pack. The
packaged tablets are sent to the finished goods store. The packaging
section can pack 3,744,000 tablets in a shift of eight hours and 7,
488,000 tablets in a two shifts of eight hours.
v. Quality control:
This section is an integral part of the other sections. This section serves
as the watch dog for the other section to ensure that quality is assured
at all times.
3.3 Capacity Expansion Plan

To expand the present production capacity and utilization and thus
increase the income-generation prospects of the company the following
goals will be pursued:
3.4
To install all uninstalled machines; and

Upgrade and enhance the capacity of installed ones.
Good Manufacturing Practices (GMP)
i. Requirement for GMP

The average person's familiarity with the pharmaceutical industry
comes from the end products - tablets, capsules, liquids, and ointments.
However, reaching this point involves active pharmaceutical ingredient
(API) manufacture, formulation, forming, packaging, and labeling that
start with the features of the specialty chemical manufacturing.
Page 20

The enforcement of strict quality standards is the basic factor setting
the pharmaceutical industry apart from other manufacturers. Within the
United States, the quality standards start with the rules and
interpretations set forth by acts of Congress and the Food and Drug
Administration (FDA); each is designed to ensure the safety and
benefits of the products made by the pharmaceutical industry. All
pharmaceutical producing countries, including Nigeria, have similar
regulatory agencies that enforce the laws, expectations, and Current
Good Manufacturing Practices (CGMP) for quality products.
National Agency for Food and Drug Administration and Control
(NAFDAC) undertakes such functions in Nigeria.
Other relevant
regulatory agencies in Lagos are Pharmaceutical Council of Nigeria
(PCN), Pharmaceutical Manufacturing Group of Manufacturers
Association of Nigeria (PMG-MAN), and Lagos State Environmental
Protection Agency (LASEPA) GMP.
The term manufacturing is defined to include all operations of receipt of
materials, production, packaging, repackaging, labeling, relabeling,
quality control, release, storage and distribution of drugs and the
related controls. The company will continually ensure that all processes
covering the following areas comply with GMP at all times and for all
products. The company has internal Standard Operation Procedures
(SOPs) in place to facilitate compliance with GMP.
ii. Quality Management
Quality in the pharmaceutical industry goes beyond ISO expectations,
playing a role within every manufacturing action. Besides exemplary
execution of manufacturing, labeling, and distribution instructions, the
regulatory organization sets the standards for documenting and
tracking all basic operations. Further, manufacturing processes must be
validated and reproducible. Validation involves establishment of
documented evidence that provides a high degree of assurance that a
specific process will consistently produce a product meeting its predetermined specification and quality attributes. Once validated, the
process must operate continually within these parameters and can be
changed only through revalidation.
Proof that the process runs within validated parameters is documented
by taking basic process measurements, assaying all raw materials and
final products, as well as documenting all maintenance and production
instructions.
To retain the validated state for each product, the
company strictly tracks and controls all changes to ensure the product
meets the standards registered with NAFDAC.
iii. Personnel
There would be adequate number of personnel qualified by appropriate
education, training, and/or experience to perform and supervise the
manufacture of intermediates and products.
Personnel would be made to practice good sanitation and health habits
including clean suitable clothing and additional protective apparels.
iv. Buildings & Facilities
Page 21

The factory and facilities have adequate space for the orderly
placement of equipment and flow of materials and personnel to prevent
mix-up or contamination.
There are defined areas or other control system for the following
activities:
Receipt, identification, sampling and quarantine of incoming
materials;
Storage of released materials;
Quarantine and sampling before release of intermediates and
products;
Production operations;
Packaging and labeling operations; and
Laboratory operations.
All utilities that could affect product quality are regularly monitored
and kept within limits. Process water, in use, meets WHO guidelines
for drinking/portable water quality. Adequate lighting is provided in all
areas to facilitate cleaning, maintenance and proper operations.
Sewage, refuse, and other wastes within and around the factory are
disposed of in a safe, timely and sanitary manner.
v.
Process Equipment
All equipment is of appropriate design, stainless steel and suitably
located for use, cleaning, and regular maintenance. Control, weighing,
measuring, monitoring and testing equipment critical for ensuring the
quality of products are calibrated according to standard and verifiable
procedures.
vi. Documentation
All production, control and distribution records are to be retained for a
least one year after expiry date of the batch. Records of raw materials,
intermediates, labeling and packaging materials are maintained. Batch
Production and Laboratory Control records are maintained for each
batch, including information relating to production and control,
complete data derived from all tests conduced to ensure compliance
with established specifications and standards, including examinations
and assays.
vii. Materials Management
Adequate arrangements are in place for proper materials management
covering:
Receipt and quarantine
Sampling and testing of incoming production materials
Storage
Re-evaluation after prolonged storage or exposure to adverse
whether.
viii.
Production and In-process Controls

These include compliance with companys SOPs:
Materials are weighed and measured under appropriate
conditions with devices of appropriate accuracy
Compliance with process time limits, when applicable
In-process sampling and controls
Page 22
Blending batches of intermediates or products are to be

adequately controlled to ensure compliance with appropriate
specifications
Production operation are conducted in a manner that prevents
contamination of products
ix. Packaging and Labeling

All packaging containers provide adequate protection against
deterioration or contamination and labeling operations are designed to
prevent mix-ups.
x.
Storage and Distribution

Adequate facilities are available for the storage of materials and
products under appropriate conditions. Products are distributed only
after release by quality unit and the distribution system can ensure
easy determination of the distribution of each batch to permit its recall,
if necessary.
xi. Laboratory Controls

Adequate facilities and materials are provided for necessary chemical
and microbiological tests on raw materials and each batch of products
to determine compliance with specifications. Appropriately identified
samples of each batch are retained for at least one year after expiry of
the batch.
xii. Complaints and Recalls
All quality-related complaints, whether oral or written, are recorded and
promptly investigated.
3.5
Quality Assurance and Quality Control

A dominant feature of our drug market in Nigeria today, is the existence of a
number of counterfeit, substandard and fake products.
However, unlike
widespread counterfeiting of prestigious products which, although illegal, does not
generally threaten the physical integrity of those who are deceived by
appearances, counterfeit/substandard drugs can seriously harm health or even
kill. For example, over 106 children died in 1990 after taking syrup of paracetamol
made with a toxic excipient (that is, diethylene glycol instead of propylene glycol).
In view of the importance of quality maintenance and management, the company
has established effective system that involves the active participation of
management and appropriate manufacturing personnel. The system incorporates
the following:
Establishment of companys Standard Operation Procedures (SOPs)
Existence of independent quality unit to handle quality assurance (QA) and
quality control (QC) responsibilities
The quality unit personnel are involved in all quality-related matters and
documentations
All quality-related activities are recorded at the time they are performed
Reviewing all production batch records for completeness
Ensuring premises and equipment are maintained and records kept
Ensuring production facilities are clean and safe
Ensuring necessary calibrations are performed and records kept
Evaluating proposed changes in product, process or equipment
Page 23
3.6
Ensuring new and/or modified equipment are qualified

Regular internal audits are performed to verify compliance with GMP for
products
Regular quality reviews of products are conducted o verify
the
consistence of the process
Power and Other Utilities

PHCN power supply within Lagos metropolis generally is erratic and so
electricity supply to the plant is unpredictable. The company therefore
has three diesel-powered generators 60KVA, 250KVA and 300KVA for
plant and machinery and lighting. With the constant high cost of diesel,
operational cost is highly increased.
There is borehole in the factory for adequate drinkable water supply of
WHO standard.
3.7 SWOT and Risk Analysis

i.
Strengths
World class stainless steel plant (new & fully refurbished) with sound,
dependable and high performance production technology.
High quality production practices and documented processes of
international standard.
Fully equipped laboratory and sound quality control processes.
Production of own plastic bottle packaging materials from existing
own plant.
Well known name in the industry and market goodwill with major
distributors.
Highly committed and experienced management
Experienced input procurement and technical (maintenance and
production) personnel.
Established local and international relationships spanning over 20
years within the industry.
Broad product base with additional formulations
Well documented processes
Loyal and dedicated staff
ii.
Weaknesses
Inadequate working capital for optimum utilization of material and

human resources and attendant low operating performance.
Loss of some experienced hands due to recent upgrade which is

nearing completion.
iii.
Opportunities
Improving world and local operating environment and performance
prospects.
Government commitment towards local production of drugs as
embedded in the national drug policy which sets target of 70% local
production.
NHIS (National Health Insurance Scheme) directed towards
improving health care in the economy thus boosting drug
requirements in the country.
Page 24
iv.
Ban on importation of certain drugs and concessionary tariffs for

pharmaceutical raw materials and equipment by the Federal
Government.
Improved vigilance, reinforced surveillance and controls by NAFDAC
against fake and counterfeit drugs being imported into the country;
and in ensuring good manufacturing practice by stakeholders in the
country.
Improving prospects/profile for the Nigerian pharmaceutical industry.
SMIEIS and similar arrangements for improved funding and
management support of small/ medium scale enterprises.
Future plant upgrade and expansion into production of major
international pharmaceutical brands under license.
Potentials for commercial production of plastic bottles for sale to
other pharmaceutical manufacturers and the public from existing
own plant.
Facility and potentials for the production of table/packaged water.
Partnership /Franchising with foreign leading pharmaceutical
companies across the globe
Threats
Porous Nigerian borders and loopholes in the Nigerian Customs
Service which can reduce the effectiveness of the ban on
importation.
Unstable/unfavourable/unpredictable government policies.
Vagaries in foreign exchange rate and attendant effect on
importation of raw materials.
Multiple taxes on manufacturers.
Lack of regular electricity supply and high dependence on diesel
powered generating sets with attendant increased operating costs
due to scarcity and high cost of fuel.
Finance industry liquidity crisis and global meltdown.
Page 25
4.0 PRODUCTION PLAN

4.1
Capacity
The granulation section determines the overall output potential of the
other sections.
The total output from the granulation section is
1,950,000 tablets in an eight-hour shift and 3,900,000 tablets in two
shifts of eight hours each.
However, it is important to note that the factory has room for
expansion. Presently there is space for a second granulation suite which
would definitely increase the production capacity in the future. Further,
there are six tabletting rooms which can accommodate twelve
tabletting machines but presently accommodates five; and four
blistering rooms which presently accommodates two blistering
machines.
4.2 Utilisation Plan
This production plan is based on the production of 3,900,000 tablets per

2-shift day for 240 days per year. We also plan to initially pack the
tablets in blistering packs before considering the plastic packs (Hospital
Packs). The 3,900,000 tablets schedule for production would be
distributed amongst Pharco products as follows.
The table below also presents the planned total production for the first
year in packs of 1000 based on the current granulation capacity; with
gradual increase in production under the planned capacity expansion.
4.3 Daily Production Plan

S/N
1
2
3
4
5
6
7
8
9
10
4.4
PRODUCT DESCRIPTION
Pharco Paracetamol/1000
Pharco
Paracetamol
Blisters/10x10
Pharc Vit C white
Pharc Vit C chewable
Pharcqyl /1000
Pharcgyl in Blisters/10x10
Pharctrim/1000
Pharctrim in Blisters/10x10
Pharcquine/1000
Pharcquine in Blisters/10x10
TOTAL
in
QTY/DAY
1,284,000
672,000
300,000
300,000
224,000
224,000
224,000
224,000
224,000
224,000
3,900,000
Planned Annual Production

S/N
O
1
2
3
4
5
6
7
PARTICULARS
Pharco Paracetamol/1000
Pharco Paracetamol in
Blisters/10x10
Pharc Vit C white
Pharc Vit C chewable
Pharcqyl /1000
Pharcgyl in Blisters/10x10
Pharctrim/1000
QTY/YEAR
308,160,000
161,280,000
72,000,000
72,000,000
53,760,000
53,760,000
53,760,000
Page 26

8
9
10
4.5
Pharctrim in Blisters/10x10
Pharcquine/1000
Pharcquine in Blisters/10x10
53,760,000
53,760,000
53,760,000
936,000,00
0
Planned Production Capacity Expansion

Further to the current capacity highlighted in Sections 3.1 and 3.2
above, the following machines are required to boost the production
capacity:
S/N DESCRIPTION
QTY
COST ESTIMATE
N
Granulation Line
1
Fluid bed dryer
9,000,000
Double Planetary Mixer
3,750,000
Sifter
1,500,000
Cone Blender
3,000,000
3,000,000
Multi Mill
Tray Dryer
3,000,000
Tabletting Section
7
Tabletting Machines
12,000,000
12,000,000
Packaging Line
8
Blistering Machines
TOTAL COST
4.6
47,250,000
Anticipated Products Expansion

The company has plans to register the following additional products
with NAFDAC:
1.
2.
3.
4.
5.
6.
7.
8.
Paracetamol Syrup
Cotrim Syrup
Ampicillin Capsules 250mg + Suspension 125mg/5ml
Aspirin Tablets/Blisters
Ciprofloxacin Tablets/Blisters
Nifedipine Capsules
Paracetamol/Ibuprofen Caplets/Blisters
500mg
Cotrimoxazole Cream
Page 27

9.
Salicylate/Menthol Balm
10. Chlorpheniramine Tablet 4mg
11. Vitamin B Co Tablets
12. Folic Acid Tablet 5mg
13. Magnesium Trisilicate Tablet
14. Co-trimoxazole Tablet 480mg
15.
Coated Tablet - Multivitamins
16.
Ferrous Sulphate Tablets
17.
Ferrous Gluconate Tablets
18. Artesunate Combination
19. Methyldopa Tablets/Coated Tablets
20. Pyridomine/Suphadomine Combination
21. Levofloxacin Caplets
22. Predisolone
23. Erthromycin
24. Ampicillin/Cloxacillin/Amoxicillin Capsule 250mg + Suspension
125mg/5ml
25. Piroxicam
Page 28
5.0
5.1
i.
MARKET POTENTIALS AND MARKETING PLAN

Global Pharmaceutical Market Outlook
Global Drug Usage
With exception perhaps of one or two, todays, modern effective drugs
are available to combat virtually all known diseases. Drugs remain the
most effective technology used to manipulate the well being of man,
providing the means of diagnosing and treating diseases without undue
subjection to surgery. Even todays surgical procedures require the
benefit of drugs like general anesthetics, analgesics, antibiotics, blood
transfusions and intravenous fluids and nutrients.
The increasing world population growth and consequent present
growing demand for health care of all kinds is being felt by all countries
the world over, as countries are still striving to meet the objective of the
Ala declaration of health for all by the year 2000 A.D.. A large
majority of therapeutic services and many currently used preventive
services involve drug products. Drugs now form part of a rational
approach to disease treatment that has spread throughout the world, to
the extent that, even in the remotest parts of the world, people
consume modern drugs.
IMS Health the world's leading provider of market intelligence to the
pharmaceutical and healthcare industries research expect the market
growth to be between 5- 7 percent year on year as the market
continues to rebalance in light of changing market dynamics.
ii.
Consumption Growth
The progress in medical technology is contributing to increased drug
utilization as a number of disease conditions that were treated mainly
by prolonged hospitalization, physical therapy, shock treatment or
surgery, have given place to drug therapy. Industrialization with its
accompanying environmental pollution and exposure of man to more
stresses, traumas and toxic agents, and the growing area of industrial
medicine have all added to the already numerous areas of utilization of
drug products and medicines.
The average growth rate in drug consumption in the world for the last
few decades was said to be 11.9 per cent annually. However, according
to WHO report, the value of world consumption of drugs increased
dramatically in recent years.
iii. Production
Although production of drugs is spread all over the world, for both the
developed and developing world, the production capacity is
concentrated in only a few countries. Thus, towards the end of the last
century, more than 90 per cent of production in developed countries
was done by seven countries (USA 30%; Japan 24%; Germany 13%;
France 9%; UK 6%; Italy 6%; Switzerland 4%). Six of the developing
countries (Argentina, Brazil, Egypt, India, Mexico and Korea) account for
two thirds of output in developing countries.
Page 29

During the same period, Latin American countries produced about 75%
of their requirements for finished products while Asian Countries
(excluding China) produced 60%. In Africa, most countries depend very
heavily on imports of finished drugs.
5.2 Nigerian Pharmaceutical Consumption Pattern

In a special study, Kelan (1991) looked at the effects of some factors on
the pattern of drug prescription in a typical hospital in Nigeria. Most
important factors studied were age, sex, disease, state of patients, as
well as cost of drug and drug availability. The results of this study can
be summarized as follows:
DOSAGE FORM
FREQUENCY PERCENTAGE
OUT-PATIENT
IN-PATIENT
71.00
55.30
3.80
32.60
11.80
4.70
Capsules
8.50
5.30
Ointments/Cream
s
1.00
0.20
Others
3.90
1.90
TOTAL
100.00
100.00
Tablets
Injections
Liquids
a. Tablet is the most frequently prescribed drug dosage reaching a

frequency of
71% in out-patient and 55.4% in the in-patient, as a
result of the relative ease with which drugs can be carried about in
tablet form.
b. Capsules, though easy to carry are less frequently prescribed
because of its relatively high cost.
c. Injections have a prescription pattern of 3.8% and 32.6% for outpatient and in-patient departments respectively. The low percentage
of injection in the out-patient is because injectable doses cannot be
effectively monitored for due compliance.
d. The frequency of prescription of liquid preparations is very low
because of the inconveniences of measuring spoons, sticky bottles
and bulk containers.
However, infants constitute the highest
percentage of liquid prescription, for the little ones often have
difficulty in swallowing intact solid dosage forms such as tablets and
capsules. Further, there is greater acceptability for liquid products
by infants and children who prefer sweet and well flavoured liquids
to hard and bitter tasting solid dosage forms.
Page 30
5.3 Market and Operating Prospects of Nigerian Pharmaceutical

Sector
There has been great transformation of the sector by NAFDAC from a
mostly uncontrolled business environment where all kinds of atrocities
were committed, to an era of impressive sanity, since the appointment
of Professor Dora Akunyili as Director-General in 2001. The industry has
made tremendous progress, counterfeited drugs dropped from an
average of over 41% in 2001 to 16.7% in 2006; and Drugs not
registered by NAFDAC stood at 19% in 2006 as against 68% in 2001.
During 2001 and 2002, 13,897 raids were made on fake local
manufacturing plants. In the same vein, NAFDAC sends independent
analysts to inspect manufacturers in China and India before drugs are
licensed for import. This has led to imposition of import ban on 30
Indian and Chinese companies for failure to meet NAFDAC Standards.
Recent Stock Market report on the sub-sector include: good product
and stock turnover, profitable operations, fairly steady dividend payouts
across the firms and fairly considerable capital appreciation.
The market, operating environment and prospects have been improving
steadily due to the following factors:
a. The amendment of the Essential Drug List (EDL) decree restricting
the application only to public health institutions was the first tonic to
the industry. With the amendment to the decree, companies were able
to expand their product base, resuscitate abandoned product lines, and
increase their volume, turnover and profit margins.
b.
The recent ban on some pharmaceutical products, abolition of
Value Added Tax (VAT) on pharmaceutical raw materials, coupled with
the reduction of Customs tariff on raw materials and equipment by the
Federal government have greatly encouraged the pharmaceutical
industry.
c. NAFDACs differential tariff and its war against counterfeit and fake
drugs have stabilized the pharmaceutical industry. The sub-sector was
obviously helped in no small measure by the increased profile of
NAFDAC, which has been enforcing strict compliance with product
regulation with little or no space for fake and substandard drugs,
thereby giving a better opportunity for the serious-minded healthcare
firms, mainly in terms of output and sales.
d.
NAFDACs success in controlling the importation of regulated
products, beefing up surveillance at the ports, clamping down on major
sources of fake products both locally and internationally impacted
positively on the healthcare manufacturing sector.
e.
The increased public awareness created by NAFDACs growing
regulatory activities, especially those relating to fake and counterfeit
drugs, resulted in the participation of the regulated industries,
consumers, and other stakeholders in the promotion of food and drug
regulation in Nigeria. There is an encouraging level of compliance to
NAFDACs ban on the importation of counterfeit and other substandard
Page 31

drugs due to the commitment of importers. Consumers have now
formed the habit of scrutinizing their drugs by checking expiry dates
and the NAFDAC registration numbers before purchase and use.
The foregoing factors coupled with governments 100% import
inspection policy have contributed to the increasing capacity utilization
and return to profitability of pharmaceutical companies.
The
Pharmaceutical Manufacturers Group of Nigeria PMG-MAN, and the
individual manufacturers reported that Nigerian pharmaceutical
industries witnessed a 35% increase in turnover of drug production in
2002.
The Nigerian Association of the Chambers of Commerce,
Industry, Mines and Agriculture in its review of the economic
performance of the 2003 fiscal year, said that the government target of
achieving 65% capacity utilization in the economy was not realized.
The only exception was the pharmaceutical manufacturing sector where
the onslaught of NAFDAC on fake and substandard products pushed
capacity utilization to nearly 60%.
NAFDACs reforms also led to other West African countries renewed
confidence and increased patronage of pharmaceutical products
produced in Nigeria as evidenced by the lifting of the ban on Made in
Nigeria drugs by the Ghananian authorities.
These reinforced the confidence of investors in the pharmaceutical
industry, as evidenced in the continuous upward movement in the
share prices and considerable capital appreciation of pharmaceutical
companies quoted in the Nigerian Stock Exchange. The Exchanges
recent monthly stock market review showed capacity in the industry at
64%, which had risen far above the 54% manufacturing sector average
in recent times.
This in turn is believed to have encouraged
standardization of products, leading to recovery of lost market share. It
has also brought the need to rehabilitate, expand, and modernize the
companies plants, the possibility of opening new product lines and
diversification to capture new markets.
In addition, many multinational drug companies are already coming
back to Nigeria due to the present conducive regulatory environment
and impressive operating performance of the sector. For example,
Glaxo Smithkline recently built a new OTC factory and now
manufactures Septrin tablets and Macleans toothpaste locally. Ciba
Gaeigy and Sandoz left the country before and are now back together
as Norvatis. Reckett Benckiser has started producing Dettol Antiseptic
disinfectant and soap locally too and Tura range of products hitherto
imported from Tura International England are also now manufactured
locally.
The industry is fast growing and it is estimated to grow from US$633mn
in 2008 to US$695mn by 2013, representing a compound annual growth
rate (CAGR) of 1.89% in US dollar terms and 3.24% with respect to the
Nigerian naira. Major drivers for further expected growth are the various
healthcare programmes that have been implemented to increase health
awareness and primary healthcare uptake. The promotion of the
National Health Insurance Scheme (NHIS) is also expected to see
renewed drive from the government to boost pharmaceutical spending.
Page 32

Underlining this, we expect healthcare expenditure to rise from
US$7.3bn in 2008 to US$8.3bn by 2013.
5.4
Local Market Competition

Nigerian pharmaceutical companies can be classified into three major
groups which are:
a. Multinational/Big indigenous: - These are renowned multinational or
home-grown
companies
such
as
Evans
Pharmaceuticals,
GlaxoSmithkline,
Fidson
Pharmaceuticals
and
Emzor
Pharmaceuticals. They sell their products at a higher premium
because of the niche they have created internationally and locally.
b. Medium indigenous: - These are Nigerian medium scale industries
such as Mopson, Tuyil, Bond, Bentos, Kunimed, Gawo, Chemo, e.t.c.
which have grown overtime and they sell at a premium slightly
higher than the lowest-priced in the market. They are fast becoming
renowned in the market. This is the group we belong to; we have a
name in the market, which is synonymous with quality.
c. Small indigenous: - These are companies just entering the
pharmaceutical business and they push their products into the
market for recognition and they sell just above breakeven point.
5.5
Market Potentials for Pharco Products

Pharco Laboratoriess factory is being upgraded taking cognizance of
regulatory standards, which are embedded in the upgrade to ensure
that the output that comes out of the factory meets accepted quality.
The federal government, state governments, international bodies and
big private sector organizations usually visit factories they intend to do
business with to ensure that the facilities are up to international
standards and that the products are of premium quality. Pharcos
installations assuredly shall meet those expectations.
Our recent findings from the research conducted in the open market
and institutions revealed that the name Pharco is popular. The quality
of our products was attested to be high compared to others and we use
to have repeated calls for supplies of our products.
As we all know marketing starts from the quality of the products. The
companys name, experience and exposure in marketing of drugs would
assist a great deal in ensuring the companys products meet and even
surpass the requirements of the target market. A formidable marketing
team would be put together to ensure that the companys products get
to its customers nationwide and in the sub region.
5.6
Marketing Plan
Over the years, the company with the requisite experience has
perfected the production of the items listed in paragraph 4.2 above for
which we are well known in the market. Therefore, it is expedient we
start production with these products immediately the factory is ready
for resumption of operations.
Also we have commenced the development and plan to register more
personalized products against the five generic names in paragraph 2.2
Page 33

above because they are our core area of competence which we have
perfected over the years. These would be added to this list of products
during the plan period under review.
The names of the proposed personalized products are as follows:
Pharcmol /1000
Pharcmol in blisters /10 x 10
Pharcmol caplets in blisters /10 x 10
Pharcmin C white
Pharcmin C chewable
Pharcgyl /1000
Pharcgyl in blisters /10 x 10
Pharctrim /1000
Pharctrim in blisters /10 x 10
Pharcquine /1000
Pharcquine in blisters /10 x 10

The foregoing five generic lines are what we have developed high
competence in producing and marketing and we intend to build on them
at the initial stage of resumption of production. However, we also plan
to register and introduce other products on the list in paragraph 4.5
above in due course.
5.7
MarketingStrategy
i.
Nigerian Pharmaceutical Distribution Channels

There are five major pharmaceutical markets in the country, which are
located in Lagos, Ibadan, Onitsha, Kano and Aba. A lot of hospitals and
people dealing in drug visit these markets depending on the proximity
to their location. Manufacturers have distributors in these markets as
channels for the sale of their products to retailers. Aside from people
within the country that visit the markets, people come from
neighbouring countries such as Togo, Ghana, Mali, Cameroun and from
even Central Africa to purchase drugs in these markets.
ii.
Target Market
Hitherto, our target market used to be the foregoing open market and a
few institutions. Now we intend to also focus on more big institutions
such as blue chip corporate bodies, parastatals and non-governmental
organizations. We intend to vigorously pursue business prospects with
the Niger Delta Development Commission, Primary Health Care
institutions, Federal Capital Development Authoritys Health Service
Department, Nigerian Prisons Services, Federal Ministry of Health,
University Teaching Hospitals, States Health Management Boards, and
Non-Governmental Organisations such as MTN, BAT and other
Foundations as well as private hospitals and pharmacy stores.
iii. Distribution Strategy

We intend to appoint and use distributors in the Lagos and other market
centres, who shall be placed on a predetermined monthly target with
incentives, because it is not enough to dump the products with the
distributors but to ensure that the products get to the final consumers.
Page 34

We would also engage sales representatives in each geo-political zone
to market our products vigorously to public and private hospitals,
institutions and organizations.
Further, we would ensure that our products are listed on the essential
drug lists of federal and state hospitals and ensure that our products
are made available.
iv. Pricing
We intend to take advantage of the name we have in the market and
we would continue to sell at a premium higher than the low-end market
price. Our pricing strategy would be flexible and would be determined
by the dictates of the market and other cost factors.
v.
5.8
Product Promotion
We intend to promote our products mainly by giving our customers
guarantees on the quality of the products. We shall also encourage
distributors to buy large quantities, by setting targets with
accompanying rewards and by graduated discounts allowed on volume
sales. Lastly, we shall be giving out promotional items as and when due.
All these strategies backed with aggressive advertisement/publicity and
many more would go a long way in achieving our objectives.
Raw Material Availability

The company presently procures its raw materials from the open
market. Henceforth we intend getting our raw materials directly from
the manufacturers in Asia or any other country where we can get the
best price at the right quality.
At the moment discussions are going on with Anhui Bayi Chemical
Company, an international organization based in China on the supply of
raw materials.
Page 35
6.0 MANAGEMENT AND ORGANISATIONAL PLAN

6.1
Board of Directors
The directors of the company are respectable Nigerians who have
distinguished themselves in their professions and various areas of
human endeavors. Names of the directors are as follows:
Mrs. J. O. Lokulo-Sodipe
Mr. B. O. Alaka
Rev. E. A. Adeniji
- Managing Director
The functions of the board include:
Formulation of vision, mission and corporate values
Policy formulation
Corporate, financial and investment decisions
Annual budgetary approval
Regular monitoring, control and review
Brief details of the qualifications and experience of some of the

directors are as follows:
Mrs. J. O. Lokulo-Sodipe represents Pharco Nigeria Limited on the

Board of the company.
She is a Barrister at Law, a seasoned
administrator and a Lecturer at the University of Ibadan.
Mr. Benjamin O. Alaka is a qualified Chartered Secretary since 1971,

a member of the Nigerian Institute of Management and a Fellow of The
Institute of Chartered Secretaries and Administrators of Nigeria.
He started his pharmaceutical industrial career with the Germanoriginated Pharco Nigeria Limited from inception in 1959. By hardwork
and dedication he rose over the years through several management
positions including Accountant, Administrative Manager, Commercial
Manager, General Manager, Executive Director and Managing Director
of the highly successful Pharco Nigeria Limited.
With patience, endurance, perseverance and strong faith he played the
most excruciating pioneering role at ensuring that the trading company
successfully metamorphosed into the manufacturing outfit called
Pharco Laboratories Nigeria Limited) today. He has been the Managing
Director of Pharco Laboratories (Nigeria) Limited since commencement
of operations.
Mr. Alaka, backed with a tremendous wealth of experience spanning
over 45 years is indeed a veteran and an encyclopedia of both Pharco
group and the pharmaceutical industry in Nigeria. He is a devout
Christian and happily married with children.
Page 36

Mr. Noah Shittu Olopoenia, Bsc (Hon) Maths MBA is a versatile
banker with over 23 years of un-interrupted commercial banking
experience from 1982 to 2005 rising to the position of General Manager
(Risk Management Control and Compliance). His core competence skills
includes amongst others the following
Formulation of corporate strategies for bank-wide credit
policies within the framework of the companys risk
acceptance criteria.
Development of credit/risk management skills bank wide
New branches development and supervision strategies
Monitoring/tracking
efficiency
of
transaction
deliveries/administrative service
He left banking in 2005 and set-up a shipping/management consultancy
firm Atimia Investment Ltd and has remained the Chief Operating Officer
till date. The companys core business areas are as follows
Disport agency for incoming foreign/international vessels
Import distribution
Company staff audit
Financial services
He is happily married with children.
Rev. E. Ajibade Adeniji is a veteran pharmacist and a seasoned

administrator with over thirty-five years tremendous pharmaceutical
industrial marketing and management experience.
He has at various times worked with reputable pharmaceutical-based
companies including A. H. Robins Pharmaceutical Company of Richmond
in Virginia, USA, R. T. Briscoe Nigeria Limited, Johnson & Johnson
Nigeria Limited and Pharco Laboratories Nigeria Limited.
He is a minister of God and happily married with children.
6.2
Management Executive Committee

The Managing Director heads the management Executive Committee.
The committee is responsible for the daily operation of the company.
Their function includes:
Policy interpretation and implementation
6.3
Operational and Administrative functions
Marketing and financial management
New business development
Supervision of overall operations
Organisational Structure
The organizational structure of the company is made up as follows:
The Management Team is headed by the Managing Director

The General Manager coordinates and supervises the following three
departments:
Page 37
Technical Department headed by the Technical Manager

Marketing/Commercial
Manager
Department
headed
by
Sales/Marketing
Finance & Administration Department headed by Finance & Admin.

Manager
Qualifications and experience of some members of the Management
Team for this reengineering period are summarised as follows:
Oladapo A. Alaka - Business Manager

Mr Dapo Alaka is a graduate of Economics and an MBA holder in
marketing from Obafemi Awolowo University, Ile-Ife; and an associate
member of the Nigerian Institute of Chartered Marketers (CIMN).
His work experience spans fifteen years out of which te was spent in
Cakasa Nigeria Company Limited where he served in different positions
including Treasurer, Internal Auditor and Marketing Advisor. In the
previous five years he has had a short spell at Templegate Investment
Limited as the Scheme Coordinator for the sales of Jincheng Motorcycles
before joining Pharco Laboratories (Nigeria Limited).
He has attended various executive training/seminars which include Total
Quality
Management,
Total
Quality
Management
(Planning/Facilitator/Trainer), Quality Management System, Corporate
Internal Auditing, Activity-Based Costing and Auditing through the
computer using IDEA CAAT software for Windows and he is versatile in
the use of Quick Books Enterprise Solution (Accounting Software).
Samuel Yemi Adekunle - Finance and Administrative Manager

Samuel has HND (Accountancy) from The Polytechnic, Ibadan; M.Sc.
Finance and MBA Marketing from University of Calabar; and MBA
Management Technology from Federal University of Technology, Owerri.
He is also a member of the Institute of Chartered Accountants of
Nigeria, Chartered Institute of Taxation of Nigeria and Nigerian Institute
of Management.
His broad professional experience spanning over 25 years at Nigerian
Television Authority and Nigerian Breweries Plc covered general
accounting, financial control and management, budget planning and
control, capital project monitoring , cost control and monitoring, tax
planning and management, audit and investigation, and management
reporting. He held varied positions of responsibility before retiring as
Regional Finance Manager at Nigerian Breweries Plc. He is now on
secondment to the company for Restructuring, Systems Development,
Implementation and Training.
Organisation Chart
For the proposed plan the Organisational structure under the General
Manager will be as follows:
Page 38
GENERAL
MANAGER
SUPERINTENDENT
PHARMACIST
PRODUCTION
PHARMACIST
6.4
QUALITY
CONTROLLER
SALES &
MARKETING
MANAGER
TECHNICAL
MANAGER
MECHANICAL
ELECTRICAL
ENGINEER
ENGINEER
SALES
REPRESENTATIVES
DISTRIBUTION
OFFICERS
FINANCIAL
CONTROLLER
ACCOUNT
OFFICERS
PERSONNEL
& ADMIN
MANAGER
PERSONNEL/ADMIN
OFFICERS
Personnel Policy/Management
The company believes in employment of skilled and experienced staff
as well as training and retraining of staff.
The companys remuneration is said to be competitive with other firms
in the industry with a Group Personal Accident Insurance Scheme in
place.
Page 39

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PHARCO LABORATORIES (NIGERIA) LIMITED.

Business Plan for Pharco Laboratories (Nigeria) Limited

Business Plan for Pharco Laboratories (Nigeria) Limited

Upholding the Quality Tradition

commitment to being a leading pharmaceutical

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Background and Socio-economic Analysis

Technical Plan and Capabilities

Market Potentials and Marketing Plan

Management and Organisational Plan

Financial Plan and Analysis

Projected Financial Position

Projected Operating Statement

Projected Cash Flow

Notes to Financial Projections

Industrial Analytical Review

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

1.3 Project goal

Completion of the second phase of the reengineering project

1.4 Technical Plan and Capabilities

Business Plan for Pharco Laboratories (Nigeria) Limited

West African and Nigerian Pharmaceutical Market

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

The Managing Director heads the management Executive Committee.

1.8 SWOT and Risk Analysis

Inadequate working capital for optimum utilization of material and

Loss of some experienced hands due to recent upgrade which is

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Improving world and local operating environment and performance

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

The proposed financial arrangements are as follows:

Existing Term Loan

Proposed Additional Term Loan

1.9 Financial Analysis

Profit before tax

Profit after tax

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

2.0 BACKGROUND AND SOCIO-ECONOMIC ANALYSIS

Mrs. J. O. Lokulo Sodipe

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Simol Paracetamol in Jars/1000

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Completion of the 1st and 2nd phases of the project

Enhancement of the laboratories

Sowande Kafidiya & Co.

Business Plan for Pharco Laboratories (Nigeria) Limited

Full installation remaining uninstalled machines

Development and registration of more products with NAFDAC

Expansion and enlargement of the market coverage

The company has commenced the process of registering the following

Socio-economic importance of Pharmaceutics

Sowande Kafidiya & Co.