Industry news: Sale of AstraZeneca's local factory to BEE company ABM

According to the draft Genesis (The Growth Potential of the Pharmaceuticals Sector in SA) study released in May this year, the pharmaceutical sector is shrinking. The report indicates that the industry is losing jobs, has rising import ratios and manufacturing plants are being closed down. Since 1994, 35 pharmaceutical plants have closed.

AstraZeneca South Africa has sold it's local Alrode packaging facility as a going concern on favourable terms to Afrika Biopharma Manufacturing (ABM). Never an ideal option to close a facility, the pharmaceutical company rather sought a local BEE partner that would have the ability and commitment to ensure the long-term sustainability of the plant.

AstraZeneca CEO, Dr Guni Goolab says: “According to the draft Genesis report, pharmaceutical industry employment figures currently stand at 11 000 people; down from 16 000 in 2000. We believe a sale of an asset to an entrepreneur BEE company like ABM in the South African context will make a significant contribution towards transformation.

“A partnership agreement has been put in place with ABM, where the new company will be contracted to package our products until 2011. This will ensure a guaranteed income stream for the Alrode facility while the new shareholders take over the management reins of the factory and builds the business.”

Commenting on the deal, ABM Chairman Shad Mapetla says; “For ABM, this is indeed a major milestone and is in line with our plan to move up the pharmaceutical industry value chain. The packaging business has obvious synergies with our established subsidiary, Biotech Laboratories. We are still on course to realising our ultimate goal of being one of South Africa's major pharmaceutical manufacturers. To this extent, we acknowledge AstraZeneca's role in working with us to lay the foundation.”

“The manner in which the negotiations have been handled by AstraZeneca's management, staff, the Unions and ABM management demonstrates that there is commitment from all sides to make this transaction, which is definitely a groundbreaking deal in the South African pharmaceutical industry, work. We are pleased that our track record, which was carefully considered, clearly indicated that we have the capacity to add value to the packaging business to the benefit of all stakeholders,” says Mapetla.

Goolab says: “It is always our intention to be part of the solution not the problem and the AstraZeneca / ABM deal is an important step in transforming our industry. It effectively bolsters the pharmaceutical sector through the preservation and creation of jobs and is true empowerment.

AstraZeneca is committed to the local transformation goals and objectives as defined in local (Broad Based Black Economic Empowerment) BBBEE and related legislation. The company views transformation as a business and social imperative. In keeping with this and the spirit of real transformation, we have, throughout the process ensured that our employees are treated in a fair, respectful and consultative manner and the deal has been structured in such a way that it will have a favourable outcome for all stakeholders.”

Mapetla concludes: “We look forward to joining hands with plant management as we make sure that the business doesn't just continue to exist but instead grows in leaps and bounds. We have already established good rapport with plant management and we are certain that we will seamlessly manage the transition as we stride ahead.”

For further information visit www.astrazeneca.co.za