The move has come as a surprise as established companies normally acquire start-ups and not the vice versa.
According to a report by Quartz, mPharma will take control of the 20 Haltons stores spread between Nairobi and Mombasa. This has come at a time when mPharma is working to complete a USD 12 million Series B funding round led by 4DX, an Accra/San Francisco venture capital firm, and Nairobi-based Novastar Ventures.
mPharma is a six-year old Ghanaian startup that manages prescription drug inventory for pharmacies and their suppliers. It was founded by Gregory Rockson to improve the efficiency of pharmaceutical supply chains in African countries.
Reportedly, Its proprietary Vendor Management Inventory (VMI) system is already being used in over 250 pharmacies in Ghana, Nigeria, Zambia and Zimbabwe.
The new deal will see the startup making a debut into the East Africa regional market.
“What excited me about Haltons was its vision to bring high quality and safe medicines to the mass market. The pharmacy plays an important role in increasing access to affordable healthcare in Africa. We look forward to using our experience in vendor managed inventory and conversion franchising to build Haltons into a mass market retail pharmacy brand in Kenya,” Gregory Rockson who is the CEO and founder told Weetracker.
“We’ve not always been able to control the customer experience and fully address the issue of drug affordability with our pharmacy clients particularly because they manage their profit margins,” said Gregordy.
“Through our QualityRx service, we’re starting to invest in improving the customer experience and pricing that patients get from pharmacies,” says Rockson. “Haltons will serve as testing ground for us to develop patient-centered services we can provide to our franchise pharmacies. This way we can encourage lower margins and pass the savings on to the customers.”
The startup is taking control of Haltons from Fanisi Capital, a private equity firm. However Haltons’s senior management will retain a stake in the business.
Mary Ngige, Haltons’ managing director, says the attraction to the deal was in a bid to better efficiency within the pharmacy’s supply chain using better inventory management software which ultimately aligned with Halton’s own mission to improve drug accessibility and affordability.
“This is a volume business and their technology will help us fine-tune our model and improve competitively.”
Pharma is believed to have paid under USD 5 Mn for the chain but the reports are not clear yet. Last year, Haltons did around USD 1.5 Mn in revenue, according to Ngige.
Ngige anticipates that its new ownership and better systems could see it start to expand again following the closure of a few of its branches that were unprofitable.