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AIDS drug made by a Finnish-Kenyan company approved by WHO

09/11/2011

The World Health Organisation (WHO) has granted prequalified status to an AIDS medication produced by Universal Corporation Ltd (UCL), a maker of high-quality, low-price generic drugs in Kenya. “This opens the door for us to participate in international tenders to provide drugs to UNICEF, the Global Fund and others,” said managing director Perviz Dhanani. Finnfund has been financing UCL since 2005.

Universal Corporation 4.jpgAIDS drugs for Africa are generally procured through competitive tendering process. Most of the drugs come from other continents because hardly any African producers have received WHO approval. UCL is one of the first.

Although UCL sought and obtained prequalification for a single product, an antiretroviral drug for treating AIDS, it is a very significant milestone. The World Health Organisation has evaluated UCL’s production equipment and quality control process. Prequalification for one product makes it much easier for others in the future.

Drug for children in the pipeline

“Our next objective is to get a children’s version of the same medication onto the WHO list. The process is well advanced and we hope to get the green light next year,” says UCL’s technical director Pentti Keskitalo. Before long, the company will seek WHO prequalification for drugs for treating malaria and tuberculosis, too.

AIDS is the greatest threat to public health in Africa and a great volume of antiretroviral drugs is procured in competitive tendering. If UCL’s tenders win, a large part of its capacity may in future be used to produce this single drug. The company is capable of making 2.4 billion pills a year.

Long investment pays off

WHO approval is the culmination of a quality project that has lasted for many years and costUniversal Corporation 7.jpg millions of euros. It can also have a major financial impact because WHO-approved suppliers cannot underbid each other by sacrificing quality. Although UCL got a European PICS quality standard already years ago, it has until now been confined to operating in markets where the approval of local officials normally suffices. In Africa, many of the suppliers in these markets offer cheap prices but provide substandard pharmaceuticals.

“It is vital for UCL to enter markets where quality is a prerequisite and where the prices reflect this,” says Finnfund’s investment manager Ari Nironen.

Saving costs by reusing equipment

UCL was set up about a decade ago by Pentti Keskitalo of Finland and two Kenyan partners. The company is run by managing director Perviz (Palu) Dhanani, and Keskitalo serves as technical director. Much of its equipment and production lines were acquired second-hand from countries like Finland and Germany.

Finnfund is UCL’s main source of external finance, while UCL is Finnfund’s largest individual equity-rated investment. A large part of the finance from Finnfund has been used for the quality project that has now yielded results. Finnfund has also invested in developing corporate governance and financial management.

Universal Corporation 10.jpgUCL is raising standards among Kenyan pharmaceutical producers by serving as an example and by training employees. It provides work for about 400 people. The company makes more than 100 different pharmaceutical products and exports to 15 African countries. The AIDS drug that is now on the WHO prequalified list is manufactured under licence from GlaxoSmithKline.

For Africans suffering from AIDS, UCL’s achievement of prequalified status is a precious thing. At a time when finance for AIDS drugs has disappeared from newspaper headlines in the developed world and pledges to the Global Fund against AIDS, TB and Malaria are being withdrawn, the number of producers of quality drugs needs to be increased and local suppliers ought to participate in competitive tendering. The tougher the competition between suppliers, the more drugs for sick people can be obtained from the resources available.

For more information, contact investment manager Ari Nironen tel. +358 40 547 8848 or managing director Jaakko Kangasniemi tel. +358 40 577 7676 firstname.lastname@finnfund.fi

WHO prequalification http://apps.who.int/prequal/