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Adding
CLIFFORD RAPHIRI
Chairman
OUR PERFORMANCE
(continued)
LEADERSHIP REVIEW
FROM OUR CHAIRMAN AND CEO
As each year commences, we are inspired to
move the business forward for the benefit of
the users of our products, our shareholders, our
employees, our customers, the communities in
which we operate and associated stakeholders.
It is common cause that Adcock Ingram has
been in remedial mode for at least the past
two years. It is therefore with a sense of pride
and pleasure that we communicate the
satisfying progress made this past year, not
only on economic and operational matters
but especially on customer service levels and
customer relationship management. In review,
this has been an excellent year and the positive
results are confirmation of the strategic path
chosen for the business.
CHANGES TO THE BOARD
The start of the year saw various changes to the
Board with the appointment of Clifford Raphiri
as the Company’s non-executive Chairman.
Former chairman, Brian Joffe, assumed the role
of Deputy Chairman. The Group also saw the
departure of the previous Chief Executive Officer
(CEO), Kevin Wakeford and the appointment of
Andy Hall, to this position. Dorette Neethling,
the Group Finance Executive was appointed as
Chief Financial Officer and as firm evidence of the
Company’s commitment to its Transformation
strategic imperative, Basadi Letsoalo was
appointed as Executive Director: Human Capital
and Transformation. We are grateful to Brian
and Kevin for the vision and leadership they
provided in implementing the restructuring and
placing the business on a solid foundation, now
well-positioned for its next phase of growth.
INDUSTRY
Providing affordable and accessible healthcare to
all citizens of South Africa remains a key strategic
initiative of the Government. The pharmaceutical
industry is therefore a key stakeholder of the
National Department of Health, and at Adcock
Ingram we take our responsibility of providing
affordable, safe and effective medicine seriously.
The annual adjudication of the single exit price
remains a concern, as annually determined
increases have failed to cover the cost increases
faced by the industry, particularly the cost of
importing active ingredients and medicines in
finished form.This controlled pricing environment
has made our task of maintaining margins
extremely difficult. On a positive note, the three-
year extension of the Schedule 0 exemption,
which allows products in this scheduling category
to be subject to free pricing, is welcomed.
The continuing delay in the registration of new
medicines continues to be a hindrance that
will hopefully be addressed with the launch of
the South African Health Products Regulatory
Authority (SAHPRA) during 2017. In the interim,
the Medicines Control Council (MCC) recently
announced an initiative to implement measures
to reduce the backlog. A spirit of cooperation
between the MCC and industry is evident in these
efforts, which we trust will produce positive results
in the near future.
The Consumer and OTC divisions are dealing well
with regulatory issues that affect their businesses,
including the regulation of complementary
medicines and the regulations implemented
to improve the control of codeine-containing
medicines.
PERFORMANCE
Our aimduring the past year was to give attention
to the investments in the rest of Africa and India,
while consolidating our position in South Africa
by continuing to focus on customers, products
and service.
A comprehensive review of the infrastructure
and operations of the foreign enterprises was
undertaken, specifically for the purpose of
evaluating the feasibility and future commercial
prospects.This resulted in the Company’s decision
to exit the Indian pharmaceutical sales and
marketing business, as it did not meet Company’s
current investment criteria. An agreement was
signed with Samara Capital Partners Fund II
Limited, an India-focused private equity firm,
for the disposal of the entire shareholding. The
Foreign Investment Promotion Board in India
has approved the transaction, subject to certain
conditions which the parties are evaluating.
ANDREW HALL
Chief Executive Officer
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Integrated Report 2016