Ultra Logistics Company Limited (ULCO): A vision in motion
The Nigerian Pharmaceutical Industry has the potential to be one of the best in the world. The country has one of the fastest growing populations (currently at 180 million people) and this evidently means that there is a huge potential domestic demand that can support a vibrant pharmaceutical industry.
However, the reality is lamentably far from expectations with the potential of the industry, just like every other sector of the Nigerian economy, largely sub-optimised. Despite the giant strides recorded in the last three decades, about 70 per cent of the drugs consumed in Nigeria are still imported with a record trade deficit of $475 million as at 2013 and this deficit is projected to reach about $800 million in 2018. Overall, the industry’s contribution to the national GDP is about 0.3 per cent and is practically non-existent in the world pharmaceutical map.
Barrier to growth
One of the factors militating against the rapid growth of the industry is the unorganised nature of the drug distribution system in the country. Over the years, this system has been compromised by criminal elements, which gave rise to the circulation of fake, adulterated and substandard drugs. The problem, which started small, has grown to become hydra-headed and has defied every attempt curb it.
In 2012, the federal government published a New Drug Distribution Guidelines (NDDG, 2nd Edition) which clearly set the roles and responsibilities of the different levels of players in the distribution chain. The operation of these guidelines is expected to facilitate an audit trail whenever a disruption occurs in the system. The guidelines’ operation, initially scheduled for implementation in July, 2014, was first shifted to 2015 and later to August, 2017.
I was privileged to be the chairman of the National Drug Distribution Committee set up by the Pharmaceutical Society of Nigeria (PSN) in 2013, with the mandate to generate awareness about the NDDG and advise the society on the appropriate steps to protect the interest of pharmacy, pharmacists and the general public in the implementation of the guidelines. The committee accepted the provisions of the guidelines and I travelled round the country to generate awareness as mandated and the response was impressive.
The committee also recommended the formation of a company which will serve as a buffer in the system and to assuage the palpable fear that the current unorganised drug distribution system may be replaced by a monopoly or oligopoly at the Mega Drug Distribution level. This company, as conceived, is expected to be run in accordance with the best practices in the industry and also provide an investment opportunity for Nigerian pharmacists. The recommendations were accepted by the PSN and the necessary steps were taken to bring the company into being.
Convinced about the viability of the project, we commissioned a Business Plan which was received, reviewed and approved by the committee. In summary, a total of N2.3 billion was recommended as the capital needed to fund the operation with a setup cost of N450 million (and balance to be used as guarantee for inventory purchase). The business is expected to break even in the second year with, a first-year target revenue of N3.6billion (1 per cent of the total market, about 5 per cent of the main competitor’s annual turnover).
Birth of ULCO
We adopted an inclusiveness strategy which ensures that everyone in the value chain (manufacturers, importers, retailers, etc.) is a participant. We also seek to drive acceptability with low margin which is the major attraction of the open drug market. This was what brought about Ultra Logistics Company Limited (ULCO) and, again, I was privileged to be the pioneer Managing Director.
The company was designed to be a Mega Drug Distribution Company, operating as a commercial enterprise with an underpinning social ethos that grows the investment of its shareholders. The company’s mission is ‘to emerge as the preferred Mega Drug Distribution Company in Nigeria and ensure that drugs are available, affordable and of good quality’. The business objectives were well laid out and the success pathway, business risks and mitigating factors were well packaged.
I worked with a crop of very intelligent and dedicated pharmacists, first in the National Drug Distribution Committee and later in the Interim Management team (Lekan Asuni, Victor Okwuosa, Abbas Sambo and Mrs Bukky George) and the Governance team (Ghali Sule, Godson Chukunda and Gafar Madehin). We were assisted throughout the course of events by a worthy consultant, Dr. Adewale Adeagbo.
Together, we worked tirelessly to ensure that the objectives of setting up the company were realised. We were driven by a passion for excellence and the compelling need to offer pharmacists a home-grown solution to the chief problem of the profession. We were also assisted by a strategy team composed of eminent pharmacists/business leaders and led by the director of Business School of Netherlands (BSN), Mr Lere Baale.
The recommendations of the strategy team was largely responsible for the adoption of the alternative route to market which could have made the full blown commercial operation to start in October, 2016.
The National Executive committee of the Association of Community Pharmacists of Nigeria (ACPN), ably led by Dr Abert Alkali, bought into the vision and the result of our collaboration was the signing of a Memorandum of Understanding (MOU) between the two parties.
In the MOU, ACPN adopted ULCO as its bulk purchase agent and ULCO would have, in this capacity, negotiated favourable terms with manufacturers and importers. In return, ULCO is expected to develop internal capabilities and harness environmental resources to provide business support services to ACPN. The operation is expected to be driven by information technology and we hope that, very soon, no retailer will have a need to leave the premises in search of drugs.
We have started working with some financial institutions to provide bridging fund for retailers, which will ultimately eliminate the current issues around unsecured credits in the industry. With this cooperative platform, we have successfully laid a solid foundation for a revolution in the drug retail business in Nigeria.
There were challenges which slowed down the progress of work on the project. First, our original business plan was rendered unworkable because of the low amount of money raised through subscriptions. The New Drug Distribution Guidelines (the platform that gave birth to ULCO), is still in limbo and the advent of the economic recession which became full blown in 2016.
As true visionaries, we remain undaunted in the face of the challenges and we engaged the critical stakeholders to readjust our plans. We were encouraged by the unflinching support received from the subscribers and many leaders of the profession. We are aware that ‘leadership is the capacity to translate vision into reality’ and this we did with ULCO. We succeeded in creating something out of nothing. The handling of the company finance was above board. We were conscious of the failure of the past and we did everything possible to avoid the pitfalls of the defunct Co-operative Pharmacy. We did not spend any money from the shareholders’ fund since inception to date. We generated income to cover our expenses, acquired assets and we still have some cash left. We fought a good fight, we kept the faith and we succeeded in turning a dream into reality.
An enviable success story
Ultra Logistics Company Limited is a vision in motion. It has come to stay. The subscribers should be proud that they have been part of a success story. Those who are yet to subscribe should do so now. The new management should be supported to make further achievements on the project.
We should all remember that the ‘road to success is constantly under construction’ and many workers will be engaged and disengaged at various times until the work is completed. The anticipated end-point should be regarded as a long-distance journey, and emphasis on a short-term gain should be moderated. It is also a relay race which will require the involvement of many competent hands to achieve victory.
Let us imagine what the future can be and follow Brian Tracy’s admonition that ‘all successful people, men and women, are big dreamers. They imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal or purpose’.
There is no need to entertain fear on the safety of your investment; the people at the helm of affairs now are tested men of integrity and they need your support for success. You have a need to ‘be daring, be different, be impractical, be anything that will assert integrity of purpose and imaginative vision against the play-it-savers, the creatures of the commonplace, and the slaves of the ordinary’ (Cecil Beaton).
God bless Ultra Logistics Company Limited; God bless Pharmacy; God bless Nigeria!