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Professional management support helps Cospharm map the road to bring more generics to southern Africa

Professional management support helps Cospharm map the road to bring more generics to southern Africa

Ten years from now, Cosmas Mukaratirwa wants to be a pharmaceutical manufacturer and distributor of note sending his products to at least six countries in southern Africa. To get there, he realised his small outfit, Cospharm, needs a proper commercial structure. Hunting for opportunities to expand his entrepreneurial skills, he came across the Stanford Seed programme, offered in southern Africa in partnership with the De Beers Group.

Mukaratirwa is the Managing Director of Cospharm. It is his intention to expand his business from a small pharmaceutical distributor to a large manufacturer of generic medicine. His dream is to grow his current workforce of 82 individuals to at least 500.

In 2017 he applied to be accepted for the Stanford Seed programme, a one-year management development course for upcoming entrepreneurs launched last year in southern Africa by the De Beers Group of companies. He was accepted and started in January this year.

It started with an immersion week in January at an institution in Kenya where De Beers first partnered Stanford University in the seed programme for East and central Africa. Upon his return to Namibia, his first practical assignment started immediately in the form of a pre-workshop for about a month, applying the principles learned or discussed during the immersion week. During this time his management team was closely involved preparing the company to receive a Stanford facilitator for an intensive one-day assessment of Cospharm’s progress.

Repeat visits to Kenya in March and June further strengthened their successful participation in the seed programme.

Mukaratirwa, a pharmacist by profession, told the Economist he started Cospharm as a small pharmaceutical distributor in 2010. At the beginning of 2017 he realised his business has grown to a level where he considered enrolling for a post-graduate management course like an MBA. It was at that time that he first read about the Stanford Seed programme, and decided to apply for admission.

“This course helps me and my management team to design a transformation strategy that will take us ever closer to our goal of becoming a pharmaceutical manufacturer of note,” he said adding that Cospharm’s exponential growth since 2010 lead to the point where he had to consider looking for professional support to take them to even bigger achievements.

For the seed programme, he had to submit financials, staff profiles, a customer list and the company’s value proposition. He also had to pay the US$5000 enrollment fee, which he pointed out, was the only expense he incurred. All the rest is covered by the De Beers Group and some components are subsidised by Stanford.

Through their engagement in the seed programme this year, Mukaratirwa and his team are building a transformation strategy which they will then start implementing early next year after completing the course. His people are involved all the time in all aspects of the process. “This way, your management feels part and parcel of the organisation and of the intended transformation process,” he said.

At the end of the one-year programme, he can apply for a coach from Stanford for 20 hours per month. This cost is also covered by De Beers.

Cospharm is built on sourcing intellectual property licences from Asian manufacturers of generic medicine. Under the current arrangement, some 30 of these companies manufacture medicines for the Namibian distributor, branded for each of the jurisdictions where they are registered as distributors, – Namibia, Zimbabwe and Botswana.

“Regulatory approvals are very important. If generic medicines are not approved by the World Health Organisation and by the Food and Drug Administration in the United States, it is almost impossible to penetrate new markets,” he said. This is where his experience as an R&D pharmacist at Varicham Pharmaceuticals, a WHO pre-qualified company based in Zimbabwe, helped him to chart the first years for Cospharm as a distributor of generics.

With his background, his technical expertise and his Stanford tools, Mukaratirwa is confident they will grow into a leading regional player in generics.

Photograph of Cosmas Mukaratirwa by Donald Matthys

The Stanford Seed Transformation Programme, southern Africa. The application period will run until 1st July 2018. To learn more about the program and apply, please visit


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Sanlam 2018 Annual Results

7 March 2019


Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at