Govt bails out vaccines factory with Shs2.3 trillion

In the back-to-back meeting with Mr Magoola, the government promised to acquire a stake in the company and release the required money in phases, with the second tranche expected in the next financial year.

The initial release, according to sources close to senior officials in the Ministry of Finance Planning and Economic Development, was to ensure the company is financially sound following a tripartite agreement between the Government of Uganda, Equity Bank and Dei Group International.

Dei Group International is an African conglomerate with business interests in several sectors such as agriculture, technology, medicine and research.

The Dei BioPharma Drugs and Vaccines Manufacturing Plant in Matugga is a subsidiary of Dei Group International.

The ministers, according to multiple sources, described the bail out deal rooted in the finer details of the “equity financing” arrangement, as “a stitch in time” and talked of “a life-saving company” going through financial challenges.

Dr Monica Musenero, the minister of Science, Technology and Innovation, confirmed the bail out and explained that the government is acquiring a stake in the vaccines factory.

“When you are investing, you don’t put in the money at once, so the government after realising that the investor [Mr Magoola] had put a lot of money, had to also come in and rescue him from the financial constraints he was in, support him and as well acquire stake,” Dr Musenero said.

In the Shs3.5 trillion supplementary budget passed by Parliament in December last year, Dei Pharmaceuticals was given Shs77.6 billion as initial government investment in the vaccines factory. Dr Musenero, however, didn’t disclose the number of shares in the company.

Magoola on financial woes
In an interview with the Daily Monitor yesterday, Mr Magoola confirmed government intervention and acquisition of undisclosed shares in his company. He revealed that the company is no longer struggling financially and castigated a section of people he didn’t name but accused them of attempting to strangle what he also called “a life-saving” facility.

“Most of the challenges we faced were basically financial because one of our financiers, Equity Bank wanted to exit the project because there was a lot of sabotage and misinformation,” Mr Magoola said.

He added: “A lot of people were fighting the project but thank God, the government led by President Museveni stood their ground and said that such a project can’t fail and have done each and everything and we can assure Ugandans that this project is here and going nowhere.”

Mr Magoola also told reporters: “Dei Group, which I lead has invested a total of $500 million in the entire project. Equity Bank has given us a good amount of money, Uganda Development Bank has invested some money, and our partners from the US and Europe have invested a lot of money.”

Gov't stake
Explaining the government stake in his company, Mr Magoola said without delving into the details: “We are discussing dynamics [with the government] definitely they will come in and get a stake in a company, get equity in the business because this is going to change the way manufacturing of drugs in Uganda and the entire globe.
 
The $1b facility was launched on July 6, 2021, by President Yoweri Museveni and then Kenyan Vice President (now President) William Ruto. The facility seeks to produce high-quality yet affordable medicines, including those of cancer and malaria that will make a difference to millions of families across Africa.
  
The mass production of essentials will start immediately after a three-month trial, which is expected to start early next month. The National Drug Authority (NDA) is expected to inspect the facility’s Generic Section and later issue Mr Magoola with a Certificate of Suitability.
 
“After trials, we shall start with daily production of one million doses of drugs which we shall increase depending on the demand. The generic section will at full capacity produce 150 different types of drugs but we have started with 25 types and will as well go on increasing,” Mr Agil Khan, a senior pharmacist and project manager, told journalists during a guided tour of the facility at the weekend.
  
“Every requirement has been installed and tested. We have also produced a few samples of drugs (as you can see) with them and we are just waiting for the NDA who are expected before the end of this month to inspect the facility,”  Mr Khan added.
  
Future plans
Once fully completed, the vaccines facility, which sits on 150 acres, will produce all forms of essential drugs, including; all types of vaccines on top of the mRNA vaccines, and other biological solutions listed as essential drugs including the Filgrastim, Erythropoietin, and Trastuzumab.
 
The facility comprises nine sections including Bio-tech Facility, Injectable, Warehousing, YKTM GLP Biotech Laboratories, Generic Section, Nutraceuticals Section, Penicillin, Cephalosporin and Non-Beta Lactam Facility, Oncology/Cancer Manufacturing Facility, and the Virus Vaccines Facility, where the majority are under construction.
  
“This project is very unique, it is the first of its kind in Africa that has been built by consultants from the US and Europe and it is the only facility in Africa that has been built to meet all global stringent good manufacturing practices, its meets US, European standards, and the World Health organisation and we expect to export drugs,” Mr Magoola emphasised.
 
“The Generic area is fully completed, we have installed every required equipment and tested them well and we shall start mass production around May,” Mr Magoola told journalists on January 27.
 

Works updates
Mr Hafeez Ghouri, the project site head, said the entire project is 60 percent complete with two of the nine facilities fully completed and these are; the Yoweri Kaguta Tibuhaburwa Museveni GLP Biotech Laboratories dedicated to cancer research, quality assurance, drug discovery, gene therapy, cell therapy, mRNA therapeutics, vaccines, biosimilars and biologics and the generic section where production of tablets, capsules, sachets, ointment and syrup, will kick off in May this year.
 
Both the injectable facility and the warehousing facility with cold chain technology are capable of storing 60,000 pallets of mRNA and other vaccines, plus other pharmaceutical products, which are 80 percent complete.
 
“The Biotech Facility, which is the first biotech facility in Africa under a US patent will be completed this year. This facility will produce the latest cancer drugs, biosimilars, peptides, cell therapy, biologics, cytokines, therapeutic proteins, Gene therapy and vaccines including mNRA and others -- subunit, recombinant, polysaccharide, and conjugate vaccines. The facility is fully compliant with FDA, EU-EMA and WHO standards,” he said.
 
According to Mr Ghouri, engineering designs for three combined facilities including the penicillin, cephalosporin and non-beta lactam facility have been completed and fully meet global stringent guidelines.
 
“The oncology/cancer manufacturing facility has been designed to meet the most stringent FDA standards under EOL5 guidelines and technology,” he said.
 
Construction of the virus facility is expected to be completed next year and several drugs shall be produced from here.
 
These drugs, according to the officials, are Tetanus Toxoid (TT), a toxoid vaccine used to prevent tetanus, Tetanus Diphtheria vaccine which can prevent tetanus and diphtheria and the Hepatitis B vaccine (Hep B), which is also known as the first “anti-cancer” vaccine because it prevents hepatitis B, the leading cause of liver cancer worldwide.

Other vaccines that will be produced here are DTP-Hep B-Hib, which shall prevent some  killer diseases including Diphtheria, tetanus, whooping cough (pertussis) or DTP, polio, hepatitis B and Haemophilus influenzae type b (Hib) among babies.

“Combined immunisations enable maximum protection to begin as soon as possible after birth,” Dr Khan said.
 

Others are influenza vaccines such as PCV-10 vaccine, which protects against infection by the pneumococcus bacteria, one of the most common causes of pneumonia in children; typhoid conjugate vaccines, covid-19 vaccine, and human papillomavirus (HPV) vaccines, which have been licenced by the US.
 
Timeline of project
June 2020: President Museveni commissions the construction of the pharmaceutical and vaccine plant but construction fails to take off due to structural challenges and impact of the  covid-19 pandemic.

July 2021: President Museveni together with Kenyan current President who was a deputy by then, William Ruto re-launch its construction.

July 2021: Construction of Generic Section starts after key financiers Equity Bank and others released the funds.

January 2022: Plant proprietor Mathias Magoola goes into a Shs4b legal battle with Mutoni Construction (U) Limited, a South African company, contracted to build a pharmaceutical manufacturing warehouse at Kigogwa, Matugga.

December 2022: Equity Bank restructures the loan after Magoola failed to pay on time.

January 2023: Magoola applies for more restructuring of the loan but Bank of Uganda stops Equity Bank from doing so and he later cries out to government for bail out

March 2023: Cabinet Ministers led by Justice and Constitutional Affairs Minister Norbert Mao visit the facility where Magoola asked for a financial bailout of $600m.

September 2023: Equity Bank advertises planned attachment of all the properties of Dei Group and those of Magoola.

September 2023: Cabinet approves plan to acquire 

September 2023: Government and Magoola engage Equity Bank and a tripartite agreement is signed between the three partners.

December 2023: Parliament approves a Shs3.5 trillion Supplementary where Shs77.6 Billion was given to Magoola

January 27, 2024: Dei Group Boss announces dates for start of mass commercial production of 25 types of drugs in the Generic section.

Sub Editor: Joan Akello