Multinational corporations are scaling down operations or completely exiting the Kenyan market due to a challenging business environment. Among these companies, GlaxoSmithKline (GSK) has announced its decision to close its operations in Kenya, citing low sales and a strategic shift towards more profitable prescription drugs and vaccines.
GSK, a British pharmaceutical giant with nearly 60 years of presence in Kenya, will now rely on distributors to supply its products to regional markets. The decision to exit Kenya follows a similar move in Nigeria, marking a significant shift for GSK from two of its largest markets in Africa.
The company faces intense competition from local producers and affordable generic medications from India. Despite this, GSK intends to retain its manufacturing facility in Nairobi’s Industrial Area, operating under its independent consumer healthcare subsidiary, Haleon.
“The production facility in Kenya is a Haleon facility, and is not the subject of the update that GSK gave in Kenya this week,” clarified GSK in a statement.
Haleon, separated from GSK in July of the previous year, specializes in various products such as Sensodyne and Panadol. GSK’s strategic focus will now be on prescription drugs and vaccines, featuring well-known brands like Augmentin, Zentel, and Ventolin.
The company’s decision to move to a direct distribution model means that instead of maintaining a GSK commercial operation in Kenya, it will supply medicines and vaccines through a third party. This strategic adaptation aligns with the changing business environment and allows GSK to sustain its presence in Africa.
Despite the exit, GSK still plans to supply its products to the Kenyan market through a distributor-led model. This move reflects a broader trend, with several multinational companies attributing their exits to challenges such as unpredictable tax policies, foreign exchange difficulties, high operational costs, and uncertainties in Kenyan policies.
In recent times, other multinational corporations, including Finlays, De la Rue, Cadbury’s, and Game stores, have also exited the Kenyan market. P&G, another global giant, attributed its planned exit to the high cost of doing business, dollar shortages, and a sharp decline in sales in the local market.
As Kenya grapples with the departure of these companies, the government may need to address these challenges to create a more conducive business environment for both local and international enterprises. This trend underscores the need for strategic reforms to attract and retain foreign investment in the country.