This year's top black economic empowerment (BEE) company in the health sector is a newcomer to the main bourse of the JSE. Enaleni was a small, unknown pharmaceutical manufacturer until last year, when its share price rocketed from R1,50 on listing on the JSE's AltX in June to about R6,50 in a matter of months.
Suddenly everyone was interested in this small, black-empowered generics start-up. Enaleni has succeeded in improving its empowerment credentials within such a short time, that it has shown up some of the older companies in the health sector. Enaleni's total score is more than double that of its closest rival, Aspen.
Enaleni CEO Trevor Edwards says the organisation took a "conscious and strategic decision" to create a black-empowered company. In the early stages, Enaleni focused on procuring many of its services from empowered companies.
"We bought everything from packaging to transport from BEE companies," says Edwards.
In addition, it developed a recruitment policy that focuses on recruiting empowered talent at all levels of management. "It was ironic - we had more black managers than white managers."
That has changed over time. Enaleni has grown by acquisition and this has meant that its ownership score has been diluted. But its most recent acquisition - generics company Cipla Medpro, valued at R1,2bn - has increased its empowerment ownership score to about 31%. This includes the existing BEE shareholders in Enaleni. The Cipla deal has led to a number of lesser-known black empowered consortia investing in the business. These include Amabubesi Healthcare, The Inala Consortium, Yonga Consortium, Safika Investments, New Era Consortium, Two Ships Trading, Aquarella Investments and Koketso Growth.
"We'd hoped that the listing on the main bourse would increase our empowerment shareholding to more than 51%. It's a journey and that's our destination," says Edwards.
Other health-care companies balked at the idea of a 51% ownership target set in the health charter last year. The uproar forced health minister Manto Tshabalala-Msimang back to the drawing board. A revised draft of the charter suggests a more modest 31% ownership target.
"We hope that we will be rewarded for being a pioneer," says Edwards. He's talking about the more than R4bn state drug tender market. Last year Enaleni won about R54m of it but the company wants a bigger slice of the pie.
With the health charter likely to come into force this year - compelling all health companies to procure from empowered companies - Enaleni hopes to win more contracts to supply the large hospital groups Netcare and Medi-Clinic, as well as retail groups such as Pick 'n Pay and New Clicks.
Multinationals will want to beef up their empowerment credentials by procuring from BEE suppliers, as they are likely to be exempt from ownership targets in the health charter. "We're already in discussions with two multinationals."
Enaleni's empowerment scorecard will help reel in local and multinational customers, but it's unlikely that it will have much impact on seducing large international health organisations which purchase huge volumes of drugs, worth billions of rand, to treat patients across Africa.
Enaleni's rival, Aspen, has cornered this market. But Enaleni has its eye on it too and the Cipla deal should help it become a contender.
