Setting up of Pharmaceutical Companies in Kenya

There are three main vehicles by which a foreign company desirous of setting up in the pharmaceutical sector in Kenya can use, i.e. either a sole proprietorship, partnership or a limited company. Although sole proprietorship and partnerships are options afforded to the investor, this article is written with limited liability companies in mind.

Where an investor opts to go with either the partnership or the limited company option, one of the shareholders/partner MUST be a superintendent pharmacist duly licensed by the Kenyan Pharmacy and Poisons Board and must hold a MAJORITY of the shares in the company. The spirit of this requirement is to ensure the local market benefits from the foreign investment.

The most popular vehicle used in the country for pharmaceuticals is the limited company for the following reasons;

  1. it is regarded as a separate legal personality from the shareholders
  2. the ease of debt and equity financing that it affords the shareholders

Procedure & cost implication of registration of the company

STAGE I: Company Incorporation

  1. The registration of companies is undertaken by the Business Registration Service (BRS) in Kenya.  It takes approximately 1 week for registration to be completed upon the successful submission of all the required documents and payment of the requisite fees.
  2. The cost of registration of a limited company is KES 10,650 i.e. approximately 85USD (dependent on the exchange rate at the time of payment)

STAGE II: Obtaining the Company Tax PIN

  1. Company tax PIN registration is undertaken by the Kenya Revenue Authority. It is a process that is usually automatic upon the registration of a company.
  2. Please note however, in practice at times, one is required to apply for the PIN personally (at the discretion of the KRA).
  3. Once the company obtains the company PIN then the company registration is deemed completed.

Licenses required in the operation of pharmaceutical companies in Kenya

Import License

  1. The pharmacy and poisons board is mandated to review applications and issue import licenses for drugs and medical products in Kenya.
  2. Application of the permit will be done electronically through the Kenya Electronic Single Window System(KESWS).
  3. There are different types of import permits available that exist in the pharmaceutical industry. They include;
  1. Import permit for products emanating from prescription
  2. Import permit for donation products
  3. Import permit for drug registration samples
  4. Import permit for research purposes
  5. Import permit for products meant for commercial purposes

Product License

  1. All drugs whether locally manufactured or manufactured outside the Kenyan jurisdiction that will be traded in Kenya is required by law to be registered by the PPB. Each drug once registered will be issued with a Product License.

Wholesale Dealers License

 

  1. The wholesale dealers license is a mandatory requirement to anyone who wishes to operate a Pharmaceutical Wholesale business or distribution business of the drugs thus requiring storage of the drugs.
  2. It is important to note that the license automatically expires on the 31st day of December in the year that it has been issued, after which it must be renewed.
  3. In addition to the wholesale dealers license, the client will be required to register its premises. The PPB is mandated to oversee the registration process and carry out inspection of the premises to ensure that it meets the standards required of it.

Retail License

  1. The retail license is mandatory for anyone who wishes to operate a Pharmaceutical retail business.

Please note, should the company setting up wish to operate both a wholesale and retail business, the client will be required to obtain two separate licenses for two different premises with each premise having its own superintendent pharmacist.

In conclusion, the pharmaceutical industry in Kenya is fast growing and well regulated. It is therefore a good area worthy of focus by foreign investors.

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