The lobby of Hotel Africana hums softly with mid-afternoon chatter. The scent of freshly brewed coffee lingers as waiters glide between tables. Grace Munyirwa, the proprietor of Vine Pharmaceuticals, settles into one of the seats across from me, his smile calm, the kind that hides both history and hard lessons. The city outside is alive, but here, time feels slightly suspended. ‘When we began Vine on August 3, 1999, it was really to feed my family. I had a new family but no job to put food on the table,’ he says
Munyirwa had worked with a pharmaceutical company before, SmithKline Beecham, and initially, he sold medicine to pharmacies. With this new venture, he was to build pharmacies. With his savings worth Shs11m and a top-up of Shs26m from his father, the journey begun. The first branch was in Kamwokya, Kampala. Then the second was at what was then Kampala Pentecostal Church. The growth spiralled to another branch on Wandegeya Road, and another on Dewinton Road. At its peak, the Vine Pharmacies branch had grown to about 36 branches.
He laughs, remembering. ‘Actually, Vine came about purely by mistake, if I may put it that way. The initial idea was to buy distressed companies – juice them up, fix what needed fixing such as aesthetics, restock, improve customer service (hire trained staff) and then sell. That was the model.’ He adds: ‘I never believed in holding on to a business if a good bidder came along. If I got a good price, I’d sell and move to the next thing.’ Once a salesman, always a salesman. He had moved to controlled selling to a higher-risk, higher-reward venture. He had learned the art of seeing beyond the façade and this had come from experience but also training, which had helped him understand what it takes to run a business.
‘Some people came to us saying, ‘look, I want to offload this’. We also approached some ourselves, ‘you run a nice business, would you consider selling?’ And many did,’ he recalls. However, there were some whom the team turned down because the repair would drain them. ‘We were not,’ he says, ‘resurrecting the dead-but healing the sick.’ So if they invested Shs20m, they sold it at a Shs20m profit, which worked as capital for another two. The idea was to work with a SWAT staff who were self-driven and self-managed, with whom he later shared the profits. These also scouted for lucrative ventures. ‘I had the idea of how to redesign while they implemented the vision.’
Art of sales
But how does someone sell off a good business? Munyirwa says it is flattering when someone tells you that you have done well and they are willing to buy you out, should you think of selling. The beauty about it is that you are not competing with anyone, and so the negotiations are not that stiff. ‘I once went to a man’s office, told him that I loved how he ran his company. ‘While I know that you are not selling, should you ever consider it, give me a call’. He looked at me sheepishly, saying he did not think of selling in the near future. Six months later, he reached out, and we closed the deal.’
That takes boldness, and Munyirwa had it in tonnes. But, soon, he was accumulating more than he was offloading, and this realisation came when he had 10 pharmacies. He realised the buying-and-selling model wasn’t sustainable. He branched into retaining and hired people to run the pharmacies. That’s how Vine Pharmaceuticals grew-by mistake. He leans back. ‘We scaled so fast, and I was now forced to take some bank loans, which turned bad. We were akin to a healthy man with hypertension and diabetes. You don’t see the illness from the outside,’ he says as he sips his coffee.
Then a private equity fund approached them in 2012 and invested $1m (Shs3.6b) and later another $250,000 (Shs901m). Sadly, seven years later, they ran into problems. ‘When the parent company coughs, the children sneeze. All the companies they’d invested in struggled.’
A new partner
With a shaky private equity (PE) deal, the PE firm appointed a liquidator (another PE firm in the UK) to collect the investment on their behalf. Munyirwa approached people who wrote their business teaser-it is shared to interest buyers. ‘A few PE firms wanted to invest, but there was also another who wanted equity. With enough merry-go-rounds with PEs, I opted for equity, though it was heavily discounted. We were just signing to their terms,’ he says. He adds: ‘We needed someone who would walk with us through all the ups and downs, not seeking interest.
This was Mutti, with presence in 12 African countries, who took 55 percent of the company. Then we co-branded to Vine Pharmaceuticals, a Mutti Pharmacy, hence the move from blue and white to orange and white.’ This transition was not one Munyirwa was accustomed to, but he learned how to swim against the tide. ‘While you are not paying interest with a shareholder, it is tough; it’s like sharing the same bed, blanket, pillow-constantly pulling ropes. I wasn’t used to writing emails, waiting 48 hours for a response, and then chasing a decision that’s already expired.
And they did not understand our market; what worked in Nigeria or Malawi didn’t always work in Uganda. Their policies were copy-paste-and we suffered losses.’ While Munyirwa still has a stake, the branches have reduced. That was inevitable because Mutti also faced turbulence in other markets. Lessons picked This journey has not left Munyirwa the same as several lessons were gleaned. For instance, he learned that it is better to grow slowly and organically than to rush for private equity or venture capital (VC).
‘PEs and VCs will bring the money and expertise, but no one knows your company like you do. Nothing hurts more than watching that dream get diluted,’ he says.
His voice turns reflective, saying in the inception, they prided themselves in two things-exceptional customer service and sourcing hard-to-find medicine. Anyone who couldn’t get medicine elsewhere had his number. And he found it-from anywhere in the world.
‘I’ll never forget one gentleman who needed a rare drug only available in South Africa. I didn’t know him, but he’d been referred to me, and the arrangement was for an upfront payment. Two days later, I was on a flight to Johannesburg. Our name became synonymous with hope,’ he shares. He pauses. ‘Another time, a customs officer stopped me at the airport. I thought I was in trouble. But he said, Grace, you helped my mother when she was ill. Though she later passed away, we’ve never forgotten what you did.’
He looks down for a moment.
‘Once, I brought in medicine for a child with cancer at a hospital. The mother couldn’t afford it, so I gave it free of charge. That was the Vine dream-not just profit, but purpose.’ He exhales deeply. ‘When that dream breaks, a part of you dies in frustration.’ From a dream of providing cutting-edge solutions for their clients, to dealing with people who are only about financials, he says half-jokingly, ‘I have no heart.’ Nonetheless, he can afford a smile to say he is restarting, more like having a third life. He is building something new – small but growing, within his means.
Word to entrepreneurs
If you want to grow, to access capital but keep your dream intact, Munyirwa says time is your friend. None of the companies we admire made it in five years.
‘Stay the course and grow. It’s glamorous to say you’ve attracted millions in funding, especially in a country like ours, but don’t be too quick to dilute yourself. Only bring in investors when you have gained the capacity to walk away from the negotiation table. Don’t be desperate.’
He looks out towards the pool area, sunlight spilling through the glass.’Find family who can invest in you. Find friends, even fools, who believe in you,’ he laughs. Munyirwa says ‘investors don’t steal your dream, you just allow them to dilute it. However, when you have stabilised your dream to have enough leverage, you can attract the right kind of investor. But too often, many are flattered when they get a letter of interest, ‘Oh, so and so partners from Johannesburg knows I exist!’ And before you know it, you’ve signed away your dream.’ He emphasises that every entrepreneur must grow lest they easily sell their dream cheaply.
Mistake
Actually, Vine came about purely by mistake, if I may put it that way. The initial idea was to buy distressed companies – juice them up, fix what needed fixing such as aesthetics, restock, improve customer service (hire trained staff) and then sell. That was the model. I never believed in holding on to a business if a good bidder came along. If I got a good price, I’d sell and move to the next thing – Grace Munyirwa, the proprietor of Vine Pharmaceuticals.