Quality Chemical’s expansion problem
The IndependentJuly 6, 2026Business, Health, In The Magazine, NEWS
Shareholders approved a final dividend of Shs6.4 per share, taking the total payout for the year to Shs16.6 per share, up 23 percent from Shs13.5 in the previous financial year
Kampala, Uganda | JULIUS BUSINGE | Quality Chemical Industries Limited (Qcil) has said it remains confident in its long-term growth prospects, even as it warned that profitability could come under pressure from rising global competition, shifting procurement patterns and higher input costs in the near term
The outlook was presented at the company’s annual general meeting in Kampala on June 30, where shareholders also approved a higher dividend following what Qcil described as its strongest financial performance since it was established in 2005
The pharmaceutical manufacturer said it expects increasing competition, changing market conditions, supply chain disruptions and fluctuations in the cost of active pharmaceutical ingredients to weigh on margins over the coming years
However, it said continued investment in manufacturing capacity, cost efficiency and product expansion would strengthen its competitive position over the long term
“Our performance reflects the strength of our operating model,” Chief Executive Officer Ajay Kumar Pal told shareholders. “We are building a more efficient and diversified business, anchored in uncompromising quality and focused on the availability, affordability and accessibility of our medicines.”
Expansion strategy
To support future growth, Qcil is expanding its manufacturing footprint in Uganda. Construction has begun on a new facility at the company’s Luzira plant, which is expected to double production capacity within the next 24 months and introduce new product lines, including injectable medicines. The project is being financed through a combination of internally generated funds and bank borrowing
During the financial year, the company also completed what it describes as Africa’s only dedicated Hydroxyurea manufacturing plant, making it the continent’s sole producer of the treatment used for sickle cell disease
It further expanded its private market portfolio, launching 15 new products across therapeutic areas including antibiotics, antimalarials, antihypertensives, antidiabetics, antifungals and allergy treatments
Qcil Chairman and Co-founder Emmanuel Katongole said the investments reflect the company’s long-standing mission to develop local solutions to Africa’s healthcare needs
“Qcil was founded on a simple conviction: that Africa’s health challenges deserve African solutions,” he said. “For over twenty years, that conviction has guided every decision we have made.”
He added that the company had also introduced a paediatric antiretroviral medicine aimed at improving access to HIV treatment for children
“FY26 was our strongest year yet, but what matters most is not what we earned; it is what we built, and who we built it for,” Katongole said. “We are just getting started.”
Record earnings
Qcil’s expansion plans come after a year of strong financial performance for the year ended March 2026. Revenue rose 8.8 percent to Shs290.5 billion, from Shs267.1 billion a year earlier, while gross profit margin improved to 46.7 percent from 40.6 percent, supported by improved manufacturing efficiency, tighter control of raw material costs and a stronger product mix
Operating profit increased 24.2 percent to Shs73.8 billion, while profit after tax rose 38.8 percent to Shs56.4 billion
The company also reported a sharp improvement in cash generation, with operating cash flow more than doubling to Shs67.5 billion from Shs30.3 billion in FY25
Management attributed the performance to higher earnings, improved working capital management and the recovery of previously impaired receivables owed by the Government of Zambia
Dividend and caution
Shareholders approved a final dividend of Shs6.4 per share, taking the total payout for the year to Shs16.6 per share, up 23 percent from Shs13.5 in the previous financial year
However, the board cautioned that the strong payout should not be seen as a new normal, noting that the results were boosted by one-off gains, particularly the recovery of the Zambia receivable
Despite the warning, management said the company’s strategy remains focused on improving operational efficiency, expanding its product portfolio and increasing production capacity
It said the approach is intended to support sustainable growth as demand for locally manufactured medicines continues to rise across Africa, even as the operating environment becomes more competitive and cost pressures persist
AGMBusingeEmmanuel KatongolehydroxyureaJulius BusingeQCILQuality Chemical Industries Limited2026-07-06The Independent
