Outline of Xyz Pharmacy & Cosmetics Uganda LTD Business Plan

EXECUTIVE SUMMARY
1.0 BACKGROUND
XYZ Pharmacy & Cosmetics Uganda Ltd. is starting out as a new

pharmaceutical/cosmetics wholesale/retail business. The pharmacy seeks to put
much emphasis on the retailing and distribution of quality pharmaceutical products
mainly from European countries, the Indian sub-continent, Kenya and Uganda. The
pharmacy’s starting annual sales turnover is projected to start off at UShs. 360
million and thereafter grow by 25% to UShs. 450 million in the second year; and
by a further 20% to UShs. 540 million in the third year of trading.
The vision of XYZ Pharmacy & Cosmetics Uganda Ltd. is to be one of leading
pharmacies in Uganda in the wholesaling/retailing and distribution of generic and
branded prescription drugs, over-the-counter (OTC) medicines, vaccines and
cosmetics to a wide range of customer markets segments in Uganda. Our key
objective is to provide a broad range of prescription/OTC/vaccine medications
and cosmetics to our valued customers at the most affordable and competitive
prices on the market. We will be able to sell our product range at reduced prices by
carefully maintaining efficiencies in our operations and by targeting the entire
segments of the market - those customers who pay for their medicines and those
who take on credit for not more than thirty days (especially the bulk-purchasing
wholesale consumers).
XYZ Pharmacy & Cosmetics Uganda Ltd. plans to operate from a strategically
located wholesale/retail outlet within Mukono town such that it can be in good
position to consistently and continuously serve both mail order customers and those
who visit in person for all the time that it will be in active business. We expect
to thrive by employing friendly and knowledgeable personnel, which, along with our
great prices, will drive the repeat business that we shall be relying upon. We only
expect that as the price of medication continues to sky-rocket, XYZ Pharmacy &
Cosmetics Uganda Ltd. plan will continue to attract more customers basing on
competitive market pricing of its medicines and will appeal more and more to the
customer's sense of value and convenience. The customers who will be targeted are
those who will be looking to save money on a pricey but necessary and regular
expense.
Our advertising, mainly through the news media, will be targeted at those who are
looking to save money on a pricey but necessary and regular expense.
XYZ Pharmacy & Cosmetics Uganda Ltd. is founded and promoted by Ms.
Nancy Miriam, a Bachelors of Pharmacy graduate from Makerere University with a
solid track record and lots of experience in the local pharmaceutical industry. Costs
will be minimized by maintaining only one pharmacist. The business will be
aggressively built and promoted to steer it to a profitable and robust trading
position and in the process it expects to boost its periodical sales turnover by quite
a substantial volume after it has got itself well-established on the local market.
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2.0 OBJECTIVES
The objectives for the first three years include:
1. Exceed customer expectations with superior pricing

2. Increase the number of customers by more than 30% per year
3. Develop a business that survives off its own cash flow
3.0 MARKET SIZE ANALYSIS & MARKETING PLAN
Product
XYZ Pharmacy & Cosmetics Uganda Ltd. will offer a wide range of prescription
drugs to patients based within the Mukono area or nationally. Both generics and
name brands will be offered.
XYZ Pharmacy & Cosmetics Uganda Ltd. will only service customers who self
pay. The self pay customers will be attracted to XYZ Pharmacy & Cosmetics
Uganda Ltd. because of its superior prices. For many Ugandans that do not have
drug plans, a discount on drugs is very welcome on today's increasingly tight
monthly budgets.
XYZ Pharmacy & Cosmetics Uganda Ltd. will be able to survive on lower
margins due to operating efficiencies gained regular retail/wholesale trading
operations and not accepting insurance policy drug plans which hampers cash flow.
XYZ Pharmacy & Cosmetics Uganda Ltd. will also save money by not paying
for customer's unlimited access to a pharmacist.
This model of saving costs by not providing unlimited access to the pharmacist will
be successful because the majority of customers will be customers who have been
taking the said drug for awhile, as opposed to a new prescription, and will not
require their hand to be held during the transaction. They are interested in The
Pharmacy as an inexpensive source for their medication.
With each order a printout will accompany the medications providing directions on
how to take the medications, other drugs that should be avoided concurrently, and
other useful information. XYZ Pharmacy & Cosmetics Uganda Ltd. will be using
computer print outs from industry software to reduce the cost of providing this
information.
Note--while the term "self pay" is typically associated with the notion that the
customer is paying for the medication out of pocket without insurance, it is used in
this context as the customer paying for the medications up front regardless if they
have insurance. They may be paying out of pocket, or they may be paying up front
and then submitting to their insurance company's drug plan to reimburse them
later.
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Price
The rationale for the pricing strategy is “Value Based Pricing” based on an analysis
of purchasing power of the target segment and the current customer spending on
pharmaceutical products. Concerns on health and need for good quality are on the
rise and correspondingly the willingness to spend on premium value medicine is
increasing.
Our key objective is to provide a broad range of prescription/OTC/vaccine

medications and cosmetics to our valued customers at the most affordable and
competitive prices on the market. We will be able to sell our product range at
reduced prices by carefully maintaining efficiencies in our operations and by
targeting the entire segments of the market - those customers who pay for their
medicines and those who take on credit for not more than thirty days (especially
the bulk-purchasing wholesale consumers).
The XYZ Pharmacy & Cosmetics Uganda Ltd. plan focuses on attracting more
customers basing on competitive market pricing of its medicines that will appeal
more and more to the customer's sense of value and convenience.
Promotion
XYZ Pharmacy & Cosmetics Uganda Ltd. will rely on a multi-pronged approach
for marketing its prescription and OTC pharmaceuticals in Uganda. It will set aside a
significant promotions budget of about UShs. 4 million per month for promotions
in 2011. Advertising thru the established print and electronic media as well as in
health books and buzz marketing techniques will be the main promotion vehicles.
(Market research indicates health books (18%) and family/friend referrals (36%) as
being top influencers in buying decision for NHPs).
Advertising: Using health magazines for men/women, TV, radio, newspaper, bill
boards, and internet. The focus of the advertisements will be on product benefits,
and the established brand names of the imported quality pharmaceuticals imported
and stocked by XYZ Pharmacy & Cosmetics Uganda Ltd. as well as competitive
product pricing. This approach will help build consumer confidence on the quality of
health products imported to East Africa.
Sales Promotions: Includes free samples, discount coupons, bundling products into
value packs, and bundling XYZ Pharmacy & Cosmetics Uganda Ltd. goods (key
chains, coffee mugs, caps, T-shirts, etc.).
In-Store Promotions: Includes Trade Discounts and special In-Store campaigns.
Public Relationships: Includes participation in Trade Shows, sponsorship of social

causes (corporate social responsibility).
Direct Mail Campaigns: These campaigns will be used for selectively reaching
potential long term customers.
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Distribution
The main distribution channel(s) for XYZ Pharmacy & Cosmetics Uganda Ltd. in
Uganda will be its wholesale/retail outlet in Mukono town. The convenient location
of the XYZ Pharmacy & Cosmetics Uganda Ltd. wholesale/retail outlet in
Mukono town – which is within touching distance of Kampala city and its suburbs
will accord the company a significant marketing/sales advantage as it makes it easy
for consumers to purchase and collect pharmaceutical/cosmetics consignments at
will and the excellent customer-service offered by company staff will be of an
unrivalled and peerless quality in Uganda for decades.
4.0 FINANCIAL ANALYSIS
(Note: All figures are in UShs.)
Table 1: XYZ Pharmacy & Cosmetics Uganda Ltd. Forecasted Income Statements
% of Year 1 Year 2 Year 3 Remarks &
Sales Assumptions
Loan Funds 40,000,000 _ _
Personal Equity 10,000,000 _ _
Sales 100% 360,000,000 450,000,000 540,000,000 Sales include income
from the sale of both
drugs and cosmetics
Direct Cost of 180,000,000 225,000,000 270,000,000 Indicates direct
50% expenses on purchase
Sales
of shop drugs and
cosmetics
Gross Margin 50% 180,000,000 225,000,000 270,000,000
Payroll 8.2% 29,520,000 30,996,000 32,544,000
SGA 20% 72,000,000 75,600,000 79,380,000 Includes sales and
marketing expenses
Depreciation 2.89% 10,404,000 13,008,000 15,606,000 4% of Sales based on
assumption that Depex
(Depex)
is 10% of Fixed Assets
Electricity 0.33% 1,200,000 1,320,000 1,440,000
Insurance 0.56% 2,000,000 2,450,000 2,900,000
Rent 1.67% 6,000,000 6,600,000 7,200,000
Legal Expenses 2,000,000 1,000,000 1,000,000
Expensed 8,000,000 0 0 Expenses on equipment
purchases made out
Equipment
only once in Year 1
Operating Profit 98,876,000 94,026,000 129,930,000
Loan 20,000,000 20,000,000 Loan to be recovered in
a period of 2 years in
Repayments
annual installments of
UShs. 20 million p.a.
Net Profit 78,876,000 74,026,000 129,930,000
NOTE: 1) Sales are based on XYZ Pharmacy & Cosmetics Uganda Ltd.’s price to
retailers. Retailer margins are above this price.
3-Year Return on Initial Investment: 566%.
Initial Investment Required: UShs. 50 million in 2011.
Refer Exhibit 12a to 12b for projected financial statements (3-Year Forecasted
Income Statements and assumptions).
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Source of Funds: XYZ Pharmacy & Cosmetics Uganda Ltd. targets to secure a
2-Year commercial loan facility from a leading young entrepreneurship development
agency and the project promoter’s own excess cash (sponsor’s equity) for funding
initial working capital requirements.
Risks: a) High working capital requirements in future years to meet growth.
Mitigation steps – Supply chain efficiency improvement.
b) Foreign exchange risks. Risk level – Medium. Mitigation Steps – Hedging.
5.0 ORGANIZATION PLAN & MANAGEMENT STRUCTURE
XYZ Pharmacy & Cosmetics Uganda Ltd.’s Mission Statement:
The XYZ Pharmacy & Cosmetics Uganda Ltd.’s mission is to provide our valued
customers with the best prices and quality generic and branded prescription/OTC
medications. We would like to use our convenience and services to exceed the
expectations of our customers.
Organization Structure:
The proposed future organizational structure of XYZ Pharmacy & Cosmetics

Uganda Ltd. is indicated in the diagram below. There will be six levels of
hierarchical authority in the company with the Board of Directors at the apex of the
organization. The next level will be the Executive Director who will be assisted by
the General Manager – Operations in the third tier. The GM - Operations will also be
supported by the respective departmental managers comprising of Finance,
Materials/Logistics, Marketing, Administration and Human Resources and Research
and Development departments in the fourth tier.
Board of Directors
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Executive
Director
GM – Operations
Material
Finance s/Logisti Marketin Manager – Research &
g Admin. & Developmen
Manager cs t
Manager HR
Manager Coordinator
Finance Logistics Dept

Department
Customer Marketing Dept

Relationship (Wholesale and
Management Retail)
Dept
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COMPREHENSIVE BUSINESS PLAN
6.0 UGANDA – INVESTMENT CLIMATE
Strategic Location
Few countries in Africa provide the sort of strategic location that Uganda offers to
investors. Located at the heart of East and Central Africa, it shares borders with
some of Africa’s most economically important and resource rich countries, from the
mineral rich DR Congo to the rapidly expanding Southern Sudan economy. Uganda
boarders the Sudan to the north, the Democratic Republic of Congo to the west,
Kenya to the east and Tanzania and Rwanda to the south.
Though landlocked, the many borders it shares with her neighbors, give her a
commanding importance as a base for regional trade and investment.
Predictability is possible because of macro-economic stability with inflation

maintained at single digit level for over 10 years from a record high of 240% in
1988. The country has also had an annual and fairly stable economic growth
averaging 6% per annum, a result of good macroeconomic policies and political
stability.
A liberal economic regime is another consistent characteristic of the Uganda

Economy. There is free inflow and outflow of capital (both current and capital
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accounts), 100% foreign ownership of investment is permitted and exchange rates
are freely determined by the market.
Market Access
Uganda has been secured and guaranteed by membership in various free trade and
market access preferences offered to the country. The Common Market for Eastern
and Southern African states (COMESA), a region with a market of over 380 million
people in 20 countries is one of the groupings in which Uganda is a member,
guaranteeing the business community more than 80% tariff reduction in this
regional market.
Strong Natural Resource Base

The country has got great physical endowments. The location in the heart of Sub-
Saharan Africa and astride the Equator, gives Uganda one of the best climates in
the world. With rainfall all year round, fertile soils and favorable temperature range,
one can grow any crops in the country in the most natural conditions any country
can have. The country takes pride in being the leader in organic agriculture in
Africa. Many food stuffs are produced, in an environment free of harmful chemical
inputs. There are plenty of unexploited mineral deposits (over 117 minerals).
Confirmed deposits include: gold, zinc, wolfram, petroleum, diamonds, vermiculite,
silica, uranium and iron ore.
Government Commitment to Private Sector

Government and private sector dialogue in policy formulation are at the highest
level and at the center of business development processes in the country. A
Presidential Investor’s Roundtable chaired by the Country’s President is in place to
ensure that government policies keep the private sector at the center. Business
Development Strategies including the Investment Climate Strategy (CICS), the
National Export Strategy (NES) and other regulatory frameworks have all been put
in place under Public - Private Sector Partnerships. As a result, many vibrant private
sector associations have come up to advance their members’ concerns.
Cost and Trainable Labour
Uganda presently produces over 20,000 University graduates per year. The quality
of this labour is one of the biggest attractions, being a product of an education
system with strong links with the British Education System inherited at
independence. The World Bank Doing Business Report (2006) ranks Uganda among
the top 25 countries where hiring labour is simplest. The country is also a regional
base for training the labour force from the East African region. Being among World
Bank’s low income economy classification, one of the key advantages of such an
economy is low labor costs. Using the GDP per capita as a proxy to gauge possible
wage competitiveness, an evaluation of Uganda with her immediate neighbours
shows her in the fifth lowest per capita income bracket based on Purchasing Power
Parity. Using the conventional per capita measure, Uganda has the third lowest as
illustrated in the figure across.
English Speaking Labour Force
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Although English is an official language in most of the countries in East and
Southern Africa, it is not the primary language spoken by the majority of the
population in any of them. Uganda is however the only Country in East Africa where
English is the sole official language. Using the Test of English as a Foreign Language
(TOEFL) as an indicator of English language skills, studies in the region have shown
that Uganda ranks second in mean TOEFL score among the six neighboring
Countries
Based on the scores, it would appear that presently only Kenya and Uganda labour
might have the requisite English language skills that are today vital for managing
the rapidly changing global business, where transactions are largely conducted in
English.
Protecting Investors
The country’s investors have complete international protection made possible by
the local laws and international conventions to which the country is signatory. The
Ugandan constitution (1995) and the Investment Code Act 2000, stipulate sufficient
laws to protect investors rights and property. The International Conventions and
institutions to which Uganda is signatory include the Multi lateral Investment
Guarantee Agency (MIGA); Overseas Private Investment Corporation (OPIC) of US;
Convention on the recognition and enforcement of foreign arbitral award (CREFAA)
and several others.
7.0 THE UGANDA PHARMACEUTICAL & MEDICAL PRODUCTS SECTOR
7.1 Overview
Over 90 per cent of Uganda’s drug needs is imported leaving only 10 per cent which
is produced locally. Imports of pharmaceutical and health products account for over
6% of total imports. Pharmaceutical companies in Uganda are categorized into 2
groups the manufacturers and distributors. The National Medical Stores imports
most of the pharmaceutical and health products.
Uganda’s Pharmaceutical and Medical products sector has witnessed steady growth
trends since the 1990s. There are currently 12 manufacturers 1 engaged in the
production of medicinal products and supplies such as tablets, hard gelatin
capsules, injectables, liquid mixtures and surgical gauze among others. The number
of pharmacies and drug shops has grown from 216 and 2,700 in 2004 to 425 and
4,370 respectively in 2008.
Table 2: Pharmacies & Drug Shops in Uganda, 2004 to 2008

2004 2005 2006 2007 2008
1
8 are large scale whilst 4 are small scale.
9
Pharmacie 216 263 326 336 425
s
Drug 2,700 3,000 3,500 3,900 4,370
shops
Source: National Drug Authority
7.2 Government Policy
The National Drug Policy relates to the regulation of the importation, production,
distribution, marketing, exportation, and use of pharmaceuticals in the public as
well as in the private sector and to any matter related to the above. The National
Drug Authority (NDA) is charged with the implementation of the National Drug
Policy.
All Statutory requirements are contained in: -

• The National Drug Policy and Authority Statute, 1993;
• The National Drug Policy and Authority (issue of licenses) Regulations, 1993;
• The National Drug Policy and Authority (Certificate of Suitability of Premises)
Regulations, 1995;
• A number of guidelines and sops (standard operating procedures) which are
obtainable from the National Drug Authority, Head Office.
National Drug Authority

The National Drug Authority (NDA) is an autonomous body set up by the
government by statute No. 13 of 1993, to implement the National Drug Policy based
on the concept of Essential Drugs. The importation of a drug requires the
submission of a request to NDA, which is examined and verified before permission
to import is granted. On arrival at specified ports of entry the medicines are
checked for Quality Assurance. Where need arises samples are taken for analysis at
Quality Control Laboratories locally or abroad.
• Control of Medicines
In Uganda, medicines are classified into three categories:-
- Class A – Narcotics;
- Class B – Restricted medicines – prescription only drugs/medicines +
pharmacy only medicines; and
- Class C – Over-the-counter (OTC) drugs/medicines.
Class A and B are drugs which must be dispensed only on prescription by a

registered medical Practitioner, Dental Surgeon and Veterinary Surgeon.
Drug Registration
NDA registers drug products for use in the country after full details about the
product and the research that has been carried out on it to assess its safety,
efficacy and quality is studied. NDA examines all the research and test results in
detail before a decision is made on whether the product should be granted
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registration in Uganda. This process is expected to weed out substandard products
and reduce the number of medicines circulating in the country to a manageable
number which can be monitored effectively.
Monitoring of Medicines
Even after medicines have been imported into the country or granted license to be
manufactured in the country, NDA, through its inspectors, monitors them while they
are being used. NDA inspectors carry out regular inspections of manufacturing
plants, pharmacies and drug shops.
Requirements and Procedures to be followed by an Investor Setting Up a

Pharmaceutical Manufacturing Plants and/or Pharmacies in Uganda
� Suitable Premises
• To avoid congestion and ensure equitable distribution of the services to the
people national Drug Authority advises investors about the location of premises;
• The actual premises/building must have all the appropriate compartments,
decorations and facilities for which a “Certificate of Suitability of Premise” is issued
by the National Drug Authority after inspection and recommendation by the Drug
Inspectorate;
� Pharmacist
• It is both a legal and professional requirement that all pharmacies and
pharmaceutical industries must engage the services of a qualified pharmacist.
Pharmaceutical Industries may require more than one pharmacist; and
• The pharmacist must be registered and resident in Uganda, in case of a body
cooperate or partnership, at least one of the directors must be a pharmacist
resident in Uganda.
� Licenses
• Application forms can be obtained from the National Drug Authority, Head office
and the licenses are obtained from the Secretary, National Drug Authority;
• The licenses that can be applied for include:-
- License to operate a pharmaceutical manufacturing business;
- License to operate a whole sale pharmacy;
- License to operate a retail pharmacy;
- Certificate of suitability of premises (Retail Pharmacy);
- Certificate of suitability of premises (Whole Sale Pharmacy);
- Certificate of suitability of premises (Manufacturing business); and
- Import/Export permit.
� Procedures
• Manufacturing must be under the direct supervision of a registered named
production pharmacist. In a large factory, the deputy production pharmacist must
be employed. This pharmacist (and deputy where possible) must not supervise any
other pharmaceutical business whether on the same or any other premises;
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• The production pharmacist must be supported by suitably qualified personnel
such as pharmacists, pharmacy technicians or approved technicians;
• Quality control of manufactured products must be supervised by a registered
named quality control pharmacist or chemist. In a large factory, a deputy quality
control pharmacist must be employed;
• The Quality control Pharmacist (deputy where possible), must not supervise any
other pharmaceutical business whether on the same or any other premises; and
• Suitably qualified personnel such as pharmacists, pharmacy technicians or
approved chemists must support the Quality Control Pharmacist.
Licensing Requirements:
To be licensed, the following must be submitted: -
• A certificate of practice of the production pharmacist;
• The certificate of the head of Quality Control/Assurance; and
A complete list of the products to be manufactured and their registration status.
� Import/Export
• An Import/Export permit (Annual/Temporary) must be obtained from the National
Drug Authority;
• At least 3 copies of the proforma invoices are presented to the verification
committee of the NDA for verification and endorsement;
• Note: an importer must obtain the proforma invoice and apply for verification
before dispatch of medicines from supplier;
• Only medicines registered and verified by NDA will be allowed entry into the
country;
• On arrival of the drugs in the country, inspection must be carried out at the port of
entry and a National Drug Authority authorisation/rejection report is issued by an
Inspector of Drugs or Assistant Inspector of Drugs;
� Drug Registration and Product License

• All Pharmaceuticals to be imported or manufactured in Uganda must first be
registered with the national Drug Authority; and
• All manufacturers of pharmaceuticals in Uganda are required to apply for product
license from the National Drug Authority.
7.3 Changes in Industrial Production
The Annual Index of production for the Chemical and Pharmaceutical sector
indicates general positive growth trends in the sector with a slight decline (4.7%)
from 190 in 2007 to 181 in 2008.
Figure 1: Chemical & Pharmaceutical Production, 2004 – 2008
12
200
150
100
50
0
2004 2005 2006 2007 2008
Indexof Chemical and 119 132 149 190 181
Industrial Production
Source: UBOS
7.4 Performance of the Sector

The percentage growth in the Chemical sector (Comprising Pharmaceuticals among
others), has been 5.1%, 8.6% and -4.5% in the Financial Years 2005/06, 2006/07
and 2007/08 respectively. Projected Investment and Employment in the sector is
estimated at US $ 68 million and 1,778 jobs respectively (UIA Database).
Volume of exports by September 2008 stood at 357,321 kgs, translating into US$
3.2 million in export revenues. Main export markets for Uganda’ pharmaceutical
products are Rwanda, Democratic Republic of Congo, Tanzania and Southern Sudan.
Table 3: Pharmaceutical and Medical Products Exports by quantity, 2003 – Sept.

2008
Year 2003 2004 2005 2006 2007 Sep-08
Exports 459.059 361,171 344,516 188,366 30,564,610 357,321
(Kg)
Source: UBOS, 2008
Figure 2: Pharmaceutical & Medical Products Exports by Value (US$), 2003 - Sept
2008
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3,500,000
3,000,000
2,500,000
2,000,000
1,500,000 Value (US$)
1,000,000
500,000
0
2003 2004 2005 2006 2007 8-Sep
Source: UBOS
90 percent of the pharmaceuticals, sundries and medical products are imported

accounting for 5.4 percent of Uganda’s total imports. By 2008 imports in the sector
stood at an estimated US$ 246 million (Figure 3), an increase from approximately
US$ 176 million in 2007.
Figure 3: Pharmaceutical and Medical Products Imports by Value, 2004– 2008
250,000
200,000
150,000
100,000
50,000
0
2004 2005 2006 2007 2008
Imports by value (000$) 80,137 85,721 123,065 175,778 246,202
Source: Uganda Bureau of Statistics, UBOS. Notes: 2008 Data is provisional

The major sources of Pharmaceuticals products are India, China, Pakistan, United
Kingdom, Switzerland, Germany and France among others. By December 2008, 431
foreign facilities had been licensed to export drugs to Uganda. The largest
distributor of pharmaceuticals in Uganda is National Medical Stores (NMS)2 which
supplies majority of the medicines and equipment to government health units. The
2
NMS is an autonomous government agency which procures, stores and distributes drugs
and supplies to the public sector.
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second largest distributor is Joint Medical Stores whose functions are similar to
those of NMS.
7.5 Availability of Special Skills
Uganda currently has three Universities that provide Bachelors’ degrees in

Pharmacy. These include Mbarara University of Science & Technology (MUST),
Makerere University Kampala (MUK) and Kampala International University (KIU). In
addition there is a training institution for Pharmacy Technicians at the Mulago
Paramedical School in Kampala. MUK is now providing a degree course for Industrial
Chemists.
7.6 Key Strengths (Competitive Factors)
• Quality Control: The Sector is regulated by the National Drug Policy and
Authority Act of Parliament 1993 which ensures that high quality, efficacious
and cost effective medicine (both human and veterinary) are availed to
consumers.
• Uganda’s strategic location provides market access to neighboring countries
such as Rwanda, D.R. Congo and Sudan.
• Imports of Pharmaceuticals and Medical equipment are duty free.
Table 4: East Africa Pharmaceutical Market Overview

Country Market Size (US$ Market by Segment Market by Source
millions) (%) (%)
2007 2014 Branded Generic Domestic MNC
(projecte
d)
Kenya 210 560 44% 56% 28% 72%
Tanzania 105 190 46% 54% 31% 69%
Uganda 85 150 20% 80% 10% 90%
Total 400 900
8.0 XYZ PHARMACY’S VALUE PROPOSITION AND BRAND POSITIONING
X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . will seek to become an end-

to end prescription pharmaceuticals provider to Ugandan customers. In order to
achieve this goal it will have a 3-Pronged Value Proposition – Quality, Health and
Services. Exhibit 2 shows X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . ’s
Value Proposition Model.
We believe that X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . can

differentiate itself from the current players in the Ugandan Pharmaceuticals Market
on the basis of two main factors – a) High Brand Value and b) Scientifically
Researched & Developed Products. This will also allow X Y Z P h a r m a c y &
C o s m e t i c s U g a n d a L t d . to pursue the premium pricing approach which will
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guarantee it a consistently strong financial performance. Exhibit 3 shows X Y Z
P h a r m a c y & C o s m e t i c s U g a n d a L t d . ’s Product Positioning Map.
9.0 MARKETING STRATEGY
In order to strategically use its limited resources and to minimize risk, XYZ
Pharmacy & Cosmetics Uganda Ltd. should use a concentrated marketing
approach and confine its efforts to Uganda and niche segments to build a strong
brand image and gain a firm foothold in the Ugandan market. XYZ Pharmacy &
Cosmetics Uganda Ltd. will also have to differentiate itself on the basis of the
brand premium, quality, and pricing of the prescription pharmaceuticals that it will
be sourcing directly from its manufacturer suppliers – both from within and outside
Uganda. Further, XYZ Pharmacy & Cosmetics Uganda Ltd. shall initially restrict
itself to a limited number of pharmaceutical products on the Ugandan domestic
market. Once XYZ Pharmacy & Cosmetics Uganda Ltd. has managed to
establish itself on the market and gained a sizeable foothold, it can then expand its
range of offerings in phased fashion. XYZ Pharmacy & Cosmetics Uganda Ltd.
will also strive to build a strong corporate brand image in Uganda to expand its
pharmaceuticals marketing and operational network on the Ugandan domestic
market in order to complete its promise of becoming an end-to-end prescription
pharmaceuticals provider in Uganda.
To reduce risk and increase the chances of a successful product launches at

its chosen retail sales/marketing location in Uganda, we recommend that XYZ
Pharmacy & Cosmetics Uganda Ltd. does simulated market testing followed
by controlled market testing to ensure that its products are well accepted by the
target segment during the actual launch. Simulated testing involves observing
the purchasing behavior of a focus group in a test environment containing various
pharmaceutical products including those of competitors followed by a product
satisfaction survey a few weeks later. As part of controlled market testing XYZ
Pharmacy & Cosmetics Uganda Ltd. will launch the product in a few pre-
selected locations within around Kampala in order to gauge the consumer reaction
to its products and then accordingly modify its strategy during the actual launch of
the product.
X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . will have to adapt its

marketing strategy to suit the needs of the target Ugandan market. This may result
in higher initial costs but will help secure a larger market share and greater return.
To differentiate itself from its competitors, X Y Z P h a r m a c y & C o s m e t i c s
U g a n d a L t d . shall retain the globally recognized pharmaceutical brands of the
suppliers of its products as well as its packaging, pricing techniques,
communication, advertising and promotion activities to target the affluent
pharmaceutical consumer market segments in Uganda. The detailed marketing plan
is explained in Section 11.0 of this report.
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10.0 UGANDAN PHARMACEUTICAL MARKET SEGMENTATION &
IDENTIFYING THE MARKET SEGMENT
We used the following criteria to segment the Ugandan Pharmaceuticals Market and
identify the Target Segment for X Y Z P h a r m a c y & C o s m e t i c s U g a n d a
Ltd.
• Measurability: The size, purchasing power and profile of the segment(s)

should be quantifiable objectively.
• Accessibility: The market segment(s) should have easy accessibility.
• Substantiality: The market segment(s) should be large and profitable enough
to serve.
• Actionability: Effective programs can be designed to attract and serve the
segment(s).
• Growth: The segment(s) should be undergoing rapid growth.
• Structural Attractiveness: Avoid segments that have many strong and
aggressive competitors.
• Company Objectives and Resources: XYZ Pharmacy & Cosmetics Uganda
Ltd.’s most profitable products are in the consumer pharmaceuticals group
for children and women.
Explanation of the Segmentation Process:
Level 0 Segmentation: Users/Non-users of consumer prescription pharmaceutical

products
Level 1 Segmentation: Income

The population of Ugandans using prescription pharmaceutical products was divided
into the low-income class, lower middle, upper middle, and rich class users and
others. The use of prescription pharmaceutical products in Uganda to a good extent
also depends on income levels. However, all levels of social strata in Uganda will be
targeted for marketing by XYZ Pharmacy & Cosmetics Uganda Ltd. since it will
position itself to sell affordable and competitively priced prescription
pharmaceuticals in Uganda as premium brands.
Level 2 Segmentation: Gender

A substantially higher proportion of East African women (49%) than men (37%) are
found to use prescription pharmaceutical and cosmetic products and are thus
identified as the primary target market.
Level 3 Segmentation: Age

Women below the age of 15 are categorized as children and not included as the
primary target segment as their health considerations differ from those of older
women.
17
Level 4 Segmentation: Geography
Consumption of prescription pharmaceutical and cosmetic products in Uganda
tends to follow an income distribution pattern which also follows a geographical
trend. In Uganda, consumers of with the highest disposable income to purchase
prescription pharmaceutical products are concentrated within and around Kampala
– the administrative and business hub of Uganda and also from the major up-
country urban centres in Uganda like Arua, Mbale, Gulu, Jinja, Masaka, Mukono and
Mbarara.
11.0 MARKETING PLAN
11.1 Product
XYZ Pharmacy & Cosmetics Uganda Ltd. plans to introduce to the Uganda
pharmaceutical and cosmetics market a complete range of branded and generic
prescription/OTC pharmaceutical. To ensure that it enjoys unrestricted
pharmaceutical and cosmetics sales and marketing rights in Uganda, XYZ
Pharmacy & Cosmetics Uganda Ltd. will acquire a license that authorizes it to
import, stock, distribute, and wholesale/retail a comprehensive inventory of
prescription/OTC pharmaceuticals whose details are provided in the Essential
Drug List for Uganda 1996.
The packaging of the drugs should reflect the premium positioning and value
proposition of the product. The packaging and labeling must meet the requirements
of the Ugandan prescription pharmaceutical and cosmetics consumer market.
Packaging must ensure that the medicines are not affected by temperature, light,
transportation and storage. Polyethylene liners may be heat sealed to give an air-
tight closure. While vacuum packing is not generally used, it is effective in
preserving quality and compresses the product package into a smaller volume
which can lead to savings in freight costs. Packets for palletization are suitable since
they reduce handling and hence damage to the product. There should be
consistency of packaging and package sizes, an orderly loading of containers,
shipping marks on the master pack and article numbers on the inner packs.
Shipping containers must be clearly stamped or stenciled on a minimum of two
sides with all code markings, and in waterproof ink. The packages should be sturdy
enough for multiple handling. Reusable rather than disposable packaging addresses
environmental concerns of the Uganda. Proper packaging is important since sub-
standard packaging may damage the product and create problems for the
marketing the goods and conflict with the image of “high quality”.
11.2 Pricing
XYZ Pharmacy & Cosmetics Uganda Ltd. will adopt a pharmaceutical product
pricing and sales margin policy whose details are displayed in Tables 5a & 5b
below:
18
Table 5a: Private Prescription Medications
Types or Cost of Items Margin
<$100 20-30%
>$100 25-35%
Known Value Items (KVIs such as

Combined Oral Contraceptives or
phosphodiesterase inhibitors) 20%
Table 5b: Non-Prescription Medications
Non Prescription Product Lines Margin
KVIs [includes OTC analgesics, specific Meet the competition pricing

supplements (e.g. fish oil and
glucosamine), skin care oral health, and
gastro-health]
Conventional pharmacy lines 35%
The rationale for the pricing strategy is “Value Based Pricing” based on an analysis
of purchasing power of the target segment and the current customer spending on
pharmaceutical products. Concerns on health and need for good quality are on the
rise and correspondingly the willingness to spend on premium value medicine is
increasing.
Our key objective is to provide a broad range of prescription/OTC/vaccine

medications and cosmetics to our valued customers at the most affordable and
competitive prices on the market. We will be able to sell our product range at
reduced prices by carefully maintaining efficiencies in our operations and by
targeting the entire segments of the market - those customers who pay for their
medicines and those who take on credit for not more than thirty days (especially
the bulk-purchasing wholesale consumers).
The XYZ Pharmacy & Cosmetics Uganda Ltd. plan focuses on attracting more
customers basing on competitive market pricing of its medicines that will appeal
more and more to the customer's sense of value and convenience.
11.3 Promotion
XYZ Pharmacy & Cosmetics Uganda Ltd. will rely on a multi-pronged approach
for marketing its prescription and OTC pharmaceuticals in Uganda. It will set aside a
significant promotions budget of about UShs. 4 million per month for promotions
19
in 2011. The major factors that affect the decision of Ugandan customers in the
purchase of pharmaceutical products are family/friend (36%), health books (18%)
and medical practitioners (9%). Hence, it is essential to use the promotion budget in
those vehicles which can help generate curiosity, awareness and a positive word of
mouth in the market. This will ensure that once XYZ Pharmacy & Cosmetics
Uganda Ltd. has cleared the barrier of developing an initial customer base set up
in Uganda, it will have a self-sustained advertising medium. XYZ Pharmacy &
Cosmetics Uganda Ltd.’s public relations activities, advertising, sales promotions,
in-store promotions and direct mailing will all be designed with this in mind.
Pull Strategies:
Advertising: XYZ Pharmacy & Cosmetics Uganda Ltd. should focus its
advertising on its pharmaceutical products’ benefits, and on the research and
development capacity of its major suppliers. This will help build consumer
confidence on the high quality of its imported products. It should also associate
itself with health and fitness experts and sports icons to further augment its brand
image.
XYZ Pharmacy & Cosmetics Uganda Ltd. should use multiple media vehicles to
reach the target customers. It should run ads on existing TV channels which is a
relatively inexpensive medium for running television ads as compared to other
channels. Advertising in men and women health magazines should also be a
primary means of reaching the health conscious affluent men and women in
Uganda. Radio ads run during morning and evening primetime are very reasonably
priced and can prove to be a very important tool for brand building. Billboards
placed at strategic locations such as downtown areas, near health clubs, near
pharmacies etc. are an effective and enduring way of reaching the target
customers. XYZ Pharmacy & Cosmetics Uganda Ltd. should have a daily
advertisement (25 lines) in the two leading newspapers in Uganda (e.g. The New
Vision and The Daily Monitor). Online ads and banners on health related websites
should also be used to target the tech-savvy consumers of Uganda. XYZ Pharmacy
& Cosmetics Uganda Ltd. should also develop its own website to further
advertise its products and build its image as a reliable pharmaceutical products
provider.
Public Relations: XYZ Pharmacy & Cosmetics Uganda Ltd. should work towards
building a good corporate image by ensuring that occasional articles on XYZ
Pharmacy & Cosmetics Uganda Ltd. and its products appear in health
magazines and print media. Additionally, the public relations effort may include
charity events, and supplying free samples on special public heath events/days in
Uganda. XYZ Pharmacy & Cosmetics Uganda Ltd. should participate in social
causes related to public health issues to create awareness and goodwill for XYZ
Pharmacy & Cosmetics Uganda Ltd. and its products. XYZ Pharmacy &
Cosmetics Uganda Ltd. should also participate in annual health shows that are
organized to raise public and individual health awareness in Uganda.
20
Push Strategies:
Sales Promotions: We recommend the use of the following sales promotions at

different times during the year. Free samples should be given to public and private
health practitioners (e.g. hospitals/health centres, private clinics/domiciliaries, and
the smaller retail pharmacies) who can then distribute those to their customers. As
part of a major promotion strategy, a free sample can be distributed with each copy
of one of the leading men and women healthcare magazines. XYZ Pharmacy &
Cosmetics Uganda Ltd. can also sell value packs (two for the price of one) while
launching new pharmaceutical products on the market, add coupons in
pharmaceutical product packs which give a discount (5-10%) for the next purchase
and can also bundle other items such as key chains, pens, coffee mugs, caps, T-
shirts (with the XYZ Pharmacy & Cosmetics Uganda Ltd. name and logo) to
build the brand and to increase sales. XYZ Pharmacy & Cosmetics Uganda Ltd.
should also have campaigns wherein customers can win attractive prizes such as
television, digital cameras, and music systems with purchases of XYZ Pharmacy &
Cosmetics Uganda Ltd. products.
In-store promotions: XYZ Pharmacy & Cosmetics Uganda Ltd. should offer trade
discounts to retailers to secure prime shelf space in their stores, periodically pay
extra for prominent spaces, have campaigns for XYZ Pharmacy & Cosmetics
Uganda Ltd. products during which they are attractively displayed with XYZ
Pharmacy & Cosmetics Uganda Ltd. banners.
Direct Mail: XYZ Pharmacy & Cosmetics Uganda Ltd. should purchase the list of
the major pharmaceutical product consumers in Uganda (data driven market
research) and send catalogues, brochures etc specifically targeted at these users.
Customer information required for direct mail campaigns can be obtained from
organized health clubs and associations, medical and/or pharmaceutical societies
and the retail channels that XYZ Pharmacy & Cosmetics Uganda Ltd. will be
affiliated to.
11.4 Distribution
There are three main distribution channels which XYZ Pharmacy & Cosmetics
Uganda Ltd. should adopt in Uganda: health food stores, pharmacies, and public
and private health practitioners. The online channel is not recommended due to low
ROI (Return on Investment) from this channel.
XYZ Pharmacy Retail/Wholesale Outlet: Given the convenient location of the XYZ
Pharmacy & Cosmetics Uganda Ltd. wholesale/retail outlet in Mukono town, we
stand a significant sales/marketing advantage in the sense that it is within touching
distance of Kampala city and its suburbs of Bweyogerere, Kiira TC as well as Seeta
TC. This will make it easy for various categories of consumers to purchase and
collect pharmaceutical/cosmetic products with ease while also enabling to build our
21
image and reputation as purveyors of unrivalled and peerless service and quality
drugs that should aid in rapid sales growth and enterprise development.
Health Food Product Stores: XYZ Pharmacy & Cosmetics Uganda Ltd. should
primarily target these stores for sale of their products through their established
distribution networks.
Public and Private Health Practitioners: XYZ Pharmacy & Cosmetics Uganda
Ltd. must try and use Public and Private Health Care Practitioners to capture new
adopters of prescription/OTC pharmaceutical products. XYZ Pharmacy &
Cosmetics Uganda Ltd. should use this channel sparingly given that there are
many players fighting for this channel already.
12.0 ORGANIZATION PLAN & MANAGEMENT STRUCTURE
12.1 Mission, Vision & Values:
We believe that the mission of XYZ Pharmacy & Cosmetics Uganda Ltd. in
Uganda should be inline with the company’s mission of “Promoting and Sustaining
the Health of Ugandans”. Further, the company’s vision should reflect the desire to
have a truly national market presence and impact.
12.2 XYZ Pharmacy & Cosmetics Uganda Ltd.’s Mission Statement:
The XYZ Pharmacy & Cosmetics Uganda Ltd.’s mission is to provide our valued
customers with the best prices and quality for their prescription/OTC medications
and cosmetics. We would like to use our convenience and services to exceed the
expectations of our customers.
12.3 XYZ Pharmacy & Cosmetics Uganda Ltd.’s Vision:
“To have a regional market presence and impact in high-value but competitively-
priced prescription/OTC pharmaceutical products.”
XYZ Pharmacy & Cosmetics Uganda Ltd.’s Values:
• Focus – Our customers.

• Quality – Superior products.
• People – Very caring.
• Research – Path breaking.
• Style – Strong teamwork.
• Position – Leader.
• Reward – Recognition and security
22
Figure 4: Strategic Diagram showing all aspects of XYZ Pharmacy & Cosmetics Uganda Ltd. business
Sustain revenue growth at 7%
Financial p.a.
Perspective Productivity Revenue Growth
Strategy Strategy
Optimise Enhance Expand

Increase cost
asset customer revenue
efficiency
utilisation value opportunities
Customer
Right Quality Individualiz Professiona Approachab Community
Perspective ed care spirit
Price Products l advice le staff
Operations Customer Innovation Processes Regulatory and Social

Management Management Processes
Processes Processes • Fulfilling the distinctive
and expanded roles of • Involvement in community
each pharmacist charity events
Internal • Adhering to Compounding • Ability to tailor healthcare
for each individual
Perspective Standards for quality
• Building an interactive • Liaising with surrounding
customized products customer
website – a central hub of healthcare providers, and
• Providing our products information for customers, hospitals
• Maintaining good supplier
and services for all types staff and other HCPs
relations
of industries • Meeting community
• Human resources healthcare responsibilities
• Utilising latest technology
• Expanding our management
• Efficient product community-outreach

network and other
professional bodies
Learning & Intangible Assets Organization

Human Capital
Growth Capital
Information
Perspective • Values • Culture
Capital
• Skills and knowledge • Systems • Leadership
• Training and • Databases • Empowerment

development 23
• Networks • Alignment
• Teamwork
12.4 Start-up Summary
XYZ Pharmacy & Cosmetics Uganda Ltd. will incur the following start-up
equipment costs:
• Office equipment including chairs, file cabinets, and desks.

• Front counter, storage bins, cash register.
• One computer terminal with a laser printer, and back-up system.
• Software: Microsoft Office, QuickBooks Pro, drug interaction software,
Physician Desk Reference software detailing side effects and other
information pertinent to the customer.
• Assorted bottles, boxes, envelopes, etc. for dispensing and shipment.
• Scales for shipping.
• Storefront build-out.
• Start-up inventory.
• Rent, utilities, insurance.
Please note that these items will be used for more than one year and will
therefore be labeled long-term assets, depreciated using G.A.A.P. approved
straight-line depreciation.
Table 6: Start-up Summary
S/No Expense Item Start Up Cost (UShs)

.
1 Expensed Equipment 8,000,000
2 Partitioning 7,000,000
3 Full computer set with a laser printer
and back up system 1,250,000
4 Computer software 550,000
5 Installation of computer system 900,000
6 Legal expenses 2,000,000
7 Electricity (first 5 months) 500,000
8 Rent (first 5 months) 2,500,000
9 Salary for Pharmacist (first 5 months) 6,000,000
10 Salaries for 3 Dispensing Nurses (first
5 months) 6,300,000
11 Purchase of drugs/pharmaceuticals 10,000,000
12 Purchase of cosmetics 5,000,000
TOTAL 50,000,000
12.5 Legal description of the company:
XYZ Pharmacy & Cosmetics Uganda Ltd. is a legally-registered and

incorporated business entity in Uganda specializing in the importation, distribution,
wholesale and retail of prescription/OTC pharmaceutical products.
24
As a fully registered business entity, XYZ Pharmacy & Cosmetics Uganda
Ltd. is subject to the laws of Uganda in which it operates and will maintain proper
records and file tax returns as required.
12.6 XYZ Pharmacy & Cosmetics Uganda Ltd.’s Proposed

Organization Structure:
Refer to Exhibit 4 for the Reporting Structure of the XYZ Pharmacy & Cosmetics
Uganda Ltd. management team vis-à-vis the company’s top level management.
The principal head of the company will be the Board of Directors who will
defer to the Executive Director for the overall routine management and stewardship
of company affairs. There will be one line General Manager reporting directly to the
Executive Director. This one will be the General Manager – Operations who will
directly oversee and manage the integral operational aspects of the company.
Since XYZ Pharmacy & Cosmetics Uganda Ltd.’s focus will be on

marketing, the Marketing Manager will report directly to GM – Operations. The
Marketing Manager will be responsible for all aspects of marketing and will assist
the GM – Operations in Retail Distributor Relationship Management, which is key to
XYZ Pharmacy & Cosmetics Uganda Ltd.’s business model. He will also oversee
CRM (Customer Relationship Management) efforts that XYZ Pharmacy &
Cosmetics Uganda Ltd. operates.
Also, a Research and Development Coordinator will act as a link between the
Uganda Government and XYZ Pharmacy & Cosmetics Uganda Ltd.’s R&D
division for matters regarding certification, product safety etc. This coordinator will
report directly to GM – Operations on product quality, safety matters and
development of new product variants.
The Logistics Manager will be in-charge of coordinating product distributor

operations, forecasting, and handling inbound and outbound traffic including
customs. He will also assist the Marketing Manager in fostering strong relationships
with the distributors.
13.0 HUMAN RESOURCES
13.1 Our Culture
At XYZ Pharmacy & Cosmetics Uganda Ltd., our culture will be one of
exemplary leadership, professionalism, transparency and empowerment – values
that extend to our external dealings with the community and wider professional
network. Learning is life-long and hence, XYZ Pharmacy & Cosmetics Uganda
Ltd. will invest a substantial portion of human capital on training in a variety of
health topics and products, as well as personal development areas such as
leadership and time management.
The Right Staff

25
A team is only as strong as the weakest member within it and therefore, we look for
high calibre staffs who share the same cultural values we stand for. Having the right
mindset is critical in our selection process. We look for positivity, contribution,
motivation, initiative and independence in our staff.
13.2 Staff Training and Development
A business will only grow as fast as the people within it. The philosophy behind our
staff training and development falls under two streams – professional and personal
development, as shown in Figure 5. This will ensure not only better delivery of
health information to our community but also strengthen inter-professional
networks and team dynamics.
13.3 Staff Retention and Innovation
XYZ Pharmacy & Cosmetics Uganda Ltd. will introduce quarterly workshops
that will also coincide with staff evaluation. A 360 degree appraisal will be carried
out for each staff member to provide feedback on their performance and address
any individual concerns. A confidential questionnaire will also be filled out to obtain
levels of staff satisfaction and any perceived weaknesses of the business.
XYZ Pharmacy & Cosmetics Uganda Ltd. functions around a horizontal

organizational structure, where transparency between the directors and staff is vital
to making key decision processes in the company. Thus, creativity and innovative
ideas will not be stifled. We will nurture talented staff to reach their full potential
should they develop interest in specific aspects of our pharmacy. We will provide
funding and mentorship in small-scale self-directed projects to further their interests
and thereby enriching their experience with XYZ Pharmacy & Cosmetics Uganda
Ltd. An example could be conducting market research in a niche area of interest.
Keeping their interests alive is one way we can retain talented staff.
XYZ PHARMACY &

COSMETICS UGANDA
LTD. STAFF
26
TRAINING AND
DEVELOPMENT
Tangible Stream Intangible Stream
Professional
Development
Personal Development
Online modules to be
completed every fortnight Emotional intelligence
on the XYZ Pharmacy Ltd Leadership skills
interactive website Time management
Fortnightly product training Communication skills
on specific health focus
areas
Monthly Operation Quarterly Operation

Informal assessment on Workshop on each area held
health focus areas quarterly
Case-based scenarios Taught by external consultants
Main issues related to topics Staff feedback also given
assessed
Maintenance of clinical • Increased self-awareness

competency • Increased time-efficiency and
Greater depth of hence productivity
understanding of common • Increased personal confidence
health issues and product • Improved delivery of customer
knowledge service
Up-to-date, sound • Strengthening of inter-
professional advice professional relationships
• Improved team dynamics
Figure 5: Flowchart of XYZ Pharmacy & Cosmetics Uganda Ltd. staff development
and training process
14.0 OPERATIONAL STRATEGY & IMPLEMENTATION
27
XYZ Pharmacy & Cosmetics Uganda Ltd. will use its strategic town location as
well as newspaper, FM radio, and TV adverts to develop visibility and disseminate
information.
14.1 Competitive Edge:
XYZ Pharmacy & Cosmetics Uganda Ltd.’s competitive edge will be its superior
pricing. To do that we must maintain our position as the low cost provider by
painstakingly ensuring that costs are kept low through operating efficiencies.
We will be able to do that by eliminating some of the services traditionally offered

by pharmacies. For example, we will employ only one pharmacist and use
dispensing nurses to fill the void. As long as a pharmacist is on site during the hours
of operation, we can use the dispensing nurses for all other capacities where other
pharmacies use pharmacists. Other efficiencies are created by having only a small
store front.
Finally, XYZ Pharmacy & Cosmetics Uganda Ltd. is not designed to hold the
patient's hand during their purchase. We expect that the vast majority of our
customers will already be informed of how to take the medication, and any side
effects or drug interactions that should be avoided. We will simply provide each
patient with a print out of all the relevant information for consumption of the
medication.
14.2 Marketing Strategy:
The marketing strategy will be based on targeted advertisements, appealing to the

customer's sense of value. The marketing campaign's goal will to be increase
awareness of XYZ Pharmacy & Cosmetics Uganda Ltd. with their target market.
14.3 Sales Strategy:
The sales strategy will be based on generating long-term relationships with

customers. To facilitate that, we will provide medications at superior prices,
have medicines in stock for both quick shipment and store front pick up, and
provide superior customer service. All sales agents will be trained to provide
friendly, knowledgeable customer service. By keeping to these simple, yet effective,
business practices, we expect that our customers will make XYZ Pharmacy &
Cosmetics Uganda Ltd. their exclusive source for medications. For some,
medications are an integral part of their lives, so establishing long-term
relationships will ensure a large, loyal customer base.
14.3.1 Sales Forecast
During the first fortnight (2 weeks) we will focus on setting up the store front and
generating both local and national visibility. Sales activity will begin in the third
week of the first month. Sales during the first year of business will mainly consist of
28
local business through the store front. However, for years two and three of business
we expect to see a jump in sales from market consolidation and economies of scale.
Sales will grow steadily in business year two and three by a growth factor of 25%
and 20% respectively.
14.4 Milestones:
XYZ Pharmacy & Cosmetics Uganda Ltd. will have several milestones early on:
• Office/business set up.

• Establishment of the first strategic relationship.
• Profitability.
15.0 OPERATIONS PLAN
All business operations will be evaluated according to their feasibility and the
feedback we receive from our internal and external stakeholders. This will ensure
optimal business growth and smooth running of daily trading.
15.1 Trading
Day Trading Hours

Monday - Friday 8.30 am – 6:05 pm
Saturday 9 am – 1:05 pm
Sunday Closed
The XYZ Pharmacy & Cosmetics Uganda Ltd. distribution/wholesale/retail

pharmacy outlet will be insured under the relevant insurance policies which cover
‘Professional Indemnity and Business Insurance’. At a later stage, the management
will also undertake extra security measures at these outlets by installing in each
two surveillance cameras and a back-to-base alarm system.
15.2 Lease/Regulatory Issues
• To be negotiated for a period of 5 years from settlement date

• Two 5 year options available after the first 5 year term as finished
• Rent at a total fixed rate of UShs. 500,000/= from January 2011 – 31st December
2011.
15.3 Quality Assurance
XYZ Pharmacy & Cosmetics Uganda Ltd. will adhere to the applicable and
appropriate Quality Assurance/Quality Control programmes pertaining to
pharmaceutical distribution/trading practices in Uganda.
29
15.4 IT Component
We will implement a new point of sales (POS) system and train staff on its operation
to ensure optimal utilization. The dispensary and front-of-shop (FOS) computers will
be networked and uploaded for smooth business running.
15.5 Technology
XYZ Pharmacy & Cosmetics Uganda Ltd. will at some later stage also develop
and launch an interactive website. Market research has revealed that an increasing
number of Ugandan pharmaceutical product users/consumers are becoming tech-
savvy in the knowledge, use and application of internet-based information
resources such as the use of an interactive health informative website created by
the pharmacy. This service will allow the business to keep in communication with an
increasingly technologically savvy generation of Ugandans. We will also consider
the addition of pouch packaging technology and a robotic dispenser on evaluation
of our prescription and dose administration aid volume in the future.
16.0 FINANCIAL ANALYSIS
Refer Financial Performance Exhibits 15 to 28 for projected net income

statements.
16.1 Source of Funds: There are two (2) main sources for financing of this
pharmaceutical and cosmetics trading project.
The first source of funds is the project promoter’s own contribution (equity
financing) that has been raised from personal savings and other diversified personal
sources of income. The project promoter expects to raise UShs. 10 million as
personal equity contribution towards the total capital cost of the project.
The second source of project financing will be a soft loan of UShs. 40 million
that will be raised form a young entrepreneur’s development agency that will be
applicable over a two (2) year financing period.
16.2 Application of Funds:
Equity (personal contributions) will be used to finance legal expenses for

setting up the business and pay for purchases of an assortment of business
operating equipment such as office equipment (e.g. chairs, file cabinets, and desks),
front counter, storage bins and cash register, as well as assorted bottles, boxes,
envelopes, etc. for dispensing and shipment.
Soft loan funding (UShs. 40 million) will be used to finance partitioning and
computer set and software and installation charges, plus covering up for payments
for electricity, rent, and payroll expenses for the first five months of the project and
the first month’s inventory stock of drugs and cosmetics to stock up the pharmacy
retail/wholesale shop worth UShs. 15 million.
30
. 17.0 BUSINESS RISKS
17.1 Regulatory Risks:
The Ugandan pharmaceutical products market is a relatively mature one and is well
regulated by governments at present. However, given that this is a fast growing
segment in healthcare, the government may impose yet stricter regulations in the
future, especially related to safety standards. Mitigation Steps Develop good
relationship with the government and create a premium brand image supported by
high quality and scientifically developed products.
17.2 Competitive Risks:
The pharmaceutical products market in Uganda can be expected to attract many

players in the near future because of its attractiveness (as a result of accelerated
regional economic growth leading to increased average per capita incomes). An
entry by a “Brand & Research” oriented competitor can result in XYZ Pharmacy &
Cosmetics Uganda Ltd. facing tough times in its niche segment.
Mitigation Steps Build a strong brand name in Uganda quickly to gain the “first
mover advantage” and also lock in the major pharma-product distributors (and
through them, the retailers).
17.3 Litigation Risks:
The Pharmaceuticals industry is susceptible to litigation risks.
Mitigation Steps Contract a reputed legal firm(s), to sort out the legal issues
within wider East African market.
31
Exhibit 1: The Five Forces Analysis for Industry Attractiveness
Forces
Rule: The Weaker the Forces, the Higher will be the Profitability &
Barriers to Entry
Attractiveness of the Industry
32
Exhibit 2:
XYZ PHARMACY (U) LTD’S 3-PRONGED VALUE PROPOSITION TO

CUSTOMERS
Quality
• Safety
• Efficacy
• Research
• Brand
Service
• Prescription Pharmaceutical Clinics
• Consultancy
• Helplines
Health
• Longevity
• Immunity
• Energy
33
Exhibit 3:
XYZ Pharmacy Product Positioning
XYZ Pharmacy
e
ag
Im
d
an
Br
Competitors
Sourcing/Production of Scientifically-Researched &

Developed Products
34
Exhibit 4: Proposed Future Management Structure
Board of Directors
Executive
Director
GM – Operations
Material
Finance s/Logisti Marketin Manager – Research &
g Admin. & Developmen
Manager cs t
Manager HR
Manager Coordinator
Finance Logistics Dept

Department
Customer Marketing Dept

Relationship (Wholesale and
Management Retail)
Dept
35
Exhibit 5:
Proposed Future Head Count in Different Departments

Department Finance & Marketing & Material R&D HR
Invoicing CRM Management Support
& Logistics
Head Count (Direct 3 5 2 1 2
Employees)
Contract Employees 2 1 1 1 1
Total Number of Employees 20

(including GM)
Exhibit 6: Evaluation of Distribution Alternatives
Factors Selling directly to Selling to distributors

retailers
Investment High Low
Feasibility Low High
Resources required High Low
Margins for City Pharmacy High Low
Administration Complex Easy
Warehouse required? Yes No (Use distributors)
Exhibit 7: Evaluation of Retail Alternatives
Factors Setting up City Use of Existing Retailer

Pharmacy Chain of Network
Retail Stores
Investment High Low
Implementation Time High Low
Feasibility High Medium
Resources required High Low
Margins for City Pharmacy High Low

36
Administration Complex Easy
37
EXHIBIT 8a: 3-YEAR FORECAST NET INCOME STATEMENT FOR A DRUGS AND COSMETICS SHOP (YEAR
1) - UG. SHS.
ITEM/MONTH 1 2 3 4 5 6 7 8 9 10 11 12 TOTALS
CASH INFLOWS
40,000,0 40,000,00
Loan Funds 00 _ _ _ _ _ _ _ _ _ _ _ 0
10,000,0 10,000,00
Personal Contribution 00 _ _ _ _ _ _ _ _ _ _ _ 0
20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 20,000,0 240,000,0
Drug Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 10,000,0 120,000,0
Cosmetics Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
80,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 30,000, 410,000,
Total revenues 000 000 000 000 000 000 000 000 000 000 000 000 000
CASH OUTFLOWS
15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 180,000,0
Direct Cost of Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
65,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 15,000, 230,000,
Gross Margin 000 000 000 000 000 000 000 000 000 000 000 000 000
Operating
Expenses
2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 2,460,00 29,520,00
Payroll 0 0 0 0 0 0 0 0 0 0 0 0 0
Sales + General +
6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 6,000,00 72,000,00
Administrative Exp. 0 0 0 0 0 0 0 0 0 0 0 0 0
10,404,00
Depreciation 867,000 867,000 867,000 867,000 867,000 867,000 867,000 867,000 867,000 867,000 867,000 867,000 0
Electricity 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
2,000,00
Insurance 0 _ _ _ _ _ _ _ _ _ _ _ 2,000,000
Rent 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 6,000,000
2,000,00
Legal Expenses 0 _ _ _ _ _ _ _ _ _ _ _ 2,000,000
8,000,00
Expensed Equipment 0 _ _ _ _ _ _ _ _ _ _ _ 8,000,000
21,927, 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 9,927,0 131,124,
Total Op Expenses 000 00 00 00 00 00 00 00 00 00 00 00 000
43,073, 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 5,073,0 98,876,0
OPERATING PROFIT 000 00 00 00 00 00 00 00 00 00 00 00 00
Loan Service
1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 2,000,00 2,000,00 2,000,00 2,000,00 20,000,00
Loan Repayments 0 0 0 0 0 0 0 0 0 0 0 0 0
1,500,0 1,500,0 1,500,0 1,500,0 1,500,0 1,500,0 1,500,0 1,500,0 2,000,0 2,000,0 2,000,0 2,000,0 20,000,0
Total Loan Service 00 00 00 00 00 00 00 00 00 00 00 00 00
41,573, 3,573,0 3,573,0 3,573,0 3,573,0 3,573,0 3,573,0 3,573,0 3,073,0 3,073,0 3,073,0 3,073,0 78,876,0
NET PROFIT 000 00 00 00 00 00 00 00 00 00 00 00 00
41,573,0 3,573,00 3,573,00 3,573,00 3,573,00 3,573,00 3,573,00 3,573,00 3,073,00 3,073,00 3,073,00 3,073,00
NET CASH BALANCE 00 0 0 0 0 0 0 0 0 0 0 0
38
41,573,0 45,146,0 48,719,0 52,292,0 55,865,0 59,438,0 63,011,0 66,584,0 69,657,0 72,730,0 75,803,0
CASH BAL. B/F 0 00 00 00 00 00 00 00 00 00 00 00
41,573,0 45,146,0 48,719,0 52,292,0 55,865,0 59,438,0 63,011,0 66,584,0 69,657,0 72,730,0 75,803,0 78,876,0
CASH BAL. C/F 00 00 00 00 00 00 00 00 00 00 00 00
EXHIBIT 8b: 3-YEAR FORECAST NET INCOME STATEMENT FOR A DRUGS AND COSMETICS SHOP (YEAR 2) - UG. SHS.
CASH INFLOWS
Loan Funds 0 0 0 0 0 0 0 0 0 0 0 0 0
Personal Contribution 0 0 0 0 0 0 0 0 0 0 0 0 0
25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 25,000,0 300,000,0
Drug Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 12,500,0 150,000,0
Cosmetics Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
37,500, 37,500, 37,500, 37,500,0 37,500,0 37,500,0 37,500,0 37,500,0 37,500,0 37,500,0 37,500,0 37,500,0 450,000,
Total revenues 000 000 000 00 00 00 00 00 00 00 00 00 000
CASH OUTFLOWS
18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 225,000,0
18,750, 18,750, 18,750, 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 18,750,0 225,000,
Gross Margin 000 000 000 00 00 00 00 00 00 00 00 00 000
Operating
Expenses
2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 2,583,00 30,996,00
Payroll 0 0 0 0 0 0 0 0 0 0 0 0 0
Sales + General +
6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 6,300,00 75,600,00
1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 1,084,00 13,008,00
Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0
Electricity 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 1,320,000
2,450,00
Insurance 0 _ _ _ _ _ _ _ _ _ _ _ 2,450,000
Rent 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 6,600,000
1,000,00
Legal Expenses 0 _ _ _ _ _ _ _ _ _ _ _ 1,000,000
Expensed
Equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
14,077, 10,627, 10,627, 10,627,0 10,627,0 10,627,0 10,627,0 10,627,0 10,627,0 10,627,0 10,627,0 10,627,0 130,974,
4,673,0 8,123,0 8,123,0 8,123,00 8,123,00 8,123,00 8,123,00 8,123,00 8,123,00 8,123,00 8,123,00 8,123,00 94,026,0
39
Loan Service
1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 2,000,00 2,000,00 2,000,00 2,000,00 20,000,00
Loan Repayments 0 0 0 0 0 0 0 0 0 0 0 0 0
1,500,0 1,500,0 1,500,0 1,500,00 1,500,00 1,500,00 1,500,00 1,500,00 2,000,00 2,000,00 2,000,00 2,000,00 20,000,0
3,173,0 6,623,0 6,623,0 6,623,00 6,623,00 6,623,00 6,623,00 6,623,00 6,123,00 6,123,00 6,123,00 6,123,00 74,026,0
NET PROFIT 00 00 00 0 0 0 0 0 0 0 0 0 00
3,173,00 6,623,00 6,623,00 6,623,00 6,623,00 6,623,00 6,623,00 6,623,00 6,123,00 6,123,00 6,123,00 6,123,00
NET CASH BALANCE 0 0 0 0 0 0 0 0 0 0 0 0
78,876,0 82,049,0 88,672,0 95,295,0 101,918, 108,541, 115,164, 121,787, 128,410, 134,533, 140,656, 146,779,
CASH BAL. B/F 00 00 00 00 000 000 000 000 000 000 000 000
82,049,0 88,672,0 95,295,0 101,918, 108,541, 115,164, 121,787, 128,410, 134,533, 140,656, 146,779, 152,902,
CASH BAL. C/F 00 00 00 000 000 000 000 000 000 000 000 000
EXHIBIT 8c: 3-YEAR FORECAST NET INCOME STATEMENT FOR A DRUGS AND COSMETICS SHOP (YEAR 3) - UG. SHS.
CASH INFLOWS
Loan Funds 0 0 0 0 0 0 0 0 0 0 0 0 0
Personal Contribution 0 0 0 0 0 0 0 0 0 0 0 0 0
30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 30,000,0 360,000,0
Drug Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 15,000,0 180,000,0
Cosmetics Sales 00 00 00 00 00 00 00 00 00 00 00 00 00
45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 45,000,0 540,000,
Total revenues 00 00 00 00 00 00 00 00 00 00 00 00 000
CASH OUTFLOWS
22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 270,000,0
22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 22,500,0 270,000,
Gross Margin 00 00 00 00 00 00 00 00 00 00 00 00 000
Operating
Expenses
2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 2,712,00 32,544,00
Payroll 0 0 0 0 0 0 0 0 0 0 0 0 0
Sales + General +
6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 6,615,00 79,380,00
1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 1,300,50 15,606,00
Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0
Electricity 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 1,440,000
2,900,00
Insurance 0 _ _ _ _ _ _ _ _ _ _ _ 2,900,000
40
Rent 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 7,200,000
1,000,00
Legal Expenses 0 _ _ _ _ _ _ _ _ _ _ _ 1,000,000
Expensed
Equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
15,247,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 11,347,5 140,070,
7,252,50 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 129,930,
Loan Service
Loan Repayments 0 0 0 0 0 0 0 0 0 0 0 0 0
7,252,50 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 129,930,
NET PROFIT 0 00 00 00 00 00 00 00 00 00 00 00 000
NET CASH 7,252,50 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5 11,152,5
BALANCE 0 00 00 00 00 00 00 00 00 00 00 00
152,902, 160,154, 171,307, 182,459, 193,612, 204,764, 215,917, 227,069, 238,222, 249,374, 260,527, 271,679,
CASH BAL. B/F 000 500 000 500 000 500 000 500 000 500 000 500
160,154, 171,307, 182,459, 193,612, 204,764, 215,917, 227,069, 238,222, 249,374, 260,527, 271,679, 282,832,
CASH BAL. C/F 500 000 500 000 500 000 500 000 500 000 500 000
41
Exhibit 9: EXPLANATORY NOTES AND ASSUMPTIONS TO FORECAST NET
INCOME STATEMENTS
A. Business Concept
The main goal of our retail pharmacy and cosmetics (XYZ Pharmacy & Cosmetics
Uganda Ltd.) shop is to provide prescription medications and cosmetics products
for our customers at the lowest prices on the market. We will be able to sell
prescriptions at reduced prices by carefully maintaining efficiencies in our
operations and by targeting a specific segment of the market - those customers
who pay for their prescription medications themselves. By focusing on this segment
it gives us additional efficiencies - we avoid disruptions in cash flow often associated
with insurance payments and we can eliminate unnecessary services for the type of
knowledgeable, repeat customer taking maintenance-type medication.
The XYZ Pharmacy & Cosmetics Uganda Ltd. will operate from one store/shop
front that will primarily serve retail customers and a few wholesale buyers. We
will thrive by employing friendly and knowledgeable personnel, which, along with
our great prices, will drive the repeat business that we will rely upon. We only
expect that as the price of medication continues to skyrocket; The XYZ Pharmacy
& Cosmetics Uganda Ltd. will appeal more and more to the customer's sense of
value and convenience.
Our advertising, mainly through ads in newspapers and magazines targeted across
various pharmaceutical/cosmetics market segments, will be targeted at those who
are looking to save money on a pricey but necessary and regular expense.
The XYZ Pharmacy & Cosmetics Uganda Ltd. will be led by Ms. Nancy Miriam,
a Bachelors of Pharmacy graduate from Makerere University with experience in the
pharmaceutical industry. Costs will be minimized by maintaining only one
pharmacist and filling the void with pharmaceutical techs. We expect to reach
profitability right from the first year of trading and will generate substantial sales by
year two.
B. Revenue Assumptions
Revenue assumptions for this pharmaceutical/cosmetics retail trading business

consist of sales of OTC (over-the-counter) prescriptions and cosmetics on a month-
by-month basis. Revenue assumptions used in the cash flow depict monthly sales of
UShs. 20 million and UShs. 10 million for OTC prescriptions and cosmetics
products respectively during the first year of trading. Monthly sales are thereafter
projected to increase by 25% in the second year of business, and by a further 20%
increment in the third year of trading.
42
C. Direct Cost of Sales
Direct cost of sales are the month-on-month direct expenditures on

pharmaceutical and cosmetics inventory purchases. Direct cost of sales is 50% of
the projected monthly sales revenues.
D. Operating Expenses
Payroll: This operating expense line indicates the monthly salary and emoluments
payments to XYZ Pharmacy & Cosmetics Uganda Ltd. staff that include one
trained pharmacist and 3 dispensing nurses. The pharmacist will be paid a monthly
salary and benefits package of UShs. 1.2 million, while each one of the dispensing
nurses will earn a monthly payroll package of UShs. 420,000. Payroll expenses are
projected to increase by a factor of 5 per cent per annum.
SGA (Sales + General + Administrative Expenses): This operating expense

line includes the general business overheads of running and/or operating the
pharmacy/cosmetics retail/wholesale business in terms of sales and marketing
promotions and routine administrative expenses that may include stationery, phone
bills, office administration, as well as all the contingency and miscellaneous
expenditures put together in a given trading period. We project to spend UShs. 6
million per month on SGA in the first year. This SGA expense is then set to increase
by 5 per cent per annum thereafter.
Depreciation: We have used an average asset (including trading inventory)

depreciation rate of 2.89% per month of total monthly sales revenues – which is
based on the assumption that Depreciation is 10% of Fixed Assets. Since the cash
flows show an increasing trend in periodical sales revenues, depreciation rates are
also expected to move up in a similar fashion.
Electricity: These are the monthly utility bills that the pharmacy/cosmetics retail
business expects to pay on electricity consumption basically. Starting off at a
modest UShs. 100,000 per month, payments for the electricity utility are also
expected to go up by 10% per annum in tandem with prevailing inflation rate
trends.
Insurance: Since all the assets, stock of XYZ Pharmacy & Cosmetics Uganda
Ltd. have to be insured comprehensively against all manner of risks and liabilities,
we assume that we incur an insurance expense of about 1% on the market value of
all core business assets. It is upon applying this ratio that the insurance premium
cost progressively moves up from UShs. 2,000,000 in the first year, to UShs.
2,450,000 in the second year, and eventually peaking to UShs. 2,900,000 by the
third year – reflecting a growing business trend for the business assets. Insurance
premiums are paid once a year – only in the first month of each business year.
43
Rent: XYZ Pharmacy & Cosmetics Uganda Ltd. is a new pharmacy/cosmetics
trading enterprise and is therefore staring out in hired/rented premises. Rental costs
for a space that is deemed adequate and sufficient for this type of business in
Mukono town are currently UShs. 500,000 per month. Rental costs are projected to
increase by a factor of 10% per annum – in line with prevailing inflationary trends in
the economy.
Legal Expense: This is an expense line that covers and includes such item as
company registration, acquisition of pharmaceutical trading license, payment of
affiliation fees with the relevant professional bodies/organizations, etc. Legal
expenses are a flat-line expense that is paid out only once a year (i.e. usually in the
first month). Cash flows show that the legal expense is UShs. 2 million in the first
year, while it reduces to UShs. 1 million in the second year and third year
respectively. This is explained by the fact that there are more company-formation
legal expenses that are incurred at the commencement of business in the first year
as compared to the subsequent trading years.
Expensed Equipment: This expense line is only shown for the first year of
business. This is due to the fact that money is spent on purchasing capital
equipment for internal use within the company premises and making the
appropriate installations only once. Expensed equipment expenditure is also
reflected in the Start Up expenses of the Business Plan literature and includes
inter alia items like – office equipment (chairs, file cabinets, desks, etc.); front
counter, storage bins, cash register, and assorted bottles, boxes, envelopes, etc. for
dispensing and shipment.
D. Accounting Policies
Applicable Loan Facility
Starting the pharmaceutical/cosmetics trading business will require a capital

injection of UShs. 50 million. The principal project promoter of XYZ Pharmacy &
Cosmetics Uganda Ltd. – Ms. Nancy Miriam will make a personal equity
injection of UShs. 10 million towards the total initial project capital cost. The
project promoter then expects to raise the balance of UShs. 40 million as a soft
loan facility. We have assumed that this loan will be recoverable in a period of 3
years from the date of contraction. The table below shows the breakdown of start-
up project costs and source of funding.
44
S/No Expense Item Start Up Cost Financing (UShs)
. (UShs) Loan Funds Own Funds
1 Expensed
Equipment 8,000,000 0 8,000,000
2 Partitioning 7,000,000 7,000,000 0
3 Full computer set
with a laser printer
and back up 1,250,000 1,250,000 0
system
4 Computer 550,000 550,000 0
software
5 Installation of
computer system 900,000 900,000 0
6 Legal expenses 2,000,000 0 2,000,000
7 Electricity (first 5
months) 500,000 500,000 0
8 Rent (first 5
months) 2,500,000 2,500,000 0
9 Salary for
Pharmacist (first 5
months) 6,000,000 6,000,000 0
10 Salaries for 3
Nurses (first 5
months) 6,300,000 6,300,000 0
11 Purchase of drugs 10,000,000 10,000,000 0
12 Purchase of
cosmetics 5,000,000 5,000,000 0
TOTAL 50,000,000 40,000,000 10,000,000
Repayment of Principal
The UShs. 50 million loan facility is to be repaid to the lending institution in two
(2) equal annual principal installments amounting to UShs. 20 million each p.a.
(Ref. to Cash Flow Analysis tables Year 1 – Year 3).
The proposed loan facility recovery schedule in this respect serves an instructional
purpose and should thus be viewed as a functional pointer on the recovery schedule
that XYZ Pharmacy & Cosmetics Uganda Ltd. proposes to employ in its efforts
to recover the credit facility out of the financial resources and operating income
generated by the sustained operational management of the
pharmaceutical/cosmetics retailing business within the proposed timeframe.
45
46

Outline of Xyz Pharmacy & Cosmetics Uganda LTD Business Plan

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EXECUTIVE SUMMARY

XYZ Pharmacy & Cosmetics Uganda Ltd. is starting out as a new

The objectives for the first three years include:

1. Exceed customer expectations with superior pricing

3.0 MARKET SIZE ANALYSIS & MARKETING PLAN

Our key objective is to provide a broad range of prescription/OTC/vaccine

In-Store Promotions: Includes Trade Discounts and special In-Store campaigns.

Public Relationships: Includes participation in Trade Shows, sponsorship of social

4.0 FINANCIAL ANALYSIS

(Note: All figures are in UShs.)

3-Year Return on Initial Investment: 566%.

Initial Investment Required: UShs. 50 million in 2011.

Risks: a) High working capital requirements in future years to meet growth.

Mitigation steps – Supply chain efficiency improvement.

b) Foreign exchange risks. Risk level – Medium. Mitigation Steps – Hedging.

5.0 ORGANIZATION PLAN & MANAGEMENT STRUCTURE

XYZ Pharmacy & Cosmetics Uganda Ltd.’s Mission Statement:

The proposed future organizational structure of XYZ Pharmacy & Cosmetics

Finance Logistics Dept

Customer Marketing Dept

6.0 UGANDA – INVESTMENT CLIMATE

Predictability is possible because of macro-economic stability with inflation

A liberal economic regime is another consistent characteristic of the Uganda

Strong Natural Resource Base

Government Commitment to Private Sector

7.0 THE UGANDA PHARMACEUTICAL & MEDICAL PRODUCTS SECTOR

Table 2: Pharmacies & Drug Shops in Uganda, 2004 to 2008

7.2 Government Policy

All Statutory requirements are contained in: -

National Drug Authority

Class A and B are drugs which must be dispensed only on prescription by a

Requirements and Procedures to be followed by an Investor Setting Up a

� Drug Registration and Product License

7.3 Changes in Industrial Production

Figure 1: Chemical & Pharmaceutical Production, 2004 – 2008

7.4 Performance of the Sector

Table 3: Pharmaceutical and Medical Products Exports by quantity, 2003 – Sept.

90 percent of the pharmaceuticals, sundries and medical products are imported

Figure 3: Pharmaceutical and Medical Products Imports by Value, 2004– 2008

Source: Uganda Bureau of Statistics, UBOS. Notes: 2008 Data is provisional

7.5 Availability of Special Skills

Uganda currently has three Universities that provide Bachelors’ degrees in

7.6 Key Strengths (Competitive Factors)

Table 4: East Africa Pharmaceutical Market Overview

8.0 XYZ PHARMACY’S VALUE PROPOSITION AND BRAND POSITIONING

X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . will seek to become an end-

We believe that X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . can

9.0 MARKETING STRATEGY

To reduce risk and increase the chances of a successful product launches at

X Y Z P h a r m a c y & C o s m e t i c s U g a n d a L t d . will have to adapt its

• Measurability: The size, purchasing power and profile of the segment(s)

Explanation of the Segmentation Process:

Level 0 Segmentation: Users/Non-users of consumer prescription pharmaceutical

Level 1 Segmentation: Income

Level 2 Segmentation: Gender

Level 3 Segmentation: Age

11.0 MARKETING PLAN

Known Value Items (KVIs such as

Table 5b: Non-Prescription Medications

Non Prescription Product Lines Margin

KVIs [includes OTC analgesics, specific Meet the competition pricing

Conventional pharmacy lines 35%