Square Pharma's Kenya unit hits profitability in just two years

Square Pharmaceuticals has achieved a significant overseas milestone as its Kenya-based subsidiary reported an operating profit for the first time, less than two years after starting commercial production.

The turnaround at Square Pharmaceuticals Kenya EPZ Limited underscores the Bangladeshi drug maker's growing manufacturing and market footprint in East Africa, a region seen as one of the fastest-expanding pharmaceutical markets on the continent.

According to the audited financial statements for the year ended 30 June 2025, the Kenya unit posted an operating profit of Tk10.20 crore and a net profit of Tk10.21 crore.

This marked the first instance of sustained profitability driven by core operations, rather than foreign exchange gains. In FY23, the subsidiary's marginal profit was largely attributable to exchange-rate movements, while its operating performance remained deeply negative.

Revenue growth played a central role in the turnaround. Sales surged to Tk74.47 crore in FY25 from Tk27.38 crore a year earlier, reflecting a 172% year-on-year increase in local currency terms as the company gained traction in the Kenyan market. 

Improved market penetration, higher capacity utilisation and tighter cost controls helped turn the gross margin positive, enabling the plant to cross the operational breakeven point, said the company in the annual report.

In its audit report, Square Pharmaceuticals said the board was "pleased to report" that the Kenya factory had achieved net profit after tax for the first time, describing the achievement as a "validation of the company's execution strategy".

The management noted that reaching profitability within just one and a half years of operation highlights the efficiency of the manufacturing setup and the strength of demand for its products in the region.

FY25 also marked another milestone for the subsidiary as it recorded its first export shipment from the Kenyan plant. Although the initial export value was modest at around Tk0.55 crore, the company said it signals the beginning of a broader regional export drive and positions the unit to benefit from cross-border trade within the East African Community.

Despite the return to profitability, the directors did not recommend any dividend for the year, opting instead to focus on recovering accumulated losses and preserving capital for future expansion. 

Square Pharmaceuticals Kenya EPZ Limited was incorporated in June 2017 and operates a state-of-the-art manufacturing facility at Athi River EPZ in Machakos County.

The plant began commercial operations in January 2023, with products reaching the market from March that year. Square Pharmaceuticals PLC holds 100% ownership of the subsidiary.

Kenya's pharmaceutical market was valued at nearly $1 billion in 2024 and is projected to grow to $1.6 billion by 2031, driven by rising healthcare demand and policy support for local manufacturing.