Read the Conversation
EF: What are B. Braun's plans and priorities for the near future?
JP: We are seeing a recovery in the dialysis market where we are one of the largest players. COVID-19 worldwide significantly and negatively affected the dialysis treatment business, which saw many patients lose their lives. The patient and treatment numbers have gone down. For the past 12 months, we have been seeing a recovery in the market that seems to be picking up momentum. We are now seeing room for growth in South Africa and its neighboring countries.
High on our list of priorities is going back into expansion mode for our dialysis networks, trying out new business models and partnerships, and expanding into new territories.
EF: Could you elaborate on the initiatives that B. Braun is pursuing in the Southern African region?
JP: We are quite active with various business models. One of our business models revolves around supporting local distributors in our neighboring countries. We have found success in Namibia, although it has taken us quite a while to make inroads into the Namibian market. But once we found the right partner, things started working out very nicely. Namibia is doing pretty well economically at the moment, and you can clearly see that. The public sector is recovering, and Namibia is relatively strong.
We have been present for a long time in some neighboring countries like Zimbabwe and Zambia, and we are doing quite well there. The growth momentum is there. We have a very dedicated, passionate young team.
We are currently working with the young team in Zambia and building something new from scratch. It has been very interesting and productive. The management team and I are quite involved. We move on a small scale but it is important that we plant the seeds for good development. We are working with very young, well-educated, and committed people. We are giving them the business tools, and medical instruments, educating them, and allowing them to build something up for their countries on their own. It is a very rewarding task, although it consumes a disproportionate amount of my time if you measure input in terms of time and bandwidth versus output.
There is potentially more to come, and we are very committed at B. Braun to tightening the links between the various organizations on the African continent. I'm also quite positive that in the next 6 to 12 months we will see intensified collaboration among our resources, both strategically and in terms of knowledge, to bring more services and products to the African continent.
We are seeing relatively positive business momentum across the continent, and I'm quite positive that there is more to come. I'm convinced about the mid-term and long-term future, as we are seeing it on the ground.
EF: As part of the German Chamber of Commerce, how would you assess investments in healthcare from other German companies?
JP: Firstly, we can't shy away from the fact that South Africa itself is not in a good economic space right now. The country has all kinds of economic and political challenges, load-shedding being the most prominent one. We did not even have a stable power supply for the last 6 months. We have transportation and political issues.
Despite the situation, many established companies in the healthcare and other established sectors are performing relatively well. It is clear that the economic environment is not conducive for new entrants. It's almost a put-off if you know that you do not have power for 12 hours a day for a consecutive month, and if you are interested in investing, you would think twice about whether this is a good time to enter.
The business sentiment with German companies in the German Chamber is relatively low. Established companies are still in the field playing and are relatively successful, but I think there could be more new entries, and from the Chamber side, we are working very hard to create interest and to encourage people to understand Africa is for the long term. When you think 5 to 10 years ahead, the perspectives are positive.
South Africa is the jumping board for the entire southern African region. This is typically Johannesburg or Cape Town. These are the places from which you can reach out to the neighboring countries. The long-term prospects in a place like Zambia might be attractive, but you wouldn't want to start on a new continent in a small country like Zambia as the market is reduced. Starting with bigger hubs such as Kenya, Ghana, or South Africa is preferred.
We do see some committed companies, very often family-owned companies, laboratory chains, and so on that once in a while knock on our doors. We recently had another German-based family company that sought our advice about manufacturing in South Africa. There is clearly interest, and it could be higher if South Africa had a better-performing economy.
EF: B. Braun turned 184 years old and has been in Africa for over 60 years. B. Braun presented a program called "Sharing Expertise with Africa." How do you see this impacting your operations and footprint in the region?
JP: We achieved a few milestones recently. One of our major steps was to buy, refurbish, and operate a manufacturing plant in Nairobi. This was extremely important for us because it was our first significant investment in a sizable market in East Africa. Development needs lots of education to get this up and running. They have been advancing a lot during the last nine months. Outside of Southern Africa, this is most likely our most important step.
We do have a small team in Ghana, and we are doing a lot of export business where we are dealing on a project basis with partners in various other countries, especially in the dialysis sector. There are projects in Cameroon, Angola, and all across the board. It's a mix of very different business models that are very often complementary. B. Braun employs more than 1000 people on the African continent alone.
Almost two percent of our global workforce is based on the African continent, while the African GDP and the African market size are way below one percent. You could make the case that B. Braun is disproportionately well-engaged and committed to the African continent. We put the money where our mouth is.
EF: What advice would you give to business leaders and policymakers in terms of how to attract investment into South Africa to make it a hub for exports? Do you think they see the value of investing in the country?
JP: Short-term speaking, it's a bit gloomy right now. Many of us who have been around for a long time are still quite positive about the mid-to long-term perspectives. It depends on what industry you are in.
There are a some challenges in the automotive sector, but overall, although it's not easy, they are performing well. It depends on which sector you are in and how affected you are, but I haven't met any business executive in the last 12 months who is negative about the long-term perspectives. They are typically quite gloomy short-term, and sometimes very unhappy about certain policy decisions, political environments, and shortcomings of things that should have happened and didn't happen. Overall, everybody is a big believer in the long-term prospects because the demographics don't lie and I think the demographics are extremely positive. Infrastructurally, we are pretty sound. There are a lot of positives in the long run. From my perspective, what is not always well understood is that a country like South Africa is competing against other locations and other emerging markets around the world.
We need to have or create a conducive environment. We need to make sure that we are aware that we are competing in a global space and that we are competing for foreign direct investment. We need to be an attractive destination to reach out to investors and make it as easy as we can for them to invest. This function isn't always well understood, but I think most people are aware that South Africa has this hub function for southern Africa and beyond. This has been demonstrated and we are living proof. Other companies are operating from Sub-Saharan Africa and in up-and-coming places like Rwanda. I think the roles are clearly understood, and there is much more that could be done and should be done. The same holds true for the healthcare sector. It's just that, in all likelihood, other industries are even more at the forefront. The automotive guys are more at the forefront of manufacturing than we are. The mining sector right now is still in a relatively attractive space. They are running a lot of projects to build up new mines in even more difficult places like the DRC.
Other industries are at the forefront and we might only be a follower, but the demand for growth, education, and the sharing of knowledge in the healthcare sector is phenomenally big. There is so much more that needs to be done. The question is, just who will do it?
EF: How will your 10th-anniversary speech in B Braun received by your employers?
JP: I started in 2014 so I'm just shy of 10 years. I have thought about this speech for quite a while because I've never been in a job for that long. I think what has changed and has made my job attractive and exciting was the advent of COVID-19. It was certainly a huge challenge for all of us.
During COVID, we worked extremely well with government officials here in South Africa. We almost always had daily calls because we were the largest manufacturer of disinfectants at that time. We were a key component in dealing with the crisis, and when the country was locked down, we had to make sure that our people could still come to work, that we ran our operations, and that we got the raw materials into the country. We worked with the embassy and used repatriation flights to bring disinfectant raw materials into the country. It was a very demanding and rewarding time because we kept running our dialysis clinics to keep our patients alive.
We also built a relatively large manufacturing site for pharmaceutical products, and this is also a long-term project. COVID hit us as we were starting and this was a huge curveball because all of a sudden you couldn't bring exports into the country any longer. The country was locked down, and we had some Italian subsuppliers of ours that we desperately needed to start the machines and then they couldn't come to the country due to lockdown. We tried to use tools like MS Teams and things like that.
It’s unusual to be in one of the same jobs for 9 years. It has been a very exciting and interesting journey, and strangely it was COVID that made it very exciting because all of a sudden we could not ask questions and had to make sure that we kept treating our patients, producing our products, and convincing our people that no matter how risky it might be to pop up at work, they still have to come because we have patients that we need to keep alive. Those years have passed by quite quickly.
Press Release of Pledge of commitment to building South Africa: https://www.busa.org.za/south-african-ceos-from-over-115-companies-pledge-commitment-to-building-the-country/
