Icembe Medical plans to expand

The medical group will target the public sector, then the sub-Saharan region

City Press, Business
03 April 2005
By Shadrack Mashalaba

Icembe Medical, a new black-led joint venture that markets, sells and distributes medical devices, launched this week, has announced it was in the throes of securing more than 25 percent stake in a national health risk management firm. Dr Sibusiso Mhlambi, who is a chairperson and managing director of Icembe Medical, said the company’s financial advisors were completing a due diligence process and details of the deal would be announced within three months after the two parties agree on the price.

The unveiling of Icembe, one of a few empowerment companies that are emerging in the healthcare sector, comes at a time when the Health Charter Task Team is finalising the first draft of the transformation blueprint for the sector, due for release shortly.

Icembe Medical is a partnership between black empowerment investment firm, Corez Investments and the local arm of global advanced medical devices company Smith & Nephew SA (SNSA).

Corez empowerment partners hold 60 percent in Icembe while Smith & Nephew holds 30 percent, and an Icembe Medical Employee Trust, which is being finalised, will hold 10 percent.

Corez partners include Mhlambi, who is also a director of SNSA and Queen Thandi Zulu, a businesswoman and health activist. Mhlambi is a qualified medical practitioner who retired from practising as a clinical doctor in 1996. He has been involved in a number of projects, advising on strategies and also serves in the boards of various organisations as a trustee.

SNSA is part of the multinational provider of products for the total joint replacement, fracture management, and deformity corrective markets.

The parent company operates in 32 countries, employing over 7 000 people and generates annual sales of £1,2 billion (about R14 billion).

Mhlambi said Icembe Medical had already distributed products of SNSA, mainly of its advanced wound management division, and those of BSN Medical, a multinational company with business in orthopaedics, phlebology and woundcare.

“The acid test for Icembe will be the extent to which we expand our markets. We have developed systems using our partners’ models which have been adjusted to suit our own needs,” he said, adding that they have developed an innovative selling model of using technology rather than hold unnecessary stock on their premises which may end up being obsolete.

In the short term, Icembe Medical will be targeting the public sector, an area which they have vast experience in and would be able to add value, said Mhlambi.

“We will also be targeting the private sector and in about two years’ time make advances to the sub-Saharan market.”

Kelvin Johnson, managing director of SNSA, said their buying into Icembe was part of the broader empowerment strategy by the company.

He said Smith & Nephew already had two other similar distributing ventures. He also said the new outfit will enable SNSA to tap into markets previous not exploited, using the connections of their partners.

Mhlambi said Icembe Medical's main business focus this year would be in Gauteng and KwaZulu-Natal provinces, which together constitute more than 60 percent of the state sector business. He said Icembe Medical operates from its Durban offices but will open a second office in Gauteng later this year.

The company is looking at increasing the board representation by including more independent directors to improve its corporate governance.

Polo Radebe, director of Black Economic Empowerment at the department of trade and industry commended the Icembe deal.

“The preoccupation with BEE has been around ownership. For BEE to be sustainable, government is promoting a broader approach.

“By a broader approach, we mean a process that looks at not just ownership but whether black people are involved at an executive management level, whether they are operationally involved, whether opportunities are being given to aspirant black suppliers and whether employment equity plans are in pace and are implemented. It should be much more than just one company getting a stake in another,” said Radebe