A tough business environment is pushing more global firms to scale down their operations or exit Kenya.
Already, American multinational consumer goods manufacturer Procter & Gamble (P&G) and British pharmaceutical multi-national GlaxoSmithKline (GSK) have announced plans to exit Kenya.
GlaxoSmithKline (GSK), is the latest firm to announce closure of its operations in locally.
The company has operated a manufacturing facility in Kenya for nearly 60 years and will now rely on distributors to supply its products to the regional markets.
GSK has attributed its exit to low sales and a shift in focus to its more profitable prescription drugs and vaccines business.
The corporation encountered intense competition from local producers and more affordable generic medications originating from India.
However, the company says it will keep its manufacturing facility situated in Nairobi's Industrial Area, operating under its independent consumer healthcare subsidiary, Haleon.
“The production facility in Kenya is a Haleon facility, and is not the subject of the update that GSK gave in Kenya this week,” GSK said in a statement.
The exit from Kenya comes after the firm also shut its Nigeria operations which are two of GSK’s largest markets in Africa.
Haleon was separated from GSK in July of last year and specialises in various products, such as Sensodyne and Panadol.
The change will see GSK concentrate on the profitable segments of prescription drugs and vaccines, featuring brands like Augmentin, Zentel, and Ventolin.
“We announced that for our GSK business, we would move to a direct distribution model. This means that instead of having a GSK commercial operation in the country we will supply our medicines and vaccines through a third party,” the company clarified.
The exist comes at a time that manufacturers have been lamenting on high taxation and unfriendly policies.
However, GSK still plans to continue supplying its products to these markets through a distributor-led model as a strategic adaptation to the changing business environment that allows the company to maintain its presence in Africa.
Last year, the pharmaceutical company rejected a £50 billion (Sh9.6 trillion) bid from Unilever for its unit, asserting that the proposed deal undervalued the company.
The company ceased marketing medicines to healthcare professionals in 29 sub-Saharan African markets but maintained operations in Kenya and Nigeria, along with representative offices in Cote d’Ivoire and Ghana.
The country has in recent past faced increased exits from multinationals over what they term as unpredictable tax policies, foreign exchange difficulties, high operational costs, and uncertainties in Kenyan policies.
Finlays last month sold its local subsidiary as it closed shop in the country.
De la Rue and Cadbury’s also ceased operations with Base Titanium announcing it will exit the Kenyan market in 2024.
In the retail market 2023 has seen South African giant Game stores leave the Kenyan Market.
P&G attributed its planned exit to high cost of doing business, dollar shortages, and a sharp decline in sales in the local market.