Alfa’s rise and fall: 19011 Pharmacy chain officially declared bankrupt

Zeinab El-Gundy , Thursday 16 Jun 2022

In a story befitting of a documentary on the meteoric rise and fall of companies, a Cairo Economic Court put an end last week to the expansion of famous pharmacy chain 19011, declaring its bankruptcy after controversially dominating the pharmaceutical market in Egypt briefly before crashing.

A file photo of 19011 Pharmacy branch in Cairo. Photo : 19011 official website

The 19011 chain of pharmacies — which is owned and operated by Alfa — was founded in October 2017 by a group of seven low-profile young pharmacists with ten branches only.

By 2019, the chain had been the talk of the country after managing to acquire about 100 existing pharmacies. At its peak, Alfa had 300 branches nationwide with 250,000 pharmacists, administrators, and workers.

At the time, due to its booming expansion, the chain stirred controversy for its previously unknown source of funding.

Fast forward to 8 June 2022, a Cairo Economic Court declared Alfa bankrupt as of 29 May 2022 due to its inability to pay huge debts to banks and drug companies.

According to the court, Alfa had over EGP 7 billion in debts to banks and drug supply companies.

The final nail in the chain’s coffin was a lawsuit filed by lawyer Hany Sameh. Not only did he bring an official end to 19011 pharmacies, but has also managed to prove its bankruptcy, thereby halting its acquisition by the United Company of Pharmacists (UCP) — the largest pharmaceutical wholesaler in Egypt and the owner of the ‘Care’ chain of pharmacies.

According to the UCP’s official website, it is a subsidiary of Walgreens Boots Alliance. Multiple news reports said that UCP had been in talks to acquire unknown stakes in 19011 throughout 2021 due to the huge debts Alfa owned to the company, estimated at EGP one billion.

A lawyer already had filed a lawsuit before the Administrative Court to stop UCP's acquisition of the notorious chain. The lawsuit has been  adjourned till July.

Furthermore, now that the company is bankrupt, the banks and drug companies that provided Alfa with loans will not be able to get their money back.

An endless chain of controversies

What characterised Alfa’s 19011 was not only its meteoric unexplained expansion or aggressive marketing policies, but also the number of controversies it was part of. With very little known about owners, speculation abounded that it could be a subsidiary of a company owned by the Egyptian Armed Forces.

Pro-Muslim Brotherhood satellite channels at the time circulated the rumour that led to it being labelled as the ‘Army’s pharmacy.’

In response, the Egyptian army issued a statement on 28 August 2019 refuting such claims.

“The Armed Forces deny what was circulated in hostile media channels and social media accounts from rumours related of owning or inaugurating a chain of pharmacies nationwide, and the Armed Forces urge all media channels and users of social media accounts not to spread such rumours,” the short statement said without naming the chain.

The rumour gained further traction when a connection was made between the name of the chain, 19011 — which also served as its hotline — and President Abdel-Fattah El-Sisi’s birthday on 19 November.

“It seems that there is a problem with the chain because of its name, however, I do not see a problem in it. They chose these numbers so people would remember them,” prominent TV host Amr Adib said on MBC Masr TV channel following the army’s statement, adding that the projects and companies of the army were known to the public.

Days later, Adib himself hosted the owners of the chain in September 2019 after airing a misleading promo for the interview.

The Saudi-owned Cairo-based satellite channel announced at the time that Adib would be interviewing a guest by the name of Mahmoud Abdel-Fattah El-Sisi —the name of El-Sisi’s son. Several news websites fell into the trap and reported it was the Egyptian President’s eldest son, drawing the attention of many.

However, many viewers were outraged when it turned out that the guest was the managing director of the 19011 chain, who shares the same name as the president’s son but is not a member of President El-Sisi’s family.

Many accused Adib of misleading his viewers by not making it clear that he would not be interviewing the president’s son.

Meanwhile, ‎Chairperson of the Board of 19011 Naem El-Sabagh — one of the guests who appeared on Adib’s show — denied rumours that the company derived its name from the president’s birth date.

He confirmed that the name was chosen to match the hotline number, as their slogan was ‘Our name is our hotline.’

El-Sabagh also said that he and his partners knew that they would achieve revenues after three years and that the chain depended on marketing more than anything.

All these controversies, however, were soon left by the wayside when El-Sabagh made a snide remark that was seared into the memory of the Egyptian public and has been dug up and recirculated in the country over the past few days as a cautionary tale of how lofty ambitions and arrogance can destroy everything.

“Any young man who reaches the age of 35 and is still poor deserves to be poor,” El-Sabagh said during Adib’s interview, describing his success with his partners as young men and becoming the owners of Egypt’s fastest growing pharmacy chain.

The statement provoked many that were struggling economically, with many young people finding it challenging to make a living wage.

According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), the poverty rate in FY2019/20 in Egypt was 29.7 percent, down from 32.5 percent two years earlier.

Trouble with the law

The repercussions of the interview did not end at that point.

In the same week, Egypt’s Pharmacists Syndicate announced that the 19011 chain and its owners were being investigated, and that the chain itself was in violation of the law, which states that pharmacists are allowed to own no more than two pharmacies.

It also announced that the pharmacists who sold their commercial names to the chain were referred to the Primary Disciplinary Committee.

There are several old successful pharmacy chains like ‘El-Ezaby’ and ‘Roshdy’ in the country that have been operating for decades, yet as investment company-owned pharmacies and not individual pharmacist-owned pharmacies.

The syndicate has long criticised this loophole, arguing that chains can create a monopoly that can control the drug market.  

Furthermore, big chains like El-Ezaby and Roshy chains have had their share of legal trouble in previous years, however, they are still operating successfully.

Meanwhile, there are several lawsuits in front of the Administrative Court against smaller chains formed by independent pharmacists that believe larger chains threaten their industry.

There have been attempts to resolve the issue; former MP Mohamed Fouad presented a draft law to recognise pharmacy chains and impose a 40-branch cap on them.

And yet, the law did not see the light of day, and the syndicate still targets pharmacy chains that abuse legal loopholes.

In statements to the media on Wednesday, Mohamed El-Sheikh, the head of the syndicate and a senator, said that chains are harmful to the industry.

“What happened to Alfa’s 19011 pharmacies is expected, given their quick expansion and their violation of the law,” he said, recounting the Arab proverb, “what is built on falsehood is false.”

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