A group of Kenyan medical engineers has filed a lawsuit to halt the sale of Philips’ East African operations to an Egyptian company, arguing the deal could disrupt maintenance of critical hospital equipment and violate public procurement laws.
The Association of Medical Engineers of Kenya asked a court to suspend the acquisition by GMED Group, saying the transaction lacks proper regulatory review and public consultation. The group warned that transferring government contracts to a distributor without manufacturing experience could endanger patient care.
Deal Advances Amid Financing
GMED, a major medical equipment distributor in Egypt and parts of the Middle East and Africa, agreed to buy Philips’ business in Kenya, Tanzania, Uganda, Rwanda and Ethiopia. The Egyptian firm created a Dutch subsidiary to complete the purchase.
The International Finance Corporation, the World Bank’s private-sector arm, proposed a $15 million unsecured loan to support GMED’s expansion into East Africa. The loan, announced earlier this year, awaits final approval.
Philips East Africa Ltd. is seeking regulatory clearance in Kenya for the sale, estimated at around Sh2 billion.
Philips’ Role in Kenyan Healthcare
Philips has supplied equipment under two major government programs.
Under former President Uhuru Kenyatta, the company was a key contractor in the Managed Equipment Services program, a Sh63 billion initiative that leased diagnostic machines to public hospitals for eight years.
Critics said the contracts favored suppliers and limited the government’s options to cancel. Funds were deducted directly from county budgets, and some hospitals received equipment that went unused due to lack of training.
President William Ruto’s administration replaced the program with the National Equipment Service Programme, a Sh200 billion lease-to-own plan over 10 years. Philips secured contracts under the new system alongside other international firms and local investors.
The company also supplies equipment to military hospitals and private facilities in Kenya.
Just two years into the new program, Philips’ Dutch parent company decided to exit East Africa.
Concerns Over Service Continuity
The engineers’ association said GMED is not an original equipment manufacturer and may lack the expertise to service sophisticated machines.
“The transaction, if implemented before judicial review or regulatory scrutiny, would result in the unlawful transfer of public procurement obligations … contrary to the Constitution and the Public Procurement and Asset Disposal Act, 2015,” association chairperson Symon Mbakah said in court documents.
Mbakah said the potential loss of Philips’ technical staff could paralyze equipment maintenance in public and private hospitals, threatening the constitutional right to health.
In a separate case, some Philips engineers sued to block what they called a forced transfer of their employment to GMED.
The association also alleged the Philips East Africa unit was undervalued in the sale but provided no specific figure.
Without court intervention, the group said, the deal would cause irreversible disruptions to medical services and put lives at risk.
Questions on Procurement Rules
The lawsuit raises broader issues about transferring public contracts in corporate sales. It asks whether suppliers can bundle government obligations with other assets, whether buyers must be manufacturers and whether public clients should have input.
The petition names Philips entities, GMED, the Competition Authority of Kenya, the Ministry of Health, the Pharmacy and Poisons Board and the attorney general as respondents. The Council of Governors is an interested party.
None of the respondents have filed responses in court.
The case highlights ongoing concerns about Kenya’s reliance on leased high-tech medical equipment and the need for uninterrupted maintenance to support healthcare delivery.
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