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Drug manufacturers affected by FX shortage

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By Abdulwasiu Usman

High inflation, weak naira affects the operation of pharmaceutical firms.

The pharmaceutical business is struggling greatly against the backdrop of foreign exchange (FX) scarcity which has decreased imports, especially raw materials. In the first half of 2023, less medicines were produced and imported by several pharmaceutical companies in the country compared to the same period in 2022. Data analysis from five drug manufacturers’ unaudited financial records shows that total finished goods decreased by 20.6%, from N11.8 billion to N9.36 billion. These companies include Fidson Healthcare, GlaxoSmithKline, May & Baker Nigeria, Neimeth, and Morison Industries. Meanwhile, two of them experienced a rise in output.

Former president of the Pharmaceutical Society of Nigeria, Sam Ohuabunwa claimed that domestic production was not to blame for the country’s decreasing pharmaceutical imports. High inflation and a weak naira have made it difficult for firms operating in the pharmaceutical industry to recoup their expenditures. However, when they attempted this, the price of their products became unaffordable. According to Ayodeji Alaran, managing director at PBR Life Sciences, pharmaceutical firms are having challenges to keep up with consumers’ demand for medical supplies and needs to be supported.

More than 70% of Nigerian medicines are imported.

Imports of pharmaceutical items into Nigeria fell for the second year in a row in 2022, falling to $1.05 billion (a 23.4% decrease from $1.37 billion in 2021) according to data from the International Trade Centre, a multilateral agency. This was attributed to the nation’s escalating dollar liquidity crisis. Gabriel Idahosa, deputy president of the Lagos Chamber of Commerce and Industry (LCCI), asserted that all pharmaceutical industry inputs, from raw materials to packaging, are imported. Nigeria healthcare system is endangered as the price of drugs for treating common diseases like malaria uproar.

Nigeria imports a great deal of pharmaceutical products, active pharmaceutical ingredients, and drug production machinery and equipment from China, India, Malaysia, and the Netherlands. As disclosed during the major pharmaceutical exhibition in Africa, Pharma West Africa, more than 70% of Nigerian medicines are imported, with pharmaceuticals making up a significant portion of the country’s $10 billion annual healthcare budget. It stated on its website that due to the lack of availability of health insurance, out-of-pocket costs may rise up to 62% of overall healthcare costs.

GlaxoSmithKline closed down operations in Nigeria.

Elaborating on the firm’s data, in the first half of 2023, Fidson Healthcare’s completed goods revenue was N5.07 billion, up from N4.96 billion in the first half (H1) of a calendar year (January to June) 2022. The company’s stock of goods fell from N14.62 billion to N13.5 billion. Products in transit decreased to N4.42 billion from N5 billion, and purchases of raw materials and packaging materials decreased to N3.67 billion from N3.94 billion. The inventory of work-in-progress decreased from N527.3 million to N40.9 million. Promotional and other consumable materials rose to N197.5 million, up from N189.5 million, while engineering spare parts grew to N289.3 million, up from N92.4 million.

After 51 years in business, GlaxoSmithKline Nigeria announced last month that the company will be closing down operation in Nigeria. In H1 2023, the company’s gross value of finished goods was N2.28 billion, down from N5.26 billion in H1 2022. The total inventory of the company fell from N5.21 billion to N2.18 billion. Morison Industries saw a decrease in its finished goods of N13.9 million from N22.2 million in the first half of 2023. Total inventory of the company fell from N40.57 million to N27.9 million. Inventory of raw materials increased to N14.1 million from N28.6 million.

Neimeth’s finished goods revenue increased in H1 2023.

May & Baker saw a modest increase in H1 2023 finished goods sales to N1.08 billion, from N1.06 billion in H1 2022. The total value of the company’s inventory rose to N4.84 billion, from N4.45 billion. Inventory of raw materials and packaging increased to N3.03 billion from N2.59 billion, and inventory of work in progress increased to N277.3 million from N255.8 million. In H1 2023, Neimeth’s finished goods revenue increased to N911.2 million, from N490.53 million in H1 2022. The total value of the company’s inventory increased to N1.82 billion, from N1.65 billion.


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AN-Toni
AN-Toni
16 days ago

Drug manufacturers affected by FX shortage.High inflation, weak naira affects the operation of pharmaceutical firms.Express your point of view.

SarahDiv
SarahDiv
16 days ago

The pharmaceutical business is facing a hard time due to the backdrop of foreign exchange (FX) scarcity which has decreased imports of raw materials needed for making medicines. In the first half of 2023, less medicines were produced and imported by several pharmaceutical companies in the country compared to the same period in 2022. And this is endangering the Nigeria healthcare system as the price of drugs for treating common diseases like malaria uproar and other diseases will skyrocket leaving the masses unable to buy pharmaceutical products.

Taiwoo
Taiwoo
15 days ago

It’s terrible that the lack of foreign currency, excessive inflation, and the weak naira are having an impact on the pharmaceutical industry. It’s critical that the government deal with these problems and offer assistance to guarantee that people have access to and can afford necessary prescriptions.

Kazeem1
Kazeem1
15 days ago

Drug manufacturers affected by FX shortage. – High inflation, weak naira affects the operation of pharmaceutical firms made it challenging for pharmaceutical companies and drug makers to market and sell their goods. To finance the creation of their medicines, they must obtain the necessary funding.

Adeolastan
Adeolastan
15 days ago

I understand your concern about the impact of the FX shortage on drug manufacturers. The combination of high inflation and a weak naira can indeed have a significant effect on the operation of pharmaceutical firms. This situation not only affects their ability to import raw materials and equipment but also increases production costs, making it challenging to maintain affordable prices for essential medications.
As a supporter of the government’s investment in the biofuel and oil palm economy, I believe it’s crucial to address the challenges faced by the pharmaceutical industry. This sector plays a vital role in ensuring the health and well-being of the population, and it requires support to overcome these obstacles. Finding solutions to the FX shortage issue, such as providing access to foreign exchange at reasonable rates, can help stabilize the industry and ensure the availability of essential medicines.
Additionally, it’s important to explore long-term strategies to mitigate the impact of currency fluctuations and inflation on the pharmaceutical sector. Promoting local production of key pharmaceutical ingredients, investing in research and development, and fostering partnerships between the government and private sector can help create a more resilient and self-sufficient industry.
By addressing the FX shortage issue and implementing measures to support the pharmaceutical sector, we can ensure the availability of affordable medicines, create job opportunities, and contribute to the overall health and well-being of the population. It’s important to prioritize the diversification of the economy and invest in sectors that are essential for a sustainable and prosperous future.