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Drug manufacturers affected by FX shortage

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By Usman Oladimeji

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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