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Drugmakers distribution cost sees 50% surge

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By Okunloye Abiodun

Unfavorable economic condition affects pharmaceutical companies operation.

According to an analysis conducted by BusinessDay, there has been a remarkable surge of 50.2 percent in the cumulative selling and distribution expenses of four healthcare companies listed on the Nigerian Exchange Limited. As detailed in the latest financial reports of these firms, their overall costs escalated from ₦2.05 billion in the third quarter of 2022 to ₦3.08 billion during the corresponding period of the previous year. The costs associated with selling and distributing the product experienced an increase of 19.4 percent from ₦2.58 billion in the second quarter when compared to the previous quarter.

The analysed companies include Neimeth International Pharmaceuticals Plc, May & Baker Nigeria Plc, Fidson Healthcare Plc and GlaxoSmithKline Consumer (GSK) Nigeria Plc. From the data revealed, Fidson had the highest selling and distribution cost, which amounted to ₦1.33 billion, next by GlaxoSmithKline, which has ₦0.93 billion, May and Baker with ₦0.70 billion and Neimeth with the lowest cost of ₦0.12 billion. In the previous year, major changes implemented by the government in Nigeria resulted in a rise in transportation expenses. This was primarily due to the removal of petrol subsidies and the consolidation of the foreign exchange market.

Subsidy removal causes a spike in distribution costs.

Transportation fares, including buses, tricycles, and motorcycles, were raised by public transportation providers following the removal of the subsidy, which led to a threefold increase in petrol prices from ₦184 to ₦617. GSK, which had been operating in Nigeria for 51 years, revealed their plans to exit the country in August, citing a challenging macroeconomic environment. In the third quarter, Fidson Healthcare’s selling and distribution cost rose to ₦1.33 billion, compared to ₦0.60 billion in the corresponding period of 2022.

Furthermore, the company’s operations were initiated on March 1, 1995, serving as a local supplier of medicinal goods. Within a mere twelve months, the organisation expanded its horizons by initiating the importation of its personally developed pharmaceuticals, namely the renowned Ciprotab and Peflotab brands of quinolones. As progress continued, Fidson took a significant leap forward in July 2002 by establishing its first domestic manufacturing unit. Eventually, the company accomplished a remarkable feat in sub-Saharan Africa by becoming the first entity to produce Antiretroviral (ARVs) medications in March 2005.

More of the company’s revenues go back to selling and distribution.

In the third quarter of 2023, GSK recorded a significant increase in its selling and distribution expenditure, with costs rising from ₦0.67 billion to ₦0.93 billion compared to the corresponding period in 2022. GSK, under Beecham Limited, first established its presence in Nigeria back in June 1971 and officially began operations in July 1972. The company’s headquarters can be found at 1 Industrial Avenue in Ilupeju, Lagos. Additionally, GSK made its debut on the Nigerian Stock Limited platform in 1977.

Also, May and Baker’s selling and distribution expenses reached ₦0.70 billion in Q3 2023, a rise from ₦0.64 billion in the corresponding period of 2022. Established on September 4, 1944, as the pioneer pharmaceutical company in Nigeria, May and Baker has its roots back to Grimwade, May and Pickett, a firm founded by three chemists in England, the United Kingdom in 1834. November 10, 1994, marked the transformative moment when this organisation transitioned into a publicly traded entity following its incorporation into the Nigerian Stock Limited.

Related Article: Health insurers worry on rising drug prices

Lastly, in the third quarter of 2023, Neimeth experienced a decrease in its expenses related to selling and distribution, amounting to ₦0.12 billion. This figure is lower compared to the ₦0.14 billion recorded in the third quarter of 2022. Prior to its rebranding to Neimeth International Pharmaceuticals Plc., the company had been active in Nigeria for four decades. During this time, they focused on producing, promoting, and delivering Pfizer’s pharmaceutical and veterinary products in various forms, such as tablets, capsules, ointment/cream, powder, injectables, and oral liquids.


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AN-Toni
Editor
1 month ago

Drugmakers distribution cost sees 50% surge. Unfavorable economic condition affects pharmaceutical companies operation.Express your point of view.

Adeoye Adegoke
Member
1 month ago

That’s definitely a concerning situation. The 50% surge in distribution costs for drugmakers due to the unfavorable economic conditions is quite impactful. It can have a significant effect on the operations of pharmaceutical companies, potentially leading to higher prices for medications and limited access to essential drugs.
In such circumstances, it becomes crucial for pharmaceutical companies to find innovative solutions to mitigate these rising costs while still ensuring the availability and affordability of medications. This could involve exploring more efficient distribution channels, optimizing supply chain management, and leveraging technology to streamline processes.
Ultimately, the goal should be to strike a balance between the financial sustainability of pharmaceutical companies and the accessibility of medications for patients. By addressing the challenges posed by the surge in distribution costs, we can work towards a healthcare system that provides affordable and accessible medications for all. 💊💙

SarahDiv
Member
1 month ago

The article sheds light on the challenges faced by pharmaceutical companies in the country, with a notable 50.2 percent surge in selling and distribution expenses. The removal of petrol subsidies and economic conditions have contributed to this increase. It’s concerning to see the impact on companies like GSK, which is planning to exit Nigeria. The government’s economic policies seem to have a direct effect on operational costs, posing challenges for the pharmaceutical sector.

Taiwo
Member
1 month ago

50% increase in drug manufacturers’ distribution costs Businesses in the pharmaceutical industry are impacted by unfavorable economic conditions. The adverse economic conditions have been felt by all segments of the nation. Pharmacies must examine how they are conducting business.

Kazeem1
Member
1 month ago

Four healthcare firms listed on the Nigerian Exchange Limited have seen a notable increase in their collective marketing and distribution expenses of 50.2 percent.it becomes essential for pharmaceutical corporations to come up with creative ways to offset these growing expenses while maintaining the cost and availability of drugs.