Counterfeits kill. Especially fake drugs. Counterfeit medicines are killing the economy of Nigeria, its businesses and its people.
Because they are cheap and easy to produce and sell, the business of fake drugs attracts the unscrupulous and has become prevalent. More importantly, demand for medicines is elastic i.e. a change in price is the major factor that drives the decision to buy. Hence, the cheaper the price, the more it will be demanded. As a result, sub-standard drugs, made from cheap, and often medically ineffective, substances, produced in a backyard are proliferating the market through a vast distribution network.
Fakery and piracy thrive in Nigeria because the economy is highly informal, poorly regulated with porous borders, recovering feebly from a recession, burdened with unemployment, battling with inflation and a currency whose value has depreciated. Poor Nigerians, who are in the majority, can’t afford genuine products so they opt for counterfeits.
In developing countries, drugs for treating life-threatening illnesses like malaria and tuberculosis are the most counterfeited.
This is a triple jeopardy for the health of the public, companies and the economy. Fake drugs not only affect the business of pharmaceutical companies it destroys the reputation of their brand; and, because it fails to cure the patient of, say malaria, it’s killing tens of thousands in a country where population size is a market advantage.
A 2007 Global Fraud Report by Kroll, a risk advisory firm, notes that businesses in the pharmaceutical and healthcare sector are most vulnerable to risks from regulatory breaches and abuse of intellectual property. In its 2019 report on how the abuse of intellectual property and copyrights affects the economy, PwC, a consultancy, estimates Nigeria is losing N200 billion a year to fake drugs.
Every naira made from a fake drug is a naira stolen from the original owner of the product or idea. This is bad for business, consumers and the economy. Nigeria has emerged a hub and entrepôt for cheap sub-standard fakes for local and foreign traders.
As a result, sales in the Nigeria pharmaceutical industry have declined by over by 35.7 percent since 2015 and expected to fall even more, according to a Fitch Solutions report on the pharmaceuticals and healthcare business in Nigeria. At the peak of the recession in 2016, drug makers saw their sales drop by 20 percent to $722 million from the $904 million made in 2015. And despite a rebound in the economy in 2017, sales fell further by 11.9 percent to $636 million but rose to $666 million in 2018.
At the heart of this is weak intellectual property rights. An economy is as strong, innovative and developed as its laws. Laws, for instance, that encourage investment, incentivise innovation, protect copyrights and encourage research and development. Otherwise, local and foreign businesses will invest elsewhere. Strengthening laws that protect inventions of entrepreneurs from being stolen copied or used without a share in the financial benefits increases the amount of investment in the country.
Nigeria, however, has one of the weakest laws that protect intellectual property.
Stronger regulation and enforcement (shutting the border at Cotonou is not an example) will help. So too will legislations and policies that deter infringement and stimulate innovation, and investment. PwC reckons regulatory agencies and the private sector could collaborate more to raise public awareness about why it pays to respect intellectual property rights.
Amid these challenges, technology is playing a big role as start-ups such as mPedigree and Sproxil have come with innovative ways to curb the manufacture and spread of fake drugs. These initiatives will prove more effective with better, stronger and enforced laws and policies.
