Nigerian drug-makers are currently in a growth phase as earnings surge on aggressive expansion, improved and innovative products, and health awareness among the citizenry.
Data compiled by BusinessDay show that five quoted drug-makers recorded double-digit growth in revenues for 2013 as sales increased by 17 percent to N38.91 billion, from N33.97 billion in 2012.
The companies are Fidson Healthcare Nigeria plc, GlaxoSmithKline Consumer (GSK) Nigeria plc, May & Baker Nigeria plc, Neimeth International Pharmaceutical plc, and Pharma Deko Nigeria plc.
Some analysts interviewed by BusinessDay say the rise in non-communicable diseases (NCDs) such as diabetes, hypertension and cancer for some time now is leading to an increase in healthcare spending by Nigerians.
The top-line growth of the pharmaceutical firms is driven partly by the out-of-pocket spending on healthcare by Nigerians as they become more conscious of their health, with less reliance on government, according to Abiola Rasaq of the Research and Strategy Unit of Associated Discount House Limited.
“More so, increasing investment in plant capacity and research (leading to new product offerings) has been positive for pharmaceutical firms, at least from the perspective of revenue growth,” Rasaq said in an email response to BusinessDay questions.
GSK, the largest drug-maker in Nigeria by market value, is developing a wide range of products in the consumer segment and also penetrating into Ghana in a bid to meet growing demand.
In addition, the company has recently launched a range of generics to provide access to safe and quality medicines across the continent. These brands cut across various categories: anti-infectives, cardiovascular, metabolic, gastroenterology, central nervous system and oncology.
Many companies in the industry are making investments in this area to grow and meet the people’s demand, according to Lekan Asuni, managing director/chief executive officer, GlaxoSmithKline Pharmaceuticals, Anglophone West Africa, while responding to questions during the just concluded Healthcare Federation of Nigeria (HFN) consultative forum in Lagos.
“Most people engage in over-the-counter (OTC) drug intake, and rising health consciousness among Nigerians is driving turnover,” said Asuni.
Some analysts have, however, argued that the investment of the drug-makers have exposed them to huge operating and finance costs, consequently slowing growth at the bottom-line level.
The cumulative pretax profit of the five pharmaceutical companies that have released results reduced by 8.33 percent to N4.80 billion, from N4.40 billion in 2012.
A lot of companies in this sector are heavily geared, having acquired debt to finance new plants or align existing plants, according to a pharmacist who craved anonymity.
“This is to comply with good manufacturing practice standard which is in line with global standards in a bid to obtain World Health Organisation (WHO) prequalification status,” said the pharmacist.
The cumulative operating expenses rose by 17.86 percent to N7.52 billion in 2013, from N6.38 billion as at the end of 2012, while finance costs spiked by 22.41 percent to N1.17 billion.
“The tight monetary policy, with its attendant impact on interest rate environment, is taking a toll on the pharmaceutical firms, which pay a notable percentage of operating profits in servicing debt burdens,” said Rasaq.
However, Nigerian drug-makers have huge growth potential ahead, as they position to dominate the local market of 170 million as well as the rest of West Africa.
“Nigerian pharmaceutical firms have diversified into health-related food products over the last decade, thus complementing the growth in revenues as the products of these non-drug segments further gain market share,” said Rasaq.
BALA AUGIE
