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Fidson Healthcare Plc’s margins have risen amid severe dollars scarcity and rising inflation as foreign pharmaceutical firms plan to tap into Nigeria’s $1.3 billion drug market.
An industry expert who doesn’t want his name mentioned said revenue got a boost from the company’s new product line, IV fluids.
For the first three months through March 2017, Fidson Healthcare’s net margins, an indicator of a firm’s efficiency, rose 5 per cent versus 2 per cent the previous year.
This means the company was able to translate top line impressive performance to bottom line growth. Sales surged 182 per cent to N3 billion as net income spiked 465 per cent to N160 million.
Fidson Healthcare and other drug manufacturers are struggling with a severe dollar shortage that led to scarcity of raw materials. Most firms import 95 per cent of their raw materials apart from water.
Nigeria’s economy shrunk by 1.50 per cent in 2016, according to a recent report from the National Bureau of Statistics (NB).
The price of drugs more than doubled as drugs on the shelves of pharmaceutical stores became slim. Customers that had had inflation erode their purchasing power couldn’t afford some of the drugs.
Expert say a lot of people may result to patronizing quack pharmacy stores for cheap drugs hence endangering their lives.
Fidson Healthcare said the top most of the challenges plaguing the industry is the influx of cheap imports that continue to compete against locally produced medicines and significant energy costs.
The company also said that the ECOWAS Common External Tariff (CET), introduced in 2015 is a contentious issue that threatens the existence of local manufacturer.
“Regulatory interaction and advocacy is on-going to introduce tax adjustment tariffs that would favour local manufacturers and moderate the long term impact of a free regional trade zone within West Africa,” said the company.
Meanwhile, foreign pharmaceutical are making inroads into the Nigerian market by acquiring local drug makers.
The unit of France’s second-largest drug maker, Les Laboratoires Servier, in March, acquired Nigeria’s Swipha Ltd. after an initial $500,000 investment.
Further analysis of the financial statement of Fidson Healthcare shows gross profit margin fell to 50.86 percent in March 2017 from 53.40 percent the previous year; due to a 48.24 percent drop in cost of sales to N1.65 billion.
The company’s Earnings before Interest and Taxation (EBIT) increased surged by 132.88 percent to N450.73 million in March 2017 from N199.87 million as at March 2016.
Fidson Healthcare’s share price gained 9.09 percent to N1.20 on the floor of the exchange while market capitalization stood at N1.80 billion.
BALA AUGIE
