In mid- year 2019, profit of pharmaceuticals lost steam as cash-strapped Nigerians’ self-medication on cheap smuggled drugs and preference for alternative medicine, among others, significantly worsened the already floundering growth of listed drug makers.
Listed players pared profit by 29 percent in the first six months of 2019, dashing hopes of the industry raking nine figures after it had driven midyear profit near a billionnaira mark last year.
The combined profit of five Nigerian drug firms, with half- year numbers published, plunged to N653.44 million compared to N923.22 million in the same period last year as the companies made a Uturn on the back of dwindling sales growth.
Fidson Healthcare, Glaxosmithkline, Morison Industries, Neimeth Pharmaceuticals, though with a different calendar year, and Pharma Deko Company made a combined revenue N18.63 billion, 5.47 percent more than N17.66 billion a year ago.
The industry is struggling to grow as the increase in sales has steadily slowed in the last 4 years. Revenue grew 85 percent in 2016, 37 percent in 2017, 17 percent in 2018 and dropped to single digit in 2019.
Glaxo Smith Kline maintained a lion share of the drug market after it posted the industry’s biggest revenue jump of some 16 percent, but Pharmadeko and Morison were a drag on the sector’s performance.
While the other four players pared profit, GSK grew bottom-line by 2.76 percent although Fidson had the highest net-margin, making N3.74 as profit from every N100 revenue.
Neimeth had the least direct cost margin with 53.82 percent of revenue expended on producing drugs.
Drugmakers in Nigeria, like their peers in other sectors, have been struggling lately. The 2016 economic recession dealt a while consumers shifted to cheap and smuggled substandard drugs. There has also been a shift to traditional medicine by most low-income households.
A Common External Tarrif ( CET) in 2016 had provided some 5 percent to 20 percent tariff for the importation of pharmaceutical raw materials and excipients for local manufacturers while the trade arrangement opened Nigeria’s borders to finished medicines produced abroad which hampered domestic producers’ com
