Despite a rebound in economic activities that has been witnessed in the pharmaceutical industry, Pharma Deko, one of the biggest players in the Nigerian drug market and fast moving Consumer goods (FMCG) space, recorded a 94 percent decline in profit on the back of a high operating cost in full year 2017.
In 2017, the pharmaceutical firm posted a profit after tax (PAT) of 12.6 million, representing a 94 percent from the 218.7 million that it recorded in 2016, during the thick of the economic recession.
A cursory look at the firm’s stock price shows that investors are finding its stock unattractive as the firm stock price is trading at a negative 4.66 percent, underperforming the NSE all-share index of 6.79 percent year-to-date.
Further analysis indicated that the company’s total assets were down by 53.4 million to N2.27 billion last year from N2.32 billion two years ago. Total liabilities also fell increased by 55.2 million to N52.8 million in 2017 from N58.3 million in 2016.
The pharmaceutical industry is one of the industries that are greatly influenced by political and economic changes.
In terms of production, contributions from Pharmaceutical Manufacturing Group of Manufacturers’ Association of Nigeria (PMG-MAN) and United Nations Industrial Development Organization (UNIDO) affirm that the local pharmaceutical manufacturing industry in Nigeria is currently able to meet 25 per cent of local demand. The remaining 75 per cent has to be covered with imports from Asian companies, most especially, China.
Production in the sector of has been greatly constrained by the present economic recession that affected the country in 2016. As pharmaceutical companies experienced difficulties in producing drugs, dispensable.
These constraints arise as a result of exchange rate fluctuations, import duties, high taxation, poor infrastructure, inadequate human capital and non-availability of raw materials. This is as a result of the over dependence on the Nigerian oil market, excessive dependence on imports for both consumption and capital goods and the sharp fall in foreign exchange earnings.
For the year ended December 2017, the cost of production for the drug making firm surged by 39.4 percent to 830.2 million from 595.6 million in 2016.
MICHEAL ANI
