Nigeria’s pharmaceutical sector is shaping up as one of the economy’s rare bright spots in 2025, as two of its largest listed players, Fidson Healthcare Plc and May & Baker Nigeria Plc, delivered record earnings in the first half.
Yet despite these impressive profit figures, a recurring theme persists: the rising liquidity pressures and heavier dependence on debt to fuel growth.
May & Baker reported a 150 percent increase in profit after tax to N876.6 million in H1 2025, compared with N351.4 million a year earlier.
Revenue expanded 43 percent to N10.23 billion, supported by stronger demand and price adjustments. Gross profit rose 64 percent to N3.98 billion, lifting margins to 39 percent from 34 percent a year earlier.
Operating profit almost doubled to N1.43 billion, reflecting improved efficiency in scaling costs relative to sales. Profit before tax stood at N1.31 billion, up from N493 million in 2024, while earnings per share improved to 51 kobo from 20 kobo.
Fidson Healthcare, the industry’s heavyweight, outperformed even these strong numbers. Its after-tax profit surged to N6.02 billion, almost four times the N1.51 billion posted a year earlier. Revenue climbed 68 percent to N62.64 billion, while operating profit jumped 177 percent to N12.16 billion.
Gross profit grew 70 percent to N25.71 billion, sustaining a 41 percent margin despite higher administrative and finance costs. Fidson’s earnings were also boosted by reduced foreign exchange losses, which halved to N2.08 billion.
Both firms benefited from smaller currency-related losses compared with 2024, when steep naira depreciation weighed heavily on import-dependent manufacturers.
Fidson cut its forex hit by more than half, while May & Baker managed to contain exposure as stronger revenues offset cost pressures. This provided breathing space for margins at a time of elevated input costs and inflation.
The headline earnings mask a deeper challenge: weak cash generation. Fidson’s net cash from operations slipped into negative territory, weighed down by a more than threefold increase in trade receivables and higher prepayments.
May & Baker reported a negative operating cash flow of N1.46 billion, a sharp reversal from the positive N3.0 billion inflow a year earlier.
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The divergence between profits and liquidity reflects a sector-wide strategy of extending credit to distributors and hospitals to secure market share. While this supports revenue growth, it ties up capital in receivables and leaves companies exposed to delays in collections.
With operating cash under pressure, both drug makers have leaned more heavily on debt financing. Fidson doubled its borrowings in the first half of 2025, while May & Baker’s debt stock rose 28 percent to N8.43 billion.
Current liabilities for May & Baker climbed 26 percent to N13.67 billion, while Fidson’s short-term obligations expanded 16 percent.
The consequence is a sharp rise in finance costs. May & Baker recorded a 77 percent jump in interest expenses to N434 million, outpacing revenue growth and eroding part of the profit gains. Fidson also saw finance costs climb by half.
The pattern underscores both the opportunities and risks confronting Nigeria’s pharmaceutical players. Expansion through wider distribution and price adjustments has lifted sales and profits, but it has come at the cost of higher leverage and weaker cash flows.
Unless these firms improve cash conversion, they risk facing refinancing pressures in an environment of high interest rates and tight liquidity.
Nigeria’s pharmaceutical industry remains structurally constrained by reliance on imported raw materials, which account for more than 70 percent of input needs.
This exposes companies to currency volatility and global supply chain disruptions. At the same time, rising healthcare demand provides a growth runway for scale operators like Fidson and May & Baker.
The challenge is whether they can balance profit expansion with financial discipline. For investors, the key test in the second half of the year will be whether these companies can translate paper profits into sustainable cash flow while managing debt costs.
For now, the pharmaceutical giants have shown that Nigeria’s drugmakers can deliver growth even in a difficult economy. But sustaining that momentum without margin erosion or liquidity strain will be the true measure of resilience.
