Transforming the Nigerian pharmaceutical industry into a foremost player in the global market requires some strategic changes that will involve all stakeholders and affect all sectors of the industry, renowned pharmaceutical scientist and entrepreneur, Prof. Isa Odidi, has said.
Speaking in a recent interview with Pharmanews, Prof. Odidi, who is the chief executive officer and co-founder of Intellipharmaceutics International, a Canada-based revolutionary pharmaceutical company, specialising in the research, development, manufacture and marketing of generic controlled-release and targeted-release oral solid dosage drugs, said that, given the right conditions, the Nigerian pharmaceutical industry should be a major source of foreign exchange earnings, aside from helping to sustain the economy and promoting quality of life of the nation.
The Kano State-born innovator, who is regarded as one of the most cited African pharmaceutical scientists in patent and intellectual property history, noted that a major shift in current business strategy and practices will go a long way in repositioning the country’s pharmaceutical sector, adding that the first place to start the required transformation is the National Agency for Food and Drug Administration and Control (NAFDAC).
NAFDAC, according to Prof. Odidi, must be overhauled, reorganised and empowered to function more effectively and efficiently as other similar regulatory agencies in the world, especially the FDA in the United States.
The celebrated technocrat, who was recently appointed a member of the Strategy and Development Committee of the Global Leadership Foundation, urged pharmaceutical companies in the country to willingly embrace new business models based upon external networks and third party partnerships.
He further tasked the companies to reconfigure their manufacturing facilities to meet FDA and European regulations, reinvent their production models to focus on high-end manufacturing, as well as foraying into other areas, such as medical devices, high value OTC and consumer health care products.
Citing the success story of Intellipharmaceutics, which is publicly traded on the New York Stock Exchange (NASDAQ) in the United States and the Toronto Stock Exchange (TSX) in Canada, Prof. Odidi stated that in order to survive the seemingly harsh business environment and take their businesses to the next level, pharmaceutical entrepreneurs must think radically and be ready to identify and leverage opportunities for expansion.
He added that the government, on its part, must be committed to the growth of the pharmaceutical industry by investing massively in research and development, and creating conducive economic environment for the sustainability and viability of the industry.
Below are excerpts from the interview:
It is not easy to qualify for quotation and listing on the stock exchange as a public company. But Intellipharmaceutics International is already quoted both on the New York Stock Exchange and the Toronto Stock Exchange. How did you achieve this?
Taking Intellipharmaceutics public and listing it on two of the best international stock exchanges in USA and Canada is not an easy thing. It happened in a reverse takeover – when Intellipharmaceutics bought the public company, Vasogen, and merged it with Intellipharmaceutics.
We had always wanted to make Intellipharmaceutics public and even had applications made for the listing. But then the opportunity to reverse takeover a public company came up and we took it. Of course, that meant dilution of our holdings and going into partnership/ownership with others; but it was for the better. It is better to own a chunk of a big company rather than whole of a small company. One per cent share in a billion dollar company is better than 100 per cent of a million dollar company. This is one thing entrepreneurs should understand!
However, bringing in outside investors comes with some risk. The biggest hurdle we faced in going public was investors asking us to consider stepping down from management position and focusing on the laboratory research. One of the things they were putting in front of us was, ‘We will give you somebody to manage the company. This is an issue many entrepreneurs, particularly immigrants here in Canada and the USA, face because people believe we don’t have the management skills and they want to replace the entrepreneur with someone who has an MBA.
The irony is that I had an MBA from the reputable Rotman School of Business Management at the University of Toronto. There was a lot of negotiation and pressure when going public, but it is important to note that Intellipharmaceutics is a technology company and needs technology management expertise with an entrepreneur’s flair.
We have since proved many of those investors wrong over the years through dedication to the company’s growth. We have invested a lot in the company — money, time, everything. Our life is in this company and we have the passion to drive it, therefore our interests are aligned with the company succeeding. Frankly speaking, we are smart people to have come this far so we think we should continue to run the company and we’ll get to a point where we might decide someone else should run this but not now!
How can the Nigerian pharmaceutical industry benefit from your success story?
Generally speaking, the pharmaceutical industry is very important because of its role in growing and sustaining the economy, as well as promoting social wellbeing and quality of life of a nation. In developed nations such as Canada and the USA, it is a major source of medical innovation and foreign exchange earnings.
Take the example of the USA. The pharmaceutical industry is a major contributor to the US economy. The sector generates high-quality jobs and powers economic output for the US economy. These economic impacts are as a result of the fact that the industry is well regulated and the industry’s research and development (R&D) enterprise.
The US pharmaceutical sector invests more in R&D relative to sales than any other manufacturing industry, investing more than six times the average for all manufacturing industries. The US pharmaceutical sector’s economic output, which represents the value of the goods and services produced by the sector, totalled more than $558 billion in 2014. The sector also supported another $659 billion through its vendors and suppliers and through the economic activity of its workforce, for a total of $1.2 trillion. This is an eye-opener and underlines what can be done in Nigeria.
Unfortunately, in Nigeria, this is not the case. Nigeria has neither a comparative nor a competitive advantage in pharmaceutical research, development, manufacturing and sales. Nigeria’s pharmaceutical sales is forecast at 0.89 billion dollars or 0.19% of GDP for 2015 and basically the size of a medium-sized pharmaceutical company abroad. These estimates are projected to get worse with every passing year. Thus, the share of Nigeria’s pharmaceutical industry in the global industry is basically zero, especially exports which are virtually non-existent.
It is about time that the pharmaceutical industry in Nigeria help support a vibrant scientific and economic ecosystem that is vital to the Nigerian economy and our country’s competitiveness in the global market. Given the current state of our pharmaceutical industry, it will require a tectonic shift in current business strategy and practices if we are to succeed in repositioning Nigeria’s pharmaceutical industry. However, the first place to start these seismic changes is with our regulatory agency, NAFDAC.
NAFDAC needs a complete overhaul and retooling. The key focus here is bringing its regulatory role to the fore. Currently it is not playing the part of a true regulatory agency, such as say, the FDA in the US. It needs very competent leadership that can “hit the ground running” from day one of being appointed. It needs leaders with relevant pharmaceutical/food industry regulatory experience, be it from being embedded in or having interacted (successfully and repeatedly put products through the application and approval process) with a first class regulatory agency such as the FDA in the US.
What about the pharmaceutical companies?
On their part, Nigeria’s pharmaceutical companies need to have a sharp focus on research and development (R&D) enterprise, which is currently non-existent. This should be with the objective of targeting lucrative international export markets, such as the USA and the rest of North America, Canada, Europe and Japan. They also need to adopt new business models built upon external networks and third party partnerships in order to avail themselves to new growth opportunities.
They need to position themselves to take advantage of current trend towards a business model that relies on outsourcing of many business functions, including manufacturing, and thus be in a position to provide contract manufacturing and other services to international clients.
Nigeria’s pharmaceutical companies need to reconfigure their manufacturing facilities to meet FDA and European regulations; reinvent their production models to focus on high-end manufacturing; and foraying into other areas, such as medical devices, high value OTC and consumer healthcare products.
It goes without saying that these reforms will enhance the ability of Nigeria’s pharmaceutical industry to successfully compete with other countries on many keys factors including cost, talent and market attractiveness – as defined by regulatory requirements, market access, IP legislation and pricing controls.
One other area of weakness is the non-existent of Phase 1-4 clinical research facilities and activities in Nigeria. Nigeria needs state-of-the-art clinical research organisations (CROs), primarily devoted to clinical research management, instead of pure research through conducting trials for drugs under development by the pharmaceutical industry etc. A vibrant clinical research environment is not only a necessary adjunct to a thriving pharmaceutical industry, it is a money spinner and potential source of foreign exchange earnings as clinical research spending tend to be a significant portion of R&D costs.
What role should the government be playing in all these?
On the part of the government, there is need for massive investment in R&D and granting of generous research tax credits and tax incentives to pharmaceutical manufacturers and R&D focused companies. An offer of highly productive manufacturing facilities with flexible production capacity by Nigeria’s pharmaceutical industry, combined with investment and tax incentives from the government can position a jurisdiction with a small domestic market purchasing power to attract generic investment, mainly to produce for export markets.