May & Baker boss rates locally made medicines better than imported ones
Pharm. Nnamdi Nathan Okafor, a fellow of the Pharmaceutical Society of Nigeria (FPSN), Fellow of the Nigerian Academy of Pharmacy, (FNAPharm) and an alumnus of the Lagos Business School is the Managing Director/CEO, May & Baker Nigeria Plc. In this recent interview with Pharmanews in his office in Lagos, Okafor spoke on the challenges facing local pharmaceutical manufacturers, stressing that contrary to assumptions, drugs manufactured in Nigeria are of top quality and better than those imported. Okafor, who became the helmsman of May & Baker in February 2011 – having worked with the company since 1985 – also spoke on the benefits of WHO certification to Nigerian pharmaceutical companies and how the present economic conditions is affecting local drug manufacturers. Excerpts:
Despite the remarkable growth of the pharmaceutical industry in recent years, about 80 per cent of drugs used in Nigeria are still imported from abroad. What is responsible for this overdependence on imported medicines mainly from China and India, and how can Nigeria correct this anomaly?
Let me first say that the phenomenon or situation you just explained is not exclusive to the pharmaceutical industry. It applies to many other sectors, if not all sectors in Nigeria. This is because Nigerians have a penchant for imported goods. The average Nigerian believes that products coming from outside Nigeria are better than the ones made in Nigeria. This has to be addressed.
The second reason is that consumers tend to buy what they know and what they see constantly. And it just happens that importers have more free cash to advertise, while those of us who are into manufacturing have lost a share of our voice. So, when the average Nigerian consumer of pharmaceuticals turns on his radio or television, he will likely hear or see adverts of imported products than the locally manufactured ones and therefore go for those products.
The third reason is that some of these imported products are cheaper in the market because of a couple of reasons. The first is that some of them are coming from facilities abroad that do not compare in any way in terms of quality to where we are manufacturing here in Nigeria. I know this because I have been to many facilities abroad, especially in India and China, and I know that most of them do not compare favourably with the May & Baker PharmaCentre in terms of quality of facilities.
The infrastructure they have and the quality of their manufacturing processes also do not match what we have. We have superior products manufactured here at home than what Nigerians go to import from these facilities. Nevertheless, these products are imported because they know they can sell them at cheaper prices and exploit the fact that Nigerians will prefer cheaper products because of the state of our economy.
How do we address this issue?
First, to tackle the issue of Nigerians’ fondness for foreign products, I believe local manufacturers must do more on this. We have to continue educating Nigerians through public enlightenment. We have to let Nigerians know that products that are manufactured here in Nigeria compare favourably with most of the best imported products. We need to talk more about this as manufacturers and I also believe government also needs to lend a voice to this. If only manufacturers are asking Nigerians to buy locally-produced goods, people will assume it is because they want to promote their products; so all Nigerians must join this crusade.
Then on the issue of pricing or the cost of products, we know that we have a cost disadvantage because of the poor state of infrastructure in Nigeria. You already have about 40 per cent cost disadvantage from the outset when you are manufacturing locally because of infrastructure inadequacy and when you add the fact that you also import your Active Pharmaceutical Ingredients (APIs)and most of the other excipients, then you will realise that you already have quite a big mountain to climb compared to those who are bringing in finished products.
Nigeria needs to do something about infrastructure, and even though we have been talking about this for years, it is still a major problem for local manufacturers. Having a petrochemical industry is also critical. We would not need to go to China or India to get APIs, if the petrochemical industry were functioning. That is something that could help us to be more competitive.
We also want the Nigerian government to buy made-in-Nigeria products. It is shocking to me that sometimes when Nigerian ministries or agencies also need to buy products, they prefer to buy products that are coming from outside at the expense of Nigerian manufacturers. This must stop. This nation needs to support local manufacturers who are producing good products and sometimes better products than the ones coming from abroad. These are the issues we need to address.
What is your thought on those advocating for a ban on imported pharmaceutical products to encourage patronage of made-in-Nigeria products and curb Nigerians’ penchant for imported products. Could this help boost the local pharmaceutical industry?
I will not advocate for a blanket ban on imported pharmaceuticals because we are talking about public health and we don’t want to create a new problem while trying to solve another one. What I will rather advocate for is a ban on products that the local drug industries have the capacity to manufacture – and I know a lot of essential medicines that local manufacturers have the capacity to produce and meet the needs of Nigerians.
I will advocate that the drug import prohibition list that we have should not only remain but be expanded. More products should be added to that list.
Last year, local pharmaceutical manufacturers protested against the new ECOWAS CET which granted importers of pharmaceutical products zero tariff on imported finished pharmaceutical products, while local drug manufacturers still pay duties on imported raw materials and other inputs for their production. Has this issue been properly addressed?
We have taken up this issue at the highest level of government and we have seen that it was an oversight. Unfortunately, because it is not just a Nigerian thing, as it was an ECOWAS agreement, it has to be addressed and resolved at that level. So, we are working on it and we believe that it will be corrected.
In the last few years, about four local pharmaceutical manufacturing facilities in Nigeria, including your company, May & Baker Nigeria Plc, were certified by the World Health Organisation (WHO) and the expectation is that by now, these companies should be manufacturing prequalified products under contracts of multilateral organisations like the Global Fund. What is delaying this next important step by the companies, and what other benefits will Nigerians be getting from these certified companies?
Let me state first that those of us who have gone for WHO certification for our factories did not just go because we wanted to have access to manufacturing contracts of Global Fund and similar organisations. It is much more than that, although that is one of the objectives. However, the most import objective is to be able to consistently produce and make available quality products to Nigerians. We have accomplished that objective already. I can tell you that products that are manufactured in our facility today can compare favourably with products that are manufactured in Europe and America.
This is because it is the same stringent manufacturing process that regulatory authorities stipulate in those climes that we are applying in our manufacturing process. Therefore, Nigerians are already benefiting because they now have access to top quality medicines from May & Baker.
We have also changed the perception about drugs that are manufactured in Nigeria among our West African brothers because six or seven years ago, if you went to countries like Ghana and others in this sub-region, you would observe that they didn’t want to touch made-in-Nigeria pharmaceutical products. They believed the products were not of good quality. However, today, it is different because they have seen that the WHO is endorsing factories manufacturing in Nigeria and that means things have positively changed.
Another fact is that although about four companies were certified by the WHO, more than 10 other companies are currently upgrading their facilities and that is a positive for the quality of medicines manufactured in Nigeria. It is quite beneficial to the common man who buys medicines locally.
Nevertheless, as regards progression to manufacturing prequalified products under contracts, let me say that WHO’s prequalification process is a marathon and not an 100-meter dash. There is so much that is involved. If you take bioequivalence study for instance, to prequalify a product that does not have a bioequivalence and you have to do a bioequivalence study on the product, that may take you two to three years. That is for just one product and by the time you get to the laboratory, you may meet many other products on the queue and you have to wait for your turn. It is a long process.
However, let me say that some of us are already making good progress in that direction and I believe that in no distant time, we should be able to see some products that are prequalified coming from us in Nigeria. But it does not end there. After you now have a prequalified product, you have to subject yourself to competition because to get manufacturing contracts of Global Fund and other similar bodies is not easy. It is very competitive and you have to compete with companies from Europe and Asia that are also interested in supplying these products. That is why we are saying that our government will need to come in and ensure that appropriate protection or/and consideration is given to companies that are in this country through the mechanism of the domestic preference in our procurement act. We believe that, like the case in Uganda where the government insisted that companies from Uganda should not be subjected to the same standards like other foreign companies in bidding for contracts, and this was done. This should be applied to Nigerian companies.
The Nigerian economy is presently facing a tough time, with the value of the dollar in recent weeks increasing to an all-time high. This has affected all sectors of the Nigerian economy. As a key player in the pharmaceutical manufacturing sub-sector of the economy, what is the impact of this present state of the economy on the drug manufacturing sector and what should be done to ameliorate this situation for drug manufacturers?
Let me first state that the Nigerian economy is not in recession; the Nigerian economy is growing. But we can say that the growth has slowed down. This is because Nigeria is a mono economy. Once anything happens to crude oil, our mono product, the entire economy goes down. The Nigerian economy is down because crude oil price crashed. This has some macro-economic implications and a fallout of this is that foreign exchange is not available at the normal industry rate; and considering that we (local drug manufacturers) have to import most of the materials we need for production, it is a major challenge for us in the pharma manufacturing sector.
We have also made some contacts with the Central Bank of Nigeria (CBN) and some important government ministries but unfortunately we have not received any positive result from our efforts so far. As I speak to you, most of us have not been able to buy needed raw materials since the last quarter of last year. What we are selling today are products that we are manufacturing from the raw materials that we ordered for in the third quarter of last year.
What we are doing right now is scaling down production and operations in a way to avoid shutting down operations completely. If you have six production lines, you shut down three lines and ask people working on those lines to go home, while you continue to do skeletal production on the other three remaining lines and hoping that this situation will improve. If the situation does not improve in the next 30 days or thereabout, I can assure you that most of the pharmaceutical manufacturing companies in Nigeria may have to shut down their factories. This will be rather unfortunate and I hope this does not happen.
So what should the government do to ameliorate the situation?
We believe that there are some essential commodities that human beings will need to be productive; thus, if you want the economy to do well, you have to provide these commodities. Medicine is one of these very important commodities. Sick people cannot be productive nor contribute to the growth of the economy. It is only strong, healthy people that can do that. To also reduce mortality rate you need drugs for the sick to nurse them back to good health. Therefore, we must ensure the availability of essential medicines that people will require. That is why we are saying that the government must prioritise the pharmaceutical manufacturing sector and devote a percentage of whatever foreign exchange that is coming to this country to this sector. What is happening today is different. What we see is that priority is being given to oil and gas, agriculture and other areas that are not as essential as drug manufacturing.
The pharmaceutical manufacturers are not in the picture at all. We are expecting the government to prioritise us. We are also expecting that the government should provide some funding for this sector at a decent rate not the present rate we have in the market.
The twin challenges that have faced the pharmaceutical industry for several years are the challenges of curbing the activities of charlatans dealing in fake drugs, and ending the entrenched chaotic drug distribution caused by the open drug markets. Why does it seem so difficult to tackle these problems and what is your assessment of ongoing efforts to address them.
Let me start with the fake drug issue. My opinion is that this issue is being blown out of proportion. As a company manager, I can tell you that I am not having any serious issues with the faking of my products. If we are talking about people who bring in sub-standard products, that is a different issue and that has to do with strengthening of control at our borders and NAFDAC stepping up further in anaylsing what people bring into this country. But if you are talking about some people taking my products to go and fake and sell in the market, that is no longer a major issue for me.
I believe this also applies to a lot of companies producing locally here in Nigeria. That is why I can boldly say that drug products produced here in Nigeria are of very high quality so drug faking in Nigeria has been contained and it is not a major issue for local manufacturers.
On the second issue of open drug market that you raised, as soon as I started practising pharmacy over 30 years ago, I started hearing about this matter and today we are still talking about it. So, there are things we just enjoy taking about and we are not pragmatic in resolving them. The major reason we are unable to resolve them is because we have not been very realistic with the way we approach such issues.
If you have a system that you believe is not working and it is in a very sensitive area like health care delivery, you do not just wake up and throw everything away without first providing an alternative. We have not had an alternative to the open drug market for years; so you cannot just close it down without thinking about what will happen when you do. That is why I am happy with what is happening at the moment. I think we are now on the right track because we have realised there has to be an alternative and we are fine-tuning the alternative idea that was brought forward which was the new National Drug Distribution Guidelines (NDDGs).
The NDDGs prescribed that we should have mega drug distribution centres, but we realised that we do not have good prospects to fill the classification. We know the volume of drugs that pass through the open markets. So, companies that are trying to fill that position are not in any way suitable in terms of capacity to handle the volume of drugs that will be passed to the pharmacies and to Nigerians. That informed the position of the Pharmaceutical Manufacturing Group of the Manufacturers Association of Nigeria (PMG-MAN) that we should have regulated wholesale centres. This is to help us transit gradually from where we are to where we want to be.
May & Baker Nigeria Plc has come a long way and is a leader in the pharmaceutical manufacturing sector in Nigeria. What is the company doing to consistently keep and expand its market share and where do you hope to see this company in the next 20 years?
Thank you for the compliments. May & Baker has come from being a subsidiary of a multinational company to become a wholly indigenous company, and we have moved from selling branded patented products to selling generic products. That transition, of course, will come with its challenges. It is a lot easier to import finished products, advertise and sell them. If that was what I was doing, I believe my turnover today would have been ten times more than it is now. But, if you have to manufacture generics and you have to sell and compete against products that are brought in and heavily advertised, it is tough. We have realised that is not how we want to play in this market. So, basically, we are repositioning and that informed the decision to build the world class WHO certified factory in Ota, Ogun State.
We want to move away from the area where everybody is playing to an area that we are more familiar with and have reasonable differentiation. We are still on course. We have managed to, during the transition, run the business prudently to ensure we do not go down until we get to where we are going. In the next 20 years, I want to see a company that would be a global name in specialised medicines not just in Nigeria but in Africa and in the world.