COVID-19 and the Nigerian Pharmaceutical Industry

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This article was motivated by the webinar organised by the Association of Industrial Pharmacists of Nigeria (NAIP) on “The Impact Of COVID-19 Pandemic on the Nigerian Pharmaceutical Industry”,  held on Saturday, 7 June 2020 and for which I was privileged to be a panellist.

The webinar was well-attended, informative and educative. I was given five minutes to talk on “Collective Bargaining and Government Relations”.  I took time to prepare for my part and the five minutes was only enough to give a summary of my ideas on the subject. The webinar has been followed by many online publications and questions posed directly to me. I felt it is important to expand my ideas in this article and I will restrict myself to the part assigned to me.

Beautiful paradox

I described Nigeria as a “beautiful” paradox because of many contradictions and ambiguities that are associated with the history and development of the nation. Nigeria presents a picture of a bevy of contradictory features and qualities. Here is a potentially rich nation with a substantial population of young but extremely poor and vulnerable people. We have everything that other nations would have wished to have but we have failed, over the years, to take the nation out of the woods and make her a destination of choice for all and sundry.

I asked three questions about Nigeria during the webinar and my answers to the questions were the same: No, No and No. The first question was: “Are the vital statistics relating to Nigeria, whether on the economy, health indices, or ease of doing business, favourable?” The answer, even now, is certainly a NO. The vulnerabilities have always been there, even before the COVID-19 pandemic. The 2019 GDP growth of 2.3 per cent was below the population growth rate of 2.6 per cent of the same period. The other economic and health indices, which we will not need to enumerate here, are far below par.

My foremost agenda is to defend, repackage pharmacy profession – Lolu Ojo, PSN presidential aspirant
Pharm. (Dr) Obalolu Ojo

For the ease of doing business, Nigeria occupies a position of 131 out of 190 nations. We are battling with comparatively high maternal and infant mortality rates, low life expectancy, dwindling revenue, high government expenditure, high cost of doing business, policy inconsistencies and summersaults, etc.

The second question: “Are things going to get better with the COVID-19 pandemic or soon after? The answer, here again, is certainly NO. Already, a serious economic recession with about 5 to 10 per cent contraction has been predicted. We rely so much on oil exports for our foreign exchange and, today, the oil business has virtually collapsed. The attendant effect is easy to predict and evaluate: devaluation of the local currency, high prices of services and commodities, and spiralling inflation. It is, therefore, important for the business community and the general populace to brace up for a tougher time ahead.

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The third question is: “Is the situation of the Nigerian economy and prosperity hopeless?” The answer here too is certainly NO. The population of Nigeria is estimated to be about 200 million and it is growing. Nigeria has a huge potential demand base which cannot be ignored by companies, brand builders and sundry investors. There is so much to be done and Nigeria can become the beautiful bride of the world. We have a young, healthy, and resilient population estimated at about 45 per cent of the total. There is abundance of mineral resources, vast arable land, and intelligent human resources. All we need to do is to GET OUR PRIORITIES RIGHT and move on to fulfil our destiny in Africa and the world.

Panoramic view

For us to accurately assess the impact of the COVID-19 pandemic on the pharmaceutical industry in Nigeria, it is apt to look at the global configuration of the industry. The pharmaceutical industry is an oligopoly, projected to reach a global volume of $1.3 trillion in 2020, with a 2017-2020 CAGR of 9.1 per cent.

The industry is dominated by few players in Europe and America. In 2019, the major companies, whose turnover dominated the industry, include Pfizer ($51,7billion), Roche ($50b), Novartis ($47.4b), Merck ($46.8b), GSK ($43.54b) and Johnson & Johnson ($42.1b). The turnover of some of these companies was  more than the about N9 trillion ($25b) Nigeria budget for 2020 before the revision at the current official exchange rate.

The pertinent question will be: Is Nigeria part of this sumptuous global business in pharmaceuticals? Yes, we are part of it but at an extremely insignificant level. We have known as far back as 2011 that Nigeria is not on the global pharmaceutical map. We are just a consuming nation with about 80 per cent of national consumption imported from other countries. Even the 20 percent local manufacturing depends 100 per cent on imported inputs: active ingredients, excipients, and machineries. To stress the matter further, we also depend on imported human resources to manage the technical aspects like HVAC installation and maintenance.

Prior to the 2016 economic recession, the size of the pharmaceutical industry in Nigeria was estimated to be about $2billion and that was when one dollar was about N150. Today, one dollar is officially N360 and the size of the market, if we maintain the pre-2016 figure should be about $840million or about 0.064 per cent of the total global estimate.

In Nigeria, the pharmaceutical industry’s contribution to the GDP in 2019 was just about 0.2 per cent and this is insignificant, compared to Nollywood’s contribution of 2.3 per cent in 2016. The pharmaceutical industry faced a multidimensional challenge, even before the advent of the COVID-19 pandemic. These challenges include but not limited to huge receivable burden (federal and state governments and their agencies are the main culprits), low patronage of local manufacturers by federal and state governments, multiple taxation, regulatory difficulties (product registration, clearing of goods, etc), high cost of doing business, dearth of quality human resources, etc.

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In terms of prognosis for the industry, I can assert, with all emphasis at my command, that the land is green. We can handle the current situation and build a rosy future. We can turn the COVID-19 pandemic into a stream of opportunities that will develop the pharmaceutical industry in Nigeria. We can make the government to look at the pharmaceutical industry as a veritable source of growth and development for the economy in Nigeria.

Government has already started well with the stimulus package from the Central Bank: N1.1 trillion for the manufacturers and N100 billion for others in the value chain. It is important to state here that Nigeria cannot be ignored by the world of investors.

Path to prosperity

The last question we will ask in this treatise is: What do we need to do or what must we do to grow the pharmaceutical industry in Nigeria?  To succeed in this onerous task, we must:

Build a strong and compassionate National Agency for Food, Drug Administration and Control (NAFDAC). NAFDAC is the supra agency responsible for the regulation of pharmaceutical, food and chemical industries. It has a mandate to ensure the safety of the nation in making sure that the appropriate remedies, food, and chemical products are sold in Nigeria. In terms of being strong, I submit that NAFDAC must be appropriately resourced to fulfil its mandate. The budget must be right, and the release must be appropriate. NAFDAC is not an agency that will ask for N1000 and an appropriation of N10 will be made. NAFDAC should not be made a revenue collection agency. The agency should be well-funded by the federal government with modern tools, laboratories and methods to perform efficiently. The staff should be well trained with welfare packages comparable to the best in the world. We are lucky to have the right leadership currently in NAFDAC, but they need the appropriate resources to excel.

The flip side is that we need a NAFDAC with the right attitudes. A NAFDAC that will be an advocate for the industry. A NAFDAC that will realise that any delayed action, wrong action, or inaction has implications for the growth and development of the industry. A NAFDAC that will combine business regulation with business facilitation. For instance, we have multi-various issues in clearing goods from the port. Is it possible for NAFDAC to insert HS Codes in the product certificates, which Customs must accept as the basis of duty payment? In India, there is PHARMEXCIL, an agency devoted to promoting the Indian pharmaceutical industry. Who is going to play the role of PHARMEXCIL for us in Nigeria?

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We need to expand our local manufacturing as a directed and focused action from government. We need our manufacturers to work with importers with open arms, just as the foreign manufacturers are doing, by offering incentives to importers to change their source from foreign to local manufacturers. We need to imbibe the local contract manufacturing culture urgently to bring drug manufacturing to Nigeria and create jobs. Government needs to encourage investment in the sector by paying the outstanding debts and having improved patronage of local manufacturers.

We need a stable and consistent government policy and intervention, and this has been demonstrated by the current stimulus package, as announced by the Central Bank of Nigeria (CBN). In addition, we need a transparent and improved patronage, payment of outstanding bills and ensuring that there is a quick turnaround going forward.

For the industry, the current situation calls for cost optimisation. We cannot continue to work in silos or build local governments when we can come together to build a critical mass that can compete in the global space. We need to work together to build stronger companies by encouraging mergers, acquisitions, co-promotion, and other forms of collaboration that will make companies to be more effective and efficient.

We need to ask questions on why the National Health Insurance Scheme (NHIS) is still tottering in Nigeria. The out-of-pocket expenses, which is the norm in Nigeria today, will continue to limit growth and development of the industry.

The other issues bother on capacity building. We need to obtain, improve, and retain skills, knowledge, tools, equipment, and other resources needed for a vibrant pharmaceutical industry. In doing this, we need to support, energise and rework the NAIP BUSINESS ACADEMY as a special purpose vehicle.

By far, the most important requirement is the unity and honesty of purpose of all the groups in the pharmaceutical industry in Nigeria. We will be stronger when we work together. For this reason, I hereby call on NAIP, PMGMAN, NIROPHARM, APIN, IPMIN, pharmacists and entrepreneurs in the industry to abandon their differences and work together to build a dynamic and result-oriented pharmaceutical industry in Nigeria. With a strong pharmaceutical community, we can bargain, influence and redirect government attention and policies.

 

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