Pharm. (Sir) Nnamdi Obi, MD/CEO, Embassy Pharmaceuticals and Chemicals Limited, is also president of Association of Pharmaceutical Importers of Nigeria (APIN). In this interview with Pharmanews in Lagos, Sir Obi, a Fellow of the Nigeria Academy of Pharmacy, speaks on how the current economic recession has crippled the pharmaceutical sub-sector of the Nigerian economy, warning that the situation could worsen if the government goes ahead with its plan to start charging 20 per cent duty on imported finished pharmaceutical products. Excerpts:
The Nigerian economy is now officially in recession and this has affected all the sectors of the economy. As a major player in the pharmaceutical sub-sector, how serious is the impact of the recession and what should we be doing as a nation to change this situation?
Well, you have said it all. All sectors of the Nigerian economy have been seriously affected by the recession. The pharmaceutical sector has equally been affected and the situation is quite dire. A number of drugs are even off the shelf. Drugs that are available are now very expensive. There are drugs that patients cannot get when they need them because prices of drugs have hit the roof.
The reason for this is very simple. Most of these products are imported and you need foreign exchange to import them. Drugs manufactured locally are also affected because raw materials, the active pharmaceutical ingredients (APIs) and all inputs for local manufacturing, except water, are imported. Even the water has to be treated and what is used to treat the water is imported.
With the way our fiscal and monetary policies were managed I’m not too surprised we are in this situation. The fact is that we have to get the right people to manage our economy and jettison sentiment in taking economic decisions that have far-reaching effect. I am of the view that the people that are managing our economy right now have not done well.
Also, all concerned, especially those in the corridors of power, must also be careful about the statements they make because some of their statements have been quite unhelpful to the business community. Let me give you an example. If I, as the MD of Embassy Pharmaceuticals, go out and say Embassy imports fake drugs and I still tell people to come and buy drugs from me, they will definitely not patronise me. This is because there are things you say that send wrong signals to people. There are actions and inactions of government that send wrong signals to the business community.
At a point in time, those who have funds in domiciliary accounts in Nigeria were told that they cannot access funds in the account. That window was shut. And this was a window through which we have remittances from outside the country. Account-holders were told that they could pay into the account and that if they wanted to withdraw, they couldn’t withdraw above certain amount. That singular action sent a very wrong signal to people, especially the business community. And when that window was reopened, the demand for dollar through the window went crazy and the value of dollar vis-à-vis naira was changing by the seconds. How can you allow that to happen?
What that tells me is that there are some government actions that you have to be careful with. We cannot afford to take actions that will make people lose trust in our economy. If we continue to do that, the foreign direct investment we are expecting will not come.
Many people want to do business with Nigeria. We are the largest black race on earth and, mind you, Nigerian businesses do not service only Nigeria. Our businesses have huge influence in West Africa and even beyond. Niger, Cameroon, Ghana, Togo are getting products from Nigeria. I have an enquiry from Cameroon for some of my products. Even when I am yet to have any direct business operation in that country, they are buying from my distributors. That is an indication to me that there is a market there for my products.
It is clear that a lot of people want to do business with us in Nigeria, but we must ensure the business environment is conducive and the policies must be clear to all.
There have been demands for preferential treatment for some sectors in terms of procurement of Forex; shouldn’t the pharmaceutical sector get this special treatment considering the importance of medicine?
I don’t know of any sector getting preferential treatment right now. What I know was that some people going for pilgrimage recently were given such preferential treatment to enable them get dollars at a certain rate for the pilgrimage.
This is something that should not be happening because pilgrimage is not contributing anything to the real sector. If people want to travel for religious purposes, they should go on their own. It shouldn’t be elevated to something the government will get involved with and start making foreign exchange available for them at a lower rate during a time businesses are desperately in need of Forex to bring in raw materials. Those taking such decisions whether for Christian or Muslim pilgrimages are doing great a disservice to Nigeria. That was even done when those of us in business were told such a window for preferential Forex did not exist anymore.
As long as we continue to take decisions that have far-reaching effects on the economy on sentiments, we are not going to make progress. We have to demonstrate that we are serious.
The National Drug Distribution Guidelines (NDDG) was introduced to help solve the problem of chaotic drug distribution and stakeholders have been discussing how best to make this policy work. What is the present state of things on the implementation of this policy?
The only thing that has happened is that in the initial policy, a major stakeholder in that sector – the wholesale distributors – was not accommodated but that has been corrected. They were the only addition in the chain of distribution. And government has said that by the end of July 2017, the open markets will be closed and replaced by Coordinated Wholesale Centres. That is what has happened and it is a good development because the group in the market is an important stakeholder.
I can boldly say that there is no manufacturer in Nigeria that does not have a distributor in all those open markets. None of them. Forget about the pretences. None of them. Not the importers, not the manufacturers. They all have distributors there. So, what we are saying is that, let us have that place properly regulated so that we can be sure of what goes in and comes out.
I am a pharmacist; I don’t want chaotic drugs distribution. I want things done properly. But we must jettison the idea that those people are totally irrelevant in the scheme of things, especially in the distribution chain of drugs in Nigeria.
Let me give you an example. There are people that have done business with the FG and state governments and have not been paid for five years. They are owed several millions of naira. I did a supply of drugs to one of the states in the South West of Nigeria and after about one and a half years, I was told to come and pack the drugs. They did not ask me to come and pick the cheque but to come and take the drugs I supplied almost two years back. The reason was that doctors were on strike for several months in that period.
You know what? Some of those drugs had expired. That was a loss to me. Why would I not prefer to do business with someone who gets my stock today and pay me tomorrow and I make five per cent profit, rather than supply to someone that will give me 50 to 100 per cent profit but will not pay me for the next 10 years?
That is what the coordinated wholesales centres offered to all of us, no exception. The other structures of distribution, like the Mega Drug Distribution Centres, are still there; but if I don’t want to give my drugs to the Mega Drug Distribution Centres, that is my business. There is no legislation compelling anybody to sell his or her products to any particular group or individual. It is a free market that gives people options. So, with the accommodation of the coordinated wholesale centres, the NDDG is still on track in terms of implementation.
An issue affecting the industry is the problem of some sales representatives defrauding companies and jumping from one company to the other. How can the stakeholders tackle this issue?
It is an extension of the problem with our societal values. I have employed pharmacists in this establishment whom I expected to be men of honour, but who disappointed me. I have also worked with non-pharmacists who have done the same. I have equally worked with pharmacists and I am still working with pharmacists who have lived up to my expectation. The problem is that many Nigerians have no values they hold dear.
It is so bad that when many of our women apply for visas in some embassies, they are turned down, irrespective of their age, except they are sure of what they are going for. I remember that my godmother, may her soul rest in peace, was to go to Italy for surgery at age 67 and they were not willing to give her visa. The way they questioned her at the Italian Embassy showed that they were wondering if she was going for prostitution because they had some Nigerians over there who at that age were doing that.
So, we need to re-orientate Nigerians and do a re-evaluation of our value system. We must embrace the cherished values of old. All of us must do that. I don’t think any legislation can do that. My grandfather used to be a customary court judge and he did say that anybody from our town that was found culpable of stealing anywhere in Nigeria, he would do whatever was necessary to make sure such a person was sent to jail. And he did that. Three people from the town where sentenced by him. He was poisoned and died with his wife the same day because he was trying to inject sanity in the society.
That was a time when there was high moral value and, in fact, those who made money from untoward sources were always relegated in the town. Everybody in the town then fought for what was right. I can’t say the same thing is happening now.
So, if a sales representative gets a job, was given a car, trained and given a huge stock and yet decided to make away with and defraud the company because he doesn’t care about the organisation, it shows how morally bankrupt he is and this is quite sad.
We have had many incidents like this. And I think it is all down to the love of our people for materialism. This immoral behaviour is the same with people who manufacture or import fake drugs. What type of money is that for goodness sake? Don’t they know they will face their Creator one day to give account of their deeds on earth?
So, we all need to do more to encourage moral rebirth in Nigeria. Nevertheless, if the stakeholders converge and come up with measures to tackle it, no problem. But, I know that those with criminal intent always devise ways to beat the system.
For instance, whenever we employ people here, we usually ask them to submit their original certificates and we write the school to confirm the information the person is giving to us. Do you know that some people have come here with cloned certificates? So, when someone looking for a job is doing so with a cloned certificate, that tells you that if his first foot forward when looking for work is wrong, how can he not do worse things in future after he is employed?
I gathered that the zero per cent duty regime currently being enjoyed by pharmaceutical importers based on ECOWAS CET will soon be replaced with a new regime that may see duty on imported finished pharmaceuticals increased to as high as 20 per cent. How true is this, and if done, what are the implications for healthcare delivery?
The local pharmaceutical manufacturers are pushing very strongly for this but I had expected that they would have taken cognisance of what that ECOWAS CET says and tries to achieve. The issue really is that government implemented the ECOWAS CET regime of zero per cent duty on finished pharmaceuticals to ensure drugs are affordable to Nigerians, which is good but failed to implement same for raw materials for local pharma manufacturers, which is bad.
For me, duty for raw materials for pharmaceutical production should be zero per cent. That is what is fair. What is going to happen if this new duty regime comes into effect for imported pharmaceuticals is that the prices of pharmaceutical products are going to hit the roof by next year. With the current economic situation, it has already escalated, but Nigerians will still have to pay more than they are paying now for their medicines because most of the drugs on our shelves are imported.
As much as I know that importation is not good for us, but that is the situation we have found ourselves because we did not put all the structures in place for our industries to grow and this kind of thing is never achieved overnight. APIN made a presentation to the health ministry that the zero per cent duty should be retained to ensure Nigerians are able to get the medicines they need at affordable rates.
I have huge respect for our local manufacturers and I have said it before that they are the people that deserve national honour because the sacrifices they are making by manufacturing in this unfavourable environment is huge, but they don’t have the capacity to address the pharmaceutical needs of our people.
I made a presentation to the former minister of health and I said that installed capacity is not in any way similar to production capability. You can have a machine that can produce one million tablets in one minute, but you may not even have the wherewithal to buy the raw materials for that machine. It is a different kettle of fish. We must know that the production capacity of all the pharma companies in Nigeria cannot meet up to 20 per cent of the drug needs of Nigerians.
The theme of the 2016 PSN national conference is ‘Pharmaceutical Contributions to National Development’? What are your thoughts on this theme and how indeed can the pharmaceutical industry be strengthened to enable it contribute more to the GDP and by extension the development of Nigeria?
Yes, the pharmaceutical industry can contribute more to the GDP and to national development if all the required structures are put in place to make it thrive. Despite the fact that I am the president of APIN, I know for a fact that the real sector that makes the economy of any nation to grow is not importation but manufacturing and exportation of what is produced in the country.
If our pharmaceutical industry gets the necessary support from government, it can thrive. Right now, there is a massive deficit of required infrastructure for this industry. To manufacture a product in Nigeria, you need raw materials. All the raw materials for pharmaceutical production come from outside – from India and China mostly; whereas, in China, when a manufacturer wants to manufacture similar products, he places an order and in two to three days, the raw materials are delivered to the plant. I have seen this first-hand.
This deficit of required infrastructure is not affecting only the pharmaceutical sector. Other sectors are suffering from the same problem. Our steel rolling mill was not properly managed, that’s why we are still importing iron into this country. If the petrochemical industry had been properly managed, a lot of its bi-products are raw materials for the pharmaceutical industry.
So, for the pharmaceutical industry to thrive, the ancillary industries are crucial. What I am saying is that, it is good to dream of making the pharmaceutical industry to contribute more to the GDP, but we have a lot to do to make this dream a reality because most of what is needed are not things the industrialists can provide or decree into existence by themselves.