The alarm raised recently by local pharmaceutical manufacturers on the possible collapse of the industry is a reminder that urgent reforms are needed to rejuvenate the economy for growth and job creation. The uncertainty over the N500 billion worth of investments in the sub-sector also threatens the health care system. Reversing the adverse operating conditions and revitalising the industry should, therefore, be treated with utmost dispatch.
When there is universal criticism by those most affected, a responsive government should pause and review its policies. Like others in the industrial sector, the Pharmaceuticals Manufacturers Group of the Manufacturers Association of Nigeria says the Common External Tariff adopted by ECOWAS member-states and the newly introduced National Drug Distribution Guidelines among other policies, will harm the sub-sector. It projected that within the next two months, one million jobs across the value chain would be under threat. According to them, “catastrophic losses” were bound to hit from the provision of zero tariff on imported medicines from ECOWAS countries, while our local manufacturers are required to pay 5-20 per cent duty on imported raw materials.
Domestic drug producers, they say, are further disadvantaged by the NDDG that recognises mega-drug distribution centres with exclusive authority to buy directly from manufacturers. President Muhammadu Buhari’s administration should respond positively to their plaintive cry that the “local pharmaceutical manufacturing sector was not considered” before penning the CET agreement. Okey Akpa, Chairman of PMG MAN, said, “This policy undoubtedly spells doom for the local industry as imported medicines will become far cheaper than locally produced ones.”
Proponents view the CET as an essential component of the economic integration plans of the sub-regional body that will enhance prosperity. With its size, human and material resources, Nigeria is expected to be the major beneficiary if it can rejuvenate its manufacturing sector. However, organised private sector has always insisted that problems such as smuggling, tackling sharp practices of foreign goods re-packaged and brought into Nigeria as made-in-ECOWAS, as well as fiscal measures that will make local products competitive, should be solved first.
Health care is crucial to any country and we wonder why the previous governments that gave out dubious fiscal waivers did not think up a policy to help domestic operators to produce drugs cheaply for local use and for export. The World Health Organisation identifies the pharmaceutical industry as crucial to the development of any nation. PriceWaterhouseCoopers, a global consultancy, projects the value of the global pharmaceutical factory to hit $1.3 trillion by 2020, up from WHO’s estimate of $400 billion in 2013.
Nigeria must therefore step up its game. While the potential for growth and self-sufficiency is immense – 170 million population, large agricultural land area, minerals and low access to health care − our pharmaceutical sub-sector was worth only $1.28 billion in 2013 compared to Pakistan’s $2.1 billion and South Africa’s $3.9 billion. WHO identified the influx of counterfeit drugs (over 50 per cent), poor patent regulation and gross public underfunding of the health sector as major problems inhibiting the sub-sector’s growth. Add in high interest and foreign exchange rates, high cost of energy as a country that generates just over 4,000 megawatts of electricity, poor infrastructure and weak purchasing power.
Experience elsewhere, however signposts the way out. The importance of health care compels close collaboration and support for the domestic drug industry. Singapore is investing $3.7 billion in Research and Development from 2011 to 2015, involving 7,000 researchers in 50 companies, universities and research institutes. Beginning with its enactment of the Patents Act in the 1960s, successive Indian governments have partnered the pharmaceutical industry, enabling it to become the world’s third largest by 2009 with a turnover of $21.04 billion and exports worth $10.1 billion in 2013. The United States, the world’s largest, gives tax rebates for research and development and funds research through grants to universities, foundations and research agencies.
We need a national policy to protect the local industry from unfair competition, smuggling and dumping and from fake and adulterated medicines. The late Dora Akunyili, as director-general of the National Agency for Food and Drug Administration and Control, undertook a multi-pronged regulatory strategy that in three years, reduced the incidence of fake drugs by 80 per cent as of 2004, secured 30 convictions for fake drugs trafficking with another 40 ongoing trials. More importantly, the effective regulation and enforcement she provided boosted local capacity utilisation to over 65 per cent on the average in the 130 local producers, with 16 new manufacturing sites opened and thousands of jobs added. Nigerian drugs were in high demand in Europe, while some West African countries un-banned the importation of made-in-Nigeria drugs in recognition of their good quality.
An industry that began here in 1957 and once attracted investments from Europe’s top multinationals should not be allowed to go the way of the comatose textile industry. It generates direct employment and indirect jobs and promotes production in the agriculture, mining, chemicals, transport and distributive sectors.
Buhari needs an economic management team fast to articulate an industrial policy that gives priority to the pharmaceutical sector to protect the people’s health, boost exports and employ millions. We should protect and help local producers to grow and invest in R & D. Forbes magazine reported in 2012 that an average new drug developed by a major company costs “at least $4 billion.” No Nigerian company can afford any sum near this; indeed, most of our pharmaceutical companies only market or produce foreign brands under licence.
NAFDAC should be strengthened and overhauled to regain its potency and halt the renewed influx of counterfeit medicines. All inhibiting policies like CET, NDDG and tariffs should be critically reexamined. All economic policies should be guided by the overriding objective of boosting local production, creating jobs and diversifying exports.
