The travails of Nigeria’s pharmaceutical industry were revisited last week by manufacturers who bemoaned the increasingly hostile operating environment. For a country that is heavily dependent on imports and is confronted with an avalanche of fake and counterfeit drugs, the government needs to quickly take urgent action to stimulate this strategic sub-sector. At stake are the country’s health care system and revitalising a profitable and job-creating industrial sub-sector.
The government, through the Central Bank of Nigeria, made a move recently to boost the manufacturing sector by directing deposit money banks to ensure that at least 60 per cent of foreign exchange sales to end users are given to local manufacturers. This is commendable and should have come much earlier just as the forex market was being further deregulated in June. Like the Pharmaceutical Manufacturing Group of the Manufacturers Association of Nigeria observed, this measure should help drug manufacturers, but needs to be followed up with policies specially targeted at the sub-sector.
The call for government intervention by the PMG-MAN is timely, as the country enters recession and job losses mount. Asking for outright intervention funds, however, is fraught. Yet, the importance of the pharmaceutical sector compels a robust response from policymakers. Estimated at $1.28 billion in 2013, Nigeria’s pharmaceutical sector has a new estimate of over $2biilion today. PwC, the global consultancy, predicts that Nigeria’s pharmaceutical imports would reach $789 million in value by 2018, a 10.4 per cent rise over the 2013 levels. This figure does not take in the millions more in smuggled drugs.
Just how crucial a vibrant domestic industry is to the economy is reflected in the demand for malaria drugs. Some 97 per cent of our population is at risk of malaria, says the World Health Organisation; about 100 million cases are reported each year, a 71 per cent prevalence tracked by the Federal Ministry of Health, while over 300,000 die of the disease each year, the world’s highest. Yet, adds WHO, over 50 per cent of malaria drugs in Nigeria are adjudged to be fake; for Lagos, the country’s largest urban conurbation, health experts put fake drugs at over 70 per cent. For HIV/AIDS treatment too, it is essential to have considerable local capacity for antiretroviral drugs to cater for the 3.7 million Nigerians living with the virus and reduce the figure of 215,000 it kills each year.
Working with the Health Ministry, President Muhammadu Buhari’s economic team should focus on how to boost the pharmaceutical sector for job creation, exports, enhancing the health care system and saving scarce foreign exchange. To raise capacity utilisation, put at a record low of 20 per cent on the average, apart from encouraging the banks to direct forex and credit to pharmaceutical manufacturers, the government should immediately strengthen the National Agency for Food and Drug Administration and Control, which has become ineffective since shortly after the exit of the late Dora Akunyili as director-general. The sector posted average 65 per cent and above utilisation when she was in charge with very strong regulation that not only boosted the domestic market, but also created demand for Nigerian drugs and fruit drinks internationally. With about 120 manufacturers by 2009, combined installed capacity can meet 60 per cent of domestic demand.
Apart from the weak infrastructural base besetting Nigerian businesses, the government should review the 20 per cent duty on imported raw and packaging materials for drugs to facilitate competition with global producers. Having failed to achieve the objectives of the revised National Drug Policy 2004 that set a target of meeting domestic drug needs by 2008, the United Nations Industrial Development Organisation recommends improving access to finance, reducing poverty which inhibits effective demand, improving public infrastructure, attracting foreign investment and investing in research and development. The global pharmaceutical industry, currently valued at over $1.3 trillion, is heavily dependent on R & D. Big pharmaceutical companies typically invest about 20 per cent of their revenue in research with the United States, the world leader, providing 44 per cent of global biomedical research funding.
Nigeria suffers the handicap of lacking big indigenous pharma firms that can fund research, which is where the government has been lax. The Minister of Health should work with his Commerce and Industry and Education counterparts to forge a close collaboration between the research institutes, universities and industry. The Nigerian Institute for Pharmaceutical Research and Development especially, should be properly funded and made relevant to drive innovation as well as improved and new products.
Extra efforts should be made to attract investment, local and foreign, as the N70 billion reported to have been invested by 14 domestic producers is inadequate to raise capacity to meet the $900 million-strong Over-the-Counter domestic market and $500 million prescription ethical drugs market as estimated by the organised private sector.
A thriving pharmaceutical industry has a multiplier effect on agriculture, packaging, chemicals, transportation, exports among others. A report in PharmaExec in 2015 said Malaysia’s pharmaceutical sector grew faster than GDP growth at 8-10 per cent after policies like research funding and encouraging private investment were adopted.
The seemingly easy route of providing intervention funds should be avoided like the plague: none of such funds has ever achieved its goals in Nigeria, sabotaged always by corruption, bureaucratic incompetence and the infernal self-defeating “federal character”.
Instead, strict monitoring to ensure compliance with the 60 per cent forex rule by DMBs, appointment of zealous helmsmen at NAFDAC, instilling efficiency at the Nigeria Customs Service to contain smuggling, creative import duty regime, patronage of locally made drugs and massive investment in infrastructure will ensure a thriving pharmaceutical sector.
