Effects of exodus of pharmaceutical companies

BY ABIODUN JOSEPH OLUWADARE

The Nigerian business climate has undergone a drastic transformation in recent years, with repercussions felt across industries, most notably in the pharmaceutical sector. The departure of both small enterprises and major multinational pharmaceutical giants has raised concerns about the implications for the nation’s health sector and economic stability.

The year 2023 witnessed a turning point as businesses, faced with economic challenges and shifting government policies, chose to either exit Nigeria or scale down their operations. Reports indicate that President Bola Ahmed Tinubu’s administration’s termination of gasoline subsidies in May 2023 led to the closure of approximately 4 million small companies within two months. Micro, small, and medium-sized businesses experienced daily closures, painting a grim picture of the economic climate in the country.

The pharmaceutical industry, a critical player in healthcare and economic stability, faced a significant blow as multinational pharmaceutical companies decided to either exit or reduce their operations in Nigeria. The departure of these vital healthcare players responsible for manufacturing life-saving medications poses a severe threat to the nation’s health and economic well-being.

To comprehend the gravity of the situation, it is essential to delve into the historical development of Nigeria’s pharmaceutical industry. The sector traces its roots back to the pre-colonial era when traditional medicine was the primary healthcare system deeply ingrained in Nigerian culture.

The transition to modern pharmaceuticals gained momentum during the colonial and post-independence periods, with Nigeria seeking to develop its healthcare infrastructure, including pharmaceutical manufacturing, to meet the growing population’s needs.

Regulatory bodies like the National Agency for the Control of Food and Drugs (NAFDAC), established in 1993, play a crucial role in ensuring quality and safety standards in drug production, importation, and usage. Despite growth in the pharmaceutical sector in the 1980s and 1990s, challenges such as inadequate infrastructure, poor funding, inconsistent policies, and a reliance on imported raw materials persisted, hindering the industry’s self-sustainability.

The departure of major pharmaceutical companies from Nigeria between 2015 and 2023 signals a troubling trend that demands urgent attention. Notable giants in pharmaceutical sectors, including GlaxoSmithKline Consumer Nigeria Plc and Sanofi-Aventis Nigeria Ltd, have cited various reasons for their exit, such as challenges in keeping up with demand, a shortage of dollars for importing ingredients, and unfavourable business conditions.

The factors motivating pharmaceutical companies to relocate abroad are multifaceted.

A challenging business environment characterised by volatile exchange rates, high import duties, stringent regulatory processes, and bureaucratic hurdles has made operating in Nigeria incredibly difficult for the operations of these pharmaceutical companies. Government-imposed price controls on essential drugs, coupled with inadequate healthcare infrastructure and a fragmented distribution network, further discourage sustainable investment.

Currency fluctuations and foreign exchange scarcity pose additional challenges, making it difficult for companies to repatriate profits and import raw materials. The state of Nigeria’s infrastructure, including epileptic power supply, insecurity, and deficient transportation networks, adds to the complexity, leading to increased costs and inefficiencies.

Policy discontinuity and variations with administration changes contribute significantly to the problem, creating uncertainty and hindering long-term planning and investment for foreign companies.

The fallout from pharmaceutical companies’ flights has far-reaching consequences for Nigeria’s health sector. Reduced availability of essential medicines, increased dependency on imported drugs, and rising healthcare costs pose immediate threats.

The departure has also led to increased job losses, disrupting various sectors of the economy and eroding the expertise built within the pharmaceutical sector over the years.

This is rather unfortunate for the healthcare sector of a country struggling to provide a modernised healthcare system for its populace. The absence of these pharmaceutical giants weakens healthcare infrastructure, hampers innovation, and diminishes the country’s capacity to address health challenges.

However, strategic measures can be implemented to combat this exodus and revitalise the pharmaceutical industry in Nigeria. Among other strategic measures, the Nigerian government must ensure policy consistency, implement reforms to attract and retain pharmaceutical companies and invest in healthcare infrastructure.

Modernising hospitals, clinics, and research facilities, along with improving transportation and logistics infrastructure, will create a conducive environment for pharmaceutical companies. The government must act adroitly to support research and development, facilitate technology transfer, and reduce dependence on imports.

These are crucial steps to retain local production of essential drugs. Strengthening regulatory frameworks, cracking down on counterfeit drugs, and prioritising the education and training of healthcare professionals will contribute to enhancing the healthcare sector’s overall capacity. Nigeria is endowed with enormous human resources, including the healthcare sector.

The only challenge in the healthcare sector is harnessing these human resources and maintaining high discipline to eliminate quacks in the sector. Collaboration with international organisations, governments, and non-governmental organisations is vital to sustaining global health practices and standards.

Strengthening health insurance schemes will ensure universal access to affordable healthcare services and medications. In conclusion, while multinational pharmaceutical companies’ departures pose challenges, they also present an opportunity for stakeholders to redefine the industry’s trajectory. By implementing strategic interventions, fostering collaborations, and embracing innovative business models, Nigeria can build a more resilient, accessible, and sustainable pharmaceutical ecosystem.

The time for concerted efforts to address the fallout is now, as the nation stands at a crossroads in shaping the future of its healthcare landscape.

Oluwadare is a lecturer at the Nigerian Defence Academy (NDA), Kaduna