Exit of multinational pharmaceutical firms to raise Nigeria’s import bill
Nigeria’s import bill is expected to rise significantly as the negative impact of exodus of several multinationals in the pharmaceutical sector of out of the country worsens.
Experts disclosed that the first indication of what was to come was the sudden scarcity and increased prices of the products marketed in Nigeria by these multinationals.
Valentine Achum, Public Policy expert, disclosed that following their exit, a number of pharmaceutical multinational companies have opted for a distributor-led approach to the sale of their products in the country, however in the course of doing this, they may have created a major problem for consumers, if the relevant Nigerian authorities like the National Agency for Food and Drug Administration (NAFDAC) and Federal Competition and Consumers Protection Commission (FCCPC) do not act promptly to protect Nigerians.
“As what is being observed is that these companies may end up fostering upon us, monopolies which are foreign owned and with attendant effects on Nigerians.
This transition signifies more than just a change in business strategy—it is a looming threat to Nigeria’s health sector. With the recent development, a trend has emerged with only one distributor replacing an entire distribution chain that previously served several local businesses, enabling healthy competition and which kept prices in check. This has led to the exorbitant prices of certain drugs,” he said.
Other experts said that by monopolizing distribution channels, these companies will not only dictate prices but also wield disproportionate influence over the availability and accessibility of essential medications, further imperilling the health and well-being of Nigerians.
“Moreover, the ownership of such a significant asset by a foreign-owned entity raises concern about the country’s drug security. With critical decisions regarding pharmaceutical access and availability resting in the hands of foreign interests, the primary consideration shifts away from the welfare of Nigerians to making profit, posing a significant risk to national health security,” they said.
Continuing, they explained that in addition to the inherent risks posed by monopolistic control, the situation runs counter to the government’s local content policy, depriving indigenous companies of opportunities to develop essential competencies and contribute to the growth of the Nigerian pharmaceutical sector.
“The situation accentuates an upsetting paradox. Despite boasting of over 115 registered pharmaceutical manufacturers, the country continues to rely heavily on imports for active pharmaceutical ingredients and excipients. Unfortunately, little emphasis has been placed on fostering local production of raw materials, pharmaceutical formulations, and processing equipment. This oversight has precipitated a decline in Nigeria’s pharmaceutical manufacturing capacity, exacerbating the nation’s dependency on external sources,” they said.
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They explained that the current situation consolidates the power and influence of a single entity over the distribution of a whole line of pharmaceutical products, exacerbating the already prevalent issue of monopolistic control in the industry.
“This concentration of power enables the distributor to dictate prices, limit competition, and stifle innovation, hindering the growth and development of the local pharmaceutical sector. This situation also differs greatly from what obtains in Ghana, for instance, where GSK adopted a different model, with multiple distributors handling its products, despite the country’s significantly smaller population,” they said.
Furthermore, they said the Nigeria situation creates a dependency on a single source for some essential medications, leaving the healthcare system vulnerable to disruptions in supply chains, shortages, and price fluctuations. This lack of diversity and resilience in the distribution network also undermines the stability and reliability of pharmaceutical access, posing a grave risk to public health and well-being.
“Additionally, any decision to operate through a single distributor by multinational companies such as GSK, Sanofi, Bayer among others disregards the principles of fair competition and market diversity, stifling opportunities for smaller, local distributors to participate in the industry. This not only hampers economic growth and job creation but also limits the potential for innovation and entrepreneurial development within the pharmaceutical sector,” they said.