Nigeria’s nascent pharmaceutical industry has faced increasing headwinds over the past decade. A seeming take-off was halted following the economic decline in 2016. The pharma industry is currently estimated to be $1.5 billion in value terms with generics (branded and unbranded) controlling 80%. The industry contributes less than 0.5% to Nigeria’s Gross Domestic Product (GDP) and its growth rate has slid from 8% in 2013 to below 3% in 2018 despite aggregate 20% price increase. To put it in perspective, the South Africa pharma market is estimated to be $8 billion in value with branded medicines contributing above 65% of total value and the retail sector controlling above 80% of industry value.
The pharma industry has a critical role to play in Nigeria’s health sector. With life expectancy of 54 years, doctor to patient ratio of 1/7000 compared to the World Health Organisation (WHO) recommended 1/600, and surveys showing only about 30% of Nigerians have access to wholesome medicines and pharmacy care, the importance of this sector cannot be overemphasised. The community/retail pharmacy and to a large extent, patent medicine practitioners are the most easily accessible points of call for basic ailments by majority of Nigerians.
An overview of both upstream and downstream shows an industry at infancy with sizeable headroom for growth but impeded by a variety of factors. The industry is fragmented at every level with many independent small size players across the board. Nigeria has about 200 active manufacturing and packaging firms mostly located in Lagos, Onitsha, and Kano. Over 90% of inputs are imported mainly from India and China. These local producers in aggregate terms control approximately 30% of the market.
There are hundreds of importers of pharmaceutical products; most are small in size with a few dominant players. The highly demanded therapeutic product classes are mostly imported. The commercialisation model for most brand/product owners is a hybrid of wholesale push and direct to retail – pharmacies, patent medicine stores, clinics and hospitals. The bigger ones reach the institutional hospitals, both private and public. Some of the companies undertake expert marketing activities, otherwise called detailing, to facilitate recommendations and pull for their product lines. The process of commercialisation in the industry is sometimes fraught with issues of ethical compromise.
In the downstream sector, records at the Pharmacists Council of Nigeria state that there are about 5,000 registered retailers and wholesalers located in 140 of the 774 local governments in the country. Most of the registered outlets are located in major cities and a few tier 2 cities because of the higher disposable income levels in these locations. This implies that majority of Nigerians source their pharmaceutical products from traditional channels called patent medicine dealers and chemists which are located on street corners in tier 2/3 cities and in some tier 1 cities. Other sources of pharmaceutical products include open markets, kiosks, table tops and hawkers which can be seen in all towns across the country. These traditional outlets are estimated to be over 100,000 (with only about 40,000 registered with the Pharmacists Council of Nigeria) and in most instances, lack the capability to meet standards that will ensure wholesomeness of medicines they stock. They are supposed to handle only over-the-counter proprietary medicines. With the storage and handling conditions in these outlets, the quality and efficacy of the medicines may have been compromised.
That said, Nigeria’s pharma industry has been evolving, albeit slowly with a few retail chains with as many as 50 outlets emerging with branches across major cities as well as regional players with as many as 10-15 outlets. In the wholesale sector, a couple of modern wholesale players with fitting storage and logistics infrastructure are also emerging. This evolution will take root only if the right interventions are taken so the sector can grow rapidly to ensure sizeable opportunity for stakeholders.
Major cities including Lagos, Onitsha, Aba and Kano control about 80% of wholesale business while Lagos, Abuja and Port Harcourt control over 60% of formal retail. This follows relatively sizeable disposable income levels in these cities. Latest estimates put fake and counterfeit products at 7% in that category, a 2005 baseline study by the World Health Organisation (WHO) put it at 16.7%. This is low when we consider the chaos in the distribution pipeline. However, there may be a high incidence of ‘passing off’ and ‘copying’ which may not have been tracked by regulatory authorities and brand owners. Passing off/copying means unscrupulous players cloning brands of successful companies and selling at much lower prices, sometimes at 20%-40% discount. All things considered, we can estimate that only 30% of Nigerians have access to wholesome medicines.
Within the industry, the top selling products in the over-the-counter category include antimalarials, analgesics, cough and cold remedies, gastrointestinal remedies, vitamins and mineral supplements. Anti-infective, pain relief, cardiovascular and ophthalmology medicines are the prescription-only medicines mostly demanded.
Industry bright spots include capacity and capability expansion by local manufacturers, high number of competing brands/generics across categories, especially the highly demanded, and expansion of modern retail chains in major cities. These advancements are, however, blighted by excessive bureaucracy leading to delays of up to and beyond 12 months in registering new products and three to five months in securing approval to open retail or wholesale outlets.
The pharma industry is regulated by various bodies including the National Agency for Food and Drug Administration and Control (NAFDAC), Pharmacists’ Council of Nigeria, Standards Organisation of Nigeria, the Federal Ministry of Health, local governments and other professional bodies. Despite the seeming ‘over regulation’ and control in the industry, any and every medicine can be sourced over the counter in many of the retail outlets. The implication is predisposition to abuse of medicines with attendant resistance that may result.
In the concluding part of this series, we will examine the prospects of Nigeria’s pharmaceutical industry and recommend actions that stakeholders can take to facilitate growth.
From your experience of the pharmaceutical industry in Nigeria, highlight other pressing concerns and how they can be addressed.
