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The turbulent ride of the naira dealt a harsh blow to Nigeria’s pharmaceutical sector in 2023, as four listed firms on the Nigerian Stock Exchange collectively suffered N8.31bn in foreign exchange losses.
An analysis of the 2023 financial statements of GlaxoSmithKline Consumer Nigeria, Neimeth International Pharmaceuticals, Fidson Healthcare, and May and Baker Nigeria, all listed on The Nigerian Exchange, revealed the extent of the currency-related setbacks plaguing the industry.
GlaxoSmithKline Consumer Nigeria, which has decided to end manufacturing operations in the country, had the worst forex loss among the pharmaceutical companies in 2023, losing N4.52bn above the N935,000 loss it recorded in 2022.
Recall that in August last year GSK announced that it would stop its 51-year operations in the country and transition to a third-party direct distribution model for its pharmaceutical products.
The firm reported a 35.22 per cent drop in revenue to N16.44bn in 2023, underpinned by the sales of its pharmaceutical products, which dipped 81.77 per cent during this period.
The pharmaceutical giant which is renowned for products such as Augmentin, Neosporin, Panadol, Sensodyne, Advair, Ventolin, and Theraflu, stated in its half-year 2023 result that the forex scarcity in the country was making it difficult for it to settle foreign currency-denominated trade payables with product suppliers.
Although it succeeded in reducing the cost of sales by 43.93 per cent to N10.35bn in 2023 from N18.45bn in the corresponding period of the previous year, post-tax profit declined by 33.76 per cent to N510.02m.
Neimeth suffered a N1.51bn forex loss in 2023, compared to the N2.43m forex gain it enjoyed in the previous year.
Consequently, its revenue plunged by almost 40 per cent to N2.21bn, due to a 41.87 per cent drop in income from pharmaceuticals to N2.07bn during this period.
The 36.50 per cent dip in its cost of sales to N1.48bn from N2.32bn in 2022 could not stop the firm from recording N2.87bn loss in 2023.
It posted a N406.3m loss in the prior year.
An economic and capital market analyst, Rotimi Fakayode, informed Sunday PUNCH that pharmaceutical companies suffered heavily due to currency depreciation as they relied on imports for their raw materials.
“Most of what they need is imported, even the industrial starch that they use to make tablets is imported. As long as their raw materials are import-dependent, there is very little they can do.
“But good enough, the exchange rate is coming down. If it stabilises, they will have an improvement in their financial performance,” he stated.
The Chief Executive Officer of High Cap Securities, David Adorin, told Sunday PUNCH that the sudden transition from a semi-fixed-exchange rate to the floating of the naira caused the forex loss the pharmaceutical firms suffered in 2023.
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