Azoji: Nigeria Needs Executive Order to Mandate Public Hospitals to Prioritize Made-in-Nigeria Medicines
The MD/CEO, Neimeth International Pharmaceuticals Plc, Matthew Azoji in this interview with Kayode Tokede urged the federal government to sign an Executive Order that medicines and other health commodities that are made in Nigeria are on the priority list of purchase in public hospitals.
Local manufacturers complain of unfriendly government policies. Would you say the government is doing enough for the Pharma sector?
I do not think that Government has deliberately made unfriendly policies against the local industry. Rather some policies intended to other purposes may adversely affect local companies. For instance, the decision of the Government to provide subsidy only for Premium Motor Spirit (PMS) or petrol and not for Diesel and Aviation fuel has left the price of diesel which manufacturers use to power their factories at the mercy of the forces of demand and supply. As a result, the current disruption in the supply of petroleum products due to Russia-Ukraine war has led to less than 135% increase in the price of diesel but the price of PMS has remained largely stable except for the time the bad petrol supplied to the market caused scarcity and proliferation of black markets of the product. The current very high price of diesel has therefore heavily affected the manufacturing industry, significantly increasing the cost of production which cannot be passed 100% to consumers because of the overall adverse economic situation in the Country. The meaning is that profitability is significantly reduced for the average Manufacturer but that is not the intention of the Government.
Also, in the process of making open, the procurement process Government often throws open the purchase of drugs for Government facilities and programmes to both local manufacturers and importers. And you know that some of the foreign manufacturers operate in environments, which enjoy low cost of production. This makes products of local pharmaceutical companies un-competitive. This procurement policy has for a long time stifled patronage of local health commodities by Government and Government agencies.
There are many such policies with unintended negative consequences. Even the African Continental Free Trade Agreement (AfCFTA) which the government signed to promote trade in the continent can breed negative aftermaths if the industry does not rise to take advantage of the platform.
Regarding what the government is doing for the pharma industry, I can say that some things have been done right by the Government and more needs to be done to promote the industry. The COVID 19 pandemic woke the government up to the cries of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN) for a fund to boost capacity in the sector. The government through the Central Bank of Nigeria gave out a N100 billion capacity expansion low-cost loans from which many manufacturers benefited.
Last year the government launched the new National Drug Policy 2021. That policy seeks to promote the local pharmaceutical sector by encouraging local production. For instance, the policy seeks to ensure that by 2025 Nigeria would be able to achieve 75 per cent local manufacture of essential medicines needed in the country. The policy goes ahead to seek the use of fiscal and other measures to promote the local production of drugs in Nigeria. The Pharma Industry will need to rise to the occasion and work closely with Government to take advantage of this new policy.
However, we request the Government to do more to actively create a better enabling environment for the local Pharma industry to thrive for the benefit of Nigerians in the areas of enhancing access to medicines, creating of jobs and generating foreign exchange through export to other African Countries.
For instance, the pharma industry is a part of the larger economy and whatever happens to the economy is bound to affect the sector. All the problems of the economy, namely infrastructure deficit, poor power supply, high interest and exchange rates, corruption, and others that perennially plaque the economy impact the sector negatively. Tackling those challenges will help tackle problems in the pharma sector.
But specifically, interventions such as the CBN intervention fund is a welcome idea. This fund will definitely energize multiple efforts in the industry to ramp up capacity. The fund will also assist ameliorate the issue of revenue and profit drop which has bedevilled the pharmaceutical industry in the past few years because it offers a minimal interest rate of 5% in the first year, which will later be increased to 9%. There is an aspect that the Government needs to look into again. Being the biggest buyer of medicines, Government can deliberately make a policy that they will always patronise local products. They can only buy imported medicines if there are no quality locally manufactured alternative brands in Nigeria. The Executive Order to patronise made-in-Nigeria goods has not been extended to pharmaceuticals. The Government should sign an Executive Order that medicines and other health commodities that are made in Nigeria are on priority list of purchase in Nigeria’s public hospitals.That is a way of creating an adequate market for local pharmaceuticals. So, if the Government is buying from local manufacturers, this can boost their capacity.
Infrastructure development is another area we need Government assistance. In moving drugs from one area to the other we need good roads, then a constant supply of power is crucial to local manufacturing. Every company manufacturing in Nigeria will have to run on a generator and this is quite expensive, especially with the current price of diesel at about N730.00 per litre. So, the power plan needs to be fast-tracked. And of course, low-interest loans being offered by CBN should be expanded.
Why must shareholders partake in the N3.67billion Right Issues being floated by Neimeth and what do they stand to benefit in the short-long term?
The whole essence of the existence of the company, Neimeth International Pharmaceuticals is to continue to create value for all stakeholders, especially its investors. This is the essence of our being in business.
There are two ways we add value to investors. One is the declaration of dividends after a successful business year and the other is the multiplication of the wealth of the shareholders through capital gains. And these are key driving factors for shareholders.
Neimeth returned to dividend payment in 2020 and we are determined to remain consistent in this direction with increase in the amount we payout to shareholders. For instance, Neimeth increased dividend payout by eight per cent to 7.0 kobo for the 2021 business year, sustaining the trend started in 2020 when the company paid a dividend per share of 6.5 Kobo; after it had earlier successfully used its profit to restructure its balance sheet and counterbalanced earlier losses.
Beyond cash dividend payouts; shareholders of Neimeth have seen significant capital gains as the investing public continued to react positively to the improvements in the company’s fundamentals. The share price of Neimeth increased from 40 kobo as at September 30, 2019 to N1.75 by the end of our last business year on September 30, 2021, representing a 338 per cent gain, more than an average of 100 per cent gain per annum. This implies that a shareholder who had N1 million worth of shares on September 30, 2019 has seen its value rise to N4.75 million. The trend has remained largely the same in 2022.
In fact I can see the share price of the company jumping astronomically in the months ahead, far beyond the current price below N2.00. So for discerning investors this is the time to take advantage of the stock by investing in the shares of the company and the Rights Issue is one good opportunity.
This optimism is based on the very viable strategy and strong fundamentals of the company Neimeth is pursuing a multi-prong strategy to strengthen its position as a leading Nigerian pharmaceutical company and to develop a competitive global capacity that allows it to tap into emerging continental opportunities. As part of the expansion plans, the company is building a new multi-products manufacturing facility at Amawbia, Anambra State which will comply to World Health Organization (WHO) current standards of Good Manufacturing Practice (cGMP). It is also upgrading its Oregun factory, which is billed to be completed this year. The Oregun factory upgrade alone is expected to increase the Neimeth’s manufacturing capacity by more than 300 per cent, particularly of liquid products. This will enable the company to grow more rapidly in both turnover and profit.
The Amawbia project is also expected to have reached an advanced stage of implementation by the end of the current financial year and is expected to contribute to the next business year in 2023.
Also, in pursuit of its corporate vision to be the leading innovative healthcare provider out of Africa, the company is pioneering research and development into African homegrown solutions to various diseases. Already; it has many therapeutic formulations that will provide solutions to various human and animal diseases. Neimeth is also partnering with overseas pharmaceutical companies to formulate medicaments for various common ailments on the continent. Currently; it has about 13 different human pharmaceutical lines undergoing registration while about nine veterinary products are underway. About 25 other human pharmaceutical products are scheduled to be submitted to the National Agency for Food and Drug Administration and Control (NAFDAC) for registration soon. Most of these products are expected to be introduced into the market in the current business year, thus expanding the company’s product portfolio.
So, the money we are looking for has been mapped out for highly strategic investments, which will catapult the company into investment heaven.
How are you managing counterfeit drugs in collaboration with agencies in the Pharmaceutical sector?
The incidence of substandard or out rightly fake products is a global phenomenon. It exists in every sector and in every economy. But this becomes a source of worry when it is rampant or tries to overshadow the good products like the case appear with certain health commodities in the country.
I must also point out without being prejudiced that most of these fake health commodities come from outside the country. That puts the onus for their control on agencies that oversee importation of products into the country.
It is gratifying that NAFDAC has been making a concerted effort to limit if not eradicate the prevalence of these undesirable products. But that effort must be supported by other agencies and the society. Members of PMGMAN also support NAFDAC in her efforts to curb the prevalence of fake and substandard medicines by complying with relevant regulations of NAFDAC and Pharmacists Council of Nigeria (PCN) regarding manufacturing, sales, marketing and distribution of pharmaceutical products and by taking specific individual corporate actions to prevent the faking of their own individual company products.
Beyond these efforts, I think the decision by Nigerians to reject fake products will play a key role in eradicating this menace. Nigerians can do this at two levels. The first level is for people to stop patronizing such products. I can tell you that many Nigerians ignorantly buy fake drugs by aiming to buy the cheapest products in the market. They do this as a result of poverty. People go to medicine vendors to buy drugs but because of the higher prices of the good products they knowingly or unknowingly opt for the fake ones. This is because in most Nigerian homes illness is not provided for in the household budget. Rather the purchase of drugs is done as out-of-pocket expenditure when one or two members of the family fall sick.
This scenario can be contained with an effective health insurance package for most homes.
The other way Nigerians can curb fake drugs is to encourage business persons who import these drugs wherever they can be identified by communities to jettison the practice by embracing quality control measures of both exporting and importing countries and where such persons refuse to adhere to advice, they should be made to suffer social isolation. If fake products are not brought into the country, we shall have little or no reason to encounter it.