Before the chickens come home to roost: Addressing a

By Valentine Achum

The exodus of several multinationals in the pharmaceutical sector of our economy in recent times came as a shock to many, taking into consideration the number of years some of these entities have been operating in the country and their contribution to the healthcare and wellbeing of Nigerians, not to mention the manpower development over the years.

The first indication of what was to come was the sudden scarcity and increased prices of the products marketed in Nigeria by these multinationals.

As they left, multinationals like GSK and Sanofi opted for a distributor led approach to the sale of their products in the country.

In the course of doing that, they may create 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 to protect Nigerians. What is being observed is that these companies may end up fostering upon us, monopolies which are foreign owned, with the attendant effect.

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 indigenous businesses, enabling a healthy competition that kept prices in check. This has led to the exorbitant prices of certain drugs.

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 concerns 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.

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 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.

Divestment is not a new development in Nigeria. Foreign giants have been known to exit the Nigerian market in various sectors leaving their assets and franchises to another company. One good example is the divestment of onshore assets by International Oil Companies (IOCs) under the Goodluck Jonathan government. Oil giants including Shell and Connoco Philips sold various Oil Mining Leases (OMLs) to indigenous operators including Aiteo, Oando and Eroton.

These companies have become giants today, employing thousands of Nigerians. Aiteo became the biggest financier of football in Nigeria, sponsoring the Nigerian Federations Cup, NFF Awards, and two consecutive CAF Awards. This shows the domino effect of encouraging and promoting the acquisition of strategic business assets by local firms.

In a stark contrast to what we witnessed in the oil and gas industry and recently, the aviation industry with Air Peace, what is going on the pharmaceutical industry is a dangerous development. The 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 pharmaceutical industry. This is a stark contrast to 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.

Furthermore, the 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 etc disregards the principles of fair competition and market diversity, stifling opportunities for smaller, indigenous 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.

Moreover, the concentration of distribution rights in the hands of a single entity raises concerns about regulatory oversight and accountability. Without adequate checks and balances, there is a heightened risk of unethical practices, such as price gouging, counterfeit products, and regulatory non-compliance, further eroding trust in the pharmaceutical industry and compromising public health and safety.

Overall, the situation leads to the vulnerability of supply chains, stifles competition and innovation, and compromises regulatory oversight. It is imperative for regulatory authorities and industry stakeholders such as the Standard Organization of Nigeria (SON), National Agency for Food and Drug Administration (NAFDAC) and the Federal Competition and Consumers Protection Commission (FCCPC) to address these risks proactively to safeguard the integrity and resilience of Nigeria’s pharmaceutical sector.

Valentine Achum is a public policy professional based in Abuja, Nigeria.