With my not-so-long sojourn of 17 years in the pharmaceutical industry in Nigeria, I have been opportune to experience not just the pharmaceutical ecosystem but that of healthcare in general. I have been privileged to appreciate the strengths, struggles as well as trajectory of this industry in Nigeria and hereby present my views, research, and observations.
The pharmaceutical industry in Nigeria plays a vital role in providing healthcare solutions to its vast population of over 200 million people. As the most populous country in Africa, Nigeria’s pharmaceutical market is substantial and growing, presenting both challenges and opportunities.
In this blog post, we will delve into the size of the pharmaceutical industry in Nigeria, explore the importation of pharmaceutical products, analyze the factors driving its growth, and assess whether Nigeria is an attractive destination for multinational pharmaceutical companies.
Additionally, we will discuss several possible solutions to the challenges faced by the industry to ensure its continued growth and success.
How big is the pharmaceutical industry in Nigeria?
The pharmaceutical industry in Nigeria has experienced significant growth over the years. According to a report by McKinsey & Company, the Nigerian pharmaceutical market was estimated to be worth $4 billion by 2026, and it is projected to grow at a Compound Annual Growth Rate (CAGR) of 9% until then. This growth can be attributed to several factors, including a large and growing population, increased access to healthcare, rising incomes, and a growing middle class.
Compared to other African markets, Nigeria’s pharmaceutical industry is one of the largest. Its sheer size and potential for further expansion make it an attractive prospect for both local and international pharmaceutical companies.
Can pharmaceutical products be imported into Nigeria?
Yes, pharmaceutical products can be imported into Nigeria. While the country does produce some pharmaceuticals locally, it still relies heavily on imports to meet its healthcare demands. Nigeria imports a significant portion of its pharmaceutical products, including both finished drugs and active pharmaceutical ingredients (APIs).
However, importation comes with its challenges. The Nigerian government has implemented various regulations and requirements to ensure the safety and efficacy of imported pharmaceuticals. Importers must obtain the necessary approvals from regulatory agencies, such as the National Agency for Food and Drug Administration and Control (NAFDAC), to import drugs into the country.
While importation helps meet immediate healthcare needs, it also highlights the importance of developing local manufacturing capabilities to reduce the country’s dependence on imported drugs.
What is driving Nigeria’s pharmaceutical market?
Several factors are driving the growth of Nigeria’s pharmaceutical market:
Population & Demographics: According to Statista, demographic projections show that the Nigerian population might experience a constant increase in the next decades. By 2050, it is forecast that the population will grow to over 377 million people compared to 2022.
Nigeria’s large population, coupled with a considerable proportion in the younger age bracket, creates a robust demand for healthcare and pharmaceutical products.
As the population continues to grow, the demand for healthcare solutions is expected to increase.
Rising Healthcare Awareness and Demand: As healthcare awareness improves, more Nigerians are seeking better medical facilities and access to high-quality pharmaceutical products. People are becoming increasingly conscious of their health, leading to higher demand for preventive and curative medications.
As reported by Nairametrics, according to the Nigerian Sovereign Investment Authority (NSIA), Nigerians spend an average of $1 billion annually on medical tourism for a range of healthcare needs. 60% is reported to be across four key specialties: oncology, orthopaedics, nephrology, and cardiology.
In other words, Nigerians (mainly the middle- and upper-class) are seeking quality healthcare, and that includes pharmaceuticals, and don’t mind looking for it abroad.
Government Initiatives and Policies: The Nigerian government is empowering The National Agency For Drugs Administration & Control (NAFDAC), to enhance local manufacturing with a policy called Five Plus Five-Year Validity. What this means is that a product registration license is valid for 5 years and by the end of the 4th year of license validity, companies are required to submit draft blueprints of proposed partnerships with Nigerian companies or/and set up local manufacturing plants
From a healthcare access perspective, the Nigeria Health Insurance Authority Act was signed into law in May 2022.
The new law requires all Nigerians to have health insurance and calls for a partnership between the NHIA and state governments, particularly in the accreditation of primary and secondary healthcare facilities.
It prioritizes access to the most vulnerable population through the establishment of a ‘vulnerable group fund,’ (VGF) which is projected to be funded by the Basic Health Care Provision Fund (BHCPF), which is a collection of insurance levies used to cover the premiums of the most vulnerable.
Economic Growth and Increasing Middle Class: Nigeria’s economy has been growing steadily, leading to an expanding middle-class population with higher disposable incomes.
This demographic shift has resulted in increased healthcare spending and demand for better pharmaceutical products and services.
According to Persianas Group, Nigeria’s growing middle-class accounts for approximately 23% of the population and is estimated to have a combined buying power in excess of US$28 billion.
Prevalence of Diseases and Healthcare Challenges: Nigeria faces significant healthcare challenges, including the burden of communicable and non-communicable diseases.
The need to address these health issues drives the demand for pharmaceutical products and medical solutions.
Is Nigeria a good place for multinational pharma companies?
Nigeria offers attractive opportunities for multinational pharmaceutical companies, but it also comes with its share of challenges.
Opportunities in the Pharmaceutical Industry in Nigeria
Large Market Potential and Size
With over 200 million people, Nigeria’s vast population represents a massive market for pharmaceutical companies. The pharmaceutical industry in Nigeria features growing demand for healthcare services and products creating substantial growth potential for multinational players.
Increasing Healthcare Spending and Demand
As Nigeria’s economy continues to improve, healthcare spending is also increasing thereby making the future look better for the pharmaceutical industry in Nigeria. The demand for pharmaceutical products is driven by the growing awareness of health issues and the desire for better medical care.
Incentives for Local Manufacturing
The Nigerian government provides incentives to encourage local pharmaceutical manufacturing. Multinational companies that invest in local production can benefit from these incentives while contributing to the country’s healthcare ecosystem.
Challenges for Multinational Pharma Companies
Unstable Macroeconomic Indices
Nigeria’s economy is largely unstable and can be very unpredictable for foreign investors. One of the key reasons for this is the fact that Nigeria is increasingly a net importer of goods (including pharmaceuticals) hence the perpetual currency devaluation.
Moreover, there is also this issue of 2 parallel forex portals – the official CBN rates on one hand, and the unofficial “black market” rates which, until the new administration, used to be at least 50-60% higher than the former. This brings some complications into business forex planning rates as well as funds repatriation.
However, there is now a lot of optimism with the recent adoption of the currency exchange rate on the Investors & Exporters’ Window.
Regulatory Environment and Complexities
Nigeria’s regulatory environment can be challenging for multinational companies to navigate. The registration and approval processes for pharmaceutical products may be time-consuming and require compliance with specific standards.
Having said that the pharmaceutical industry in Nigeria looks very promising because of its potential in year to come.
Concerns about Counterfeit Drugs
The presence of counterfeit drugs in the pharmaceutical industry in Nigeria is a significant concern. Multinational companies need to establish robust supply chain management and quality control systems to ensure the authenticity of their products.
Possible Solutions to Challenges in the Pharmaceutical Industry in Nigeria
To overcome the challenges faced by the pharmaceutical industry in Nigeria and harness its potential fully, several solutions can be implemented:
Collaboration between Government and Industry Stakeholders: Streamlining regulatory processes and reducing bureaucratic hurdles can expedite the approval of pharmaceutical products.
Additionally, encouraging public-private partnerships (PPPs) for research and development, as well as improving healthcare access through the implementation of the mandatory healthcare insurance act, can foster innovation and strengthen the industry.
Investment in Local Manufacturing Capabilities
Providing tax incentives and subsidies to pharmaceutical companies investing in local production can boost domestic manufacturing. Improving infrastructure, such as power and transportation, will support efficient manufacturing operations.
Combatting Counterfeit Drugs
Implementing advanced tracking and tracing systems can help ensure the authenticity of pharmaceutical products, safeguarding public health. Stronger enforcement and stricter penalties against counterfeiters will deter illegal activities.
Investing in Healthcare Infrastructure and Personnel
Building more healthcare facilities and clinics across the country will improve access to medicine, especially in remote areas. Training and retaining skilled healthcare professionals will enhance the quality of healthcare services.
Promoting Healthcare Education and Awareness
Conducting public health campaigns to raise awareness about the importance of genuine pharmaceutical products will empower consumers to make informed choices. Educating healthcare professionals on drug safety and efficacy will further enhance the healthcare system’s efficiency.
The pharmaceutical industry in Nigeria is poised for significant growth, driven by a large and expanding population, rising healthcare awareness, and supportive government policies.
While challenges exist, such as import dependence and counterfeit drugs, viable solutions, including collaboration, local manufacturing investments, enabling healthcare access, and combating counterfeits, can pave the way for a thriving pharmaceutical industry in Nigeria.
By leveraging opportunities and implementing these solutions, the pharmaceutical sector in Nigeria can play a pivotal role in ensuring the nation’s healthcare needs are met, contributing to improved health outcomes and economic development.