Boosting bilateral co-operation between Nigerian buyers and Indian drugmakers will directly obstruct the Nigerian government's goal to increase self-sufficiency in medicines production. We do not believe implementing a selected import ban on pharmaceuticals should be considered by the government as a means of reducing import reliance. Evidently, it would lead to shortages in medicine supplies. However, in light of evidence that fixed capital investments may have been increasing over the last five years, we believe the government should encourage joint ventures and technology transfer obligations between local and Indian companies. This will make gradual headway towards improving self-sufficiency.
Headline Expenditure Projections
- Pharmaceuticals: NGN167.6bn (US$1.06bn) in 2012 to NGN193.1bn (US$1.22bn) in 2013; +15.2% in local currency terms and +15.8% in US dollar terms. Forecasts revised upwards due to modifications to historical figures.
- Healthcare: NGN2,313.9bn (US$14.6bn) in 2012 to NGN2,608.3bn (US$16.5bn) in 2013; +12.7% in local currency terms and +13.3% in US dollar terms. Forecasts revised upwards due to modifications to historical figures.
Risk/Reward Rating: Out of the 30 countries BMI covers in its Middle East and Africa Risk/Reward Ratings matrix, which evaluates a country's pharmaceutical market attractiveness to multinational investment, Nigeria ranks 21st with an overall score of 37.8 out of 100. This score positions the country in the bottom tier of the 10 least attractive investment opportunities in the region. Nigeria is regarded as a lowreward, high-risk proposition for multinationals because of drug counterfeiting, corruption and poor pharmaceutical regulations in the market.
Key Trends And Developments
After a two-year development plan between the National Agency for Food and Drug Administration and Control (NAFDAC) and the World Health Organization (WHO), established in April 2011, to help domestic drugmakers raise the standard of locally produced medicines, the WHO is expected to give prequalification status to three local drug companies on a visit to the country in April 2013. The companies - Swipha, CHI Pharmaceuticals and Evans/May & Baker - are expected to receive certification for good manufacturing practice during the visit.
In March 2013, at the third annual Indian Pharma Exhibition and Buyer-Seller Meet in Nigeria, approximately 60 Indian pharmaceutical companies arrived in Lagos and were met by 700 pharmaceutical buyers, to display their latest range of pharmaceutical products. During the exhibition it was announced that the value of Indian pharmaceuticals exported to Nigeria increased by 37% to US$307mn in the financial year ending in March 2012. In February 2013, NAFDAC approved a SMS-based medicine authentication system developed by US-based PharmaSecure. The approval is based on a pilot that showed the effectiveness of the system. The company is helping domestic and global pharmaceutical companies to meet NAFDAC's need for coding anti-malarials and antibiotics. PharmaSecure is the fourth company present in the telemedicine market in Nigeria. Other companies active in the SMS-based authentication technology include Sproxil, Kezzler and mPedigree, the latter of which launched a mobile-based technology to tackle counterfeit drugs in January 2013.
The Nigerian government allocated NGN279bn (US$1.8bn) towards the healthcare sector from its 2013 budget, which equates to 5.7% of the total. The 2013 budget allocation equates to NGN1,680 (US$11) per capita - significantly below the WHO's recommendation of NGN6,908 (US$44). The 2013 budgetary allocation to healthcare delivery will see 77% spent on paying personnel, 20% on capital expenditure and 3% to cover overheads incurred.
BMI Economic View: We expect that growth in 2013 will be more rapid than that in 2012, but is likely to be hampered to some degree by ongoing concerns about security, legislation, and lacklustre production in key sectors. We are forecasting real GDP expansion of 6.7% in 2013, which we expect will increase to 7.2% in 2014.
BMI Political View: Four of Nigeria's principal opposition parties have announced a merger into a new party, which may prove a worthy challenger for the dominant People's Democratic Party. However, this will depend on a reconciliation of internal divisions and alignment of policies on various issues facing the country.