Nigeria's pharmaceutical market remains attractive this quarter due to the country's positive macroeconomic growth outlook, increasing investment from the private healthcare sector and the government's desire to improve healthcare access. Rising demand for medicines will see drugmakers increase their presence and continue to expand. However, ructions within the ruling party, poor drug patent protection and the likelihood of further divestment in the oil and gas sector could have a negative impact on our projections.
Headline Expenditure Projections
- Pharmaceuticals: NGN203.66bn (US$1.28bn) in 2013 to NGN235.40bn (US$1.45bn) in 2014; +15.6% in local currency terms and +13.2% in US dollar terms.
- Healthcare: NGN2,590.9bn (US$16.28bn) in 2013 to NGN2,954.2bn (US$18.18bn) in 2014; +14.0% in local currency terms and +11.7% in US dollar terms.
In Q214, Nigeria maintains its Q114 Pharmaceutical Risk/Reward Rating (RRR) score of 38.3 out of 100, although it dropped one place from 18th position to 19th position in the Middle East and Africa matrix. Nigeria is regarded as a low-reward, high-risk proposition for multinationals due to drug counterfeiting, corruption and poor pharmaceutical regulations governing the market.
Key Trends And Developments
The Pharmaceutical Export Promotion Council of India (Pharmexcil) will build a warehouse facility for Indian pharmaceutical exporters in Lagos, Nigeria. The move follows India's Ministry of Commerce's initiative in 2013 to enable small- and medium-sized drugmakers to save logistic costs and enhance security, power back-up facilities, and internal logistics in Nigeria. Following the success of this facility, Pharmexcil plans to establish similar warehouses in other African and Latin American countries.
Nigeria's National Agency for Food and Drug Administration and Control (NAFDAC) and the Pharmacy Board of Sierra Leone have signed a Memorandum of Understanding (MoU) to control the circulation and cross-border trafficking of counterfeit medicines in West Africa. The MoU aims to promote bilateral trade relations between Nigeria and Sierra Leone, particularly for pharmaceutical and related products. Nigeriabased medicine manufacturers are allowed to enter Sierra Leone's pharmaceutical market to sell their products, while their counterparts in Sierra Leone are permitted to do the same in Nigeria, according to NAFDAC Director General Paul Orhii.
Nigeria's private sector operators have collaborated to form a coalition, dubbed Private Sector Health Alliance of Nigeria (PHN). This aims to accelerate the country's progress in achieving its health-related Millenium Development Goals (MDGs) by 2015 and beyond. The coalition is likely to use the widespread presence of the Nigerian private health sector, which represents at least 60% of medical services in the country, across all income groups to achieve its objectives. The country has eight MDGs, of which three are health related. The health-related MDGs are to decrease child mortality rate, improve maternal health and to fight HIV/AIDS, malaria and other diseases.
BMI Economic View: Although we maintain our view that the Nigerian economy will grow by a robust 7.2% in 2014, we note that downside risks have increased over recent months. Specifically, ructions within the ruling party and the uncertainty surrounding the identity of the central bank governor are both issues which could destabilise the economy.
BMI Political View: The defection of 37 members of the House of Representatives from the People's Democratic Party (PDP) to the opposition All Progressives' Congress (APC) deprives the ruling party of its lower house majority for the first time and indicates that its woes are worsening. The challenge for President Goodluck Jonathan and his advisors will be to stop the haemorrhaging of members and to regalvanise the party ahead of the 2015 elections.