Drug sales slump 50% as Nigerians cut spending, seek cheap substitutes
Pharmacies closing operations
The economic slowdown is hitting Nigerians so hard that they now cannot afford to buy the right drugs that will cure their ailments. This has led to many people resorting to cheaper and sometimes very dangerous substi- tutes, causing many pharmaceutical companies who have seen up to a 50-percent fall in sales to close shop or sell their operations.
“The drop in sales is about 30 to 50 percent in the last two years. Many pharmaceutical stores are doing 50 percent to 70 percent of what they were doing before now,” said Chidi Okoro, founder, Drugs and Medicaments Nigeria Limited, with about 14 retail outlets across Nigeria.
Okoro explained that the pharmaceutical industry responds fast to economic head- winds, as patients and families tend to spend less during times of economic stress.
“People are buying cheap brands because they do not have money. Rather than buy malarial drug for N1,200, they prefer to buy that of N600, which
in turn affects sales. We have a product called Wiper, which is an antimalarial drug. People were not buying it before, but it now sells like hot cake in Onitsha for about N500,” Okoro said.
“Again, people also now go to alternative medicines – herbal and to pastors,” he said.
He pointed out that importers bring in 7C drugs from, say, Czech Republic, to beat the stronger 3Cs from the UK in terms of price, adding that the industry is also trying to control its credit.
“Because retailers are not paying up, wholesalers are also stifling supply. This is one of the reasons why there are empty shelves in pharmaceutical stores,” he added.
A majority of Nigerians now have little or no disposable income, with the Brookings Institute estimating that the country is now the poverty capital of the world, with a record 87 million people living in extreme poverty and 8,000 people sliding into extreme poverty on a daily basis.
But the cheap substitutes also come at a cost, to life and health, experts say.
The patronage of cheap alternatives has negative implications on the health of Nigerians, Okoro said, with the National Agency for Food and Drug Administration and Control (NAFDAC) becoming more of a revenue-generating agency than a regulator.
Ifeh Azih, a biochemist and managing director, Destiny Laboratories, said even though cheap medicines provide short-term relief and partial remedy for patients, they prolong cures of ailments, leading to ultimately death.
“Herbal medicines particularly have serious impact on the kidney, liver and pancreas. In fact, some of them reduce the level of sugar in the blood. I know three people who recently died of this situation. They didn’t know that the medicine was reducing their blood sugar until death,” he said.
Azih added that the economic crunch is forcing Nigerians to change doctors’ prescriptions, disclosing that many citizens are now priced out of essential drugs, which has serious impact on health.
The unemployment rate in Nigeria increased to 23.10 percent in the third quarter of 2018, from 18.8 percent in the second quarter, according to the latest figure from the National Bureau of Statistics (NBS). Minimum wage is N18,000 ($50) and has remained so since 2011. Inflation rate at 11.28 percent erodes income, just as misery index, a metrics used in ascertaining how well an average citizen lives, is 34.4 percent.
“People no longer demand for drugs like they used to,” said Onocha Emeka, a pharmacist at Novelette Pharmacy. “Even those that purchase medicines prefer to go for cheaper brands.”
Pharmaceutical companies listed on the Nigerian Stock Exchange (NSE) are also being impacted as some saw a decline in revenues in their most recent third quarter (Q3) results.
May & Baker revenues fell 5.4 percent to N6.54 billion in September 2018, from N6.92 billion a year earlier.
Morison Industries Plc, another drug maker, saw a 31-percent slump in revenues to N90.96 million in September 2018, from N131.2 million a year earlier, while Pharma-deko revenues fell to N811 million in the same period from N1.1 billion in 2017, a 27-percent drop.
“The challenges of pharmaceutical companies reflect the problems facing the industry. Patronage is key and remains a challenge,” Okey Akpa, chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (MAN), told Businessday.
Major players in the pharmaceutical sector are struggling to sustain production to pre-2015 levels.
Already, Swiss Pharma has been bought by an investor after experi- encing early struggles, while Evans Medicals has gone under. Incidentally, these two drug makers got the World Health Organisation (WHO) prequalification, which ordinarily should raise the level of their competitiveness. The pharmaceutical industry depends on imports for over 50 percent of its raw materials even as patronage remains a major hurdle.
A pharmacist who spoke on condition of anonymity said the demand for drugs last year was low. According to him, some of the drugs patients bought were from doctors’ prescription while others were selfmedication.
“There has been a decrease in the sales of drugs. The degree of drop is significant. I make average sales of N70,000 daily, but it was far more than this before now,” the pharmacist said.
He said the low patronage witnessed is not because of rising drug prices as prices have remained stable; rather, it is a result of the general economic challenge in the country.
Real household consumption and government consumption expenditures declined in 2017 (at -0.99 percent) while national disposable income fell by 1.52 percent, according to NBS data.
Abdul Samad Rabiu (3rd r), chairman, Cement Company of Northern Nigeria (CCNN); Oscar Onyema (3rd l), CEO, Nigeria Stock Exchange (NSE), and other directors of the CCNN, Finn Arnoldsen (l); Chimaobi Madukwe (2nd l); Kabiru Rabiu (2nd r), and Ahmed Aliyu, company secretary, CCNN, during the ringing of the closing gong on the floor of the NSE to mark the end of trading and commemorate the successful completion of the Ccnn/kalambaina Cement Merger in Lagos. Pic by Olawale Amoo