For nearly 25 years, Fidson Healthcare Plc is relentlessly pursuing its goal of becoming the dominant player in the pharmaceutical sector in Nigeria. It has built an organizational framework that has helped it gain ascendancy in the Nigerian pharmaceutical industry. At Sango Ota, Ogun State, the company is currently championing a progressive pathway for the industry, with its recently commissioned World Health Organization (WHO)-compliant manufacturing facility and best-in-class equipment installed.
Nigeria, with a population estimated at over 200 million and an average annual growth rate of 2.6% making her the 7th most populated country in the world, is troubled with poverty, diseases, malnutrition and other social security issues. The demand for quality and affordable healthcare solutions for this population puts great pressure on available resources – requiring improvements and upgrades.
The pharmaceutical sector of any economy plays a prominent role in the general health of citizens residing in the country. Nigeria is not an exception. Despite being recently hailed as Africa’s next frontier for pharma after South Africa and the hotspots of Northern Africa based on a spark of industry and economic growth, the Nigerian health sector is still far from living up to the expectation of the teeming population, hence rated by the World Health Organisation (WHO) 187th out of 191 members due to shortage of standard equipment for production and storage of pharmaceuticals, amongst other factors.
Despite the existence of these and other challenges, there are flashes of hope as the industry continues to grow steadily and appreciably based on the collaborative efforts of the key industry players, regulatory bodies and government. This has spurred investment in local production of pharmaceuticals with the aim of promoting self-sufficiency and national security for medicines. Existing pharmaceutical companies are also developing local industrial capacity with a global standard in a view to earning foreign exchange through exportation of domestically manufactured medicines and of course creating new jobs.
Currently estimated at about $1.3 billion, several economic analyses (including Mckinsey industry analysis, 2017) have indicated that the value of the Nigerian pharma market could rise by as much as 9 per cent annually over the next ten years to reach $3.6 billion by 2026. Over the same period, Nigeria could contribute between $1.9 billion and $2.2 billion to pharma sales growth, 55 per cent of it from prescription drugs.
As part of its strategic initiative to harness this market potential, Fidson completed its ₦10 billion investment in 2016 and began full operations in 2017. This plant is at the forefront of the company’s growth strategy and was built to consolidate its manufacturing capabilities, increase revenue and returns to shareholders, and ultimately reinforce the company’s eminent position in the Nigerian pharmaceuticals market.
The new formulation plant is one of the most sophisticated manufacturing facilities in West Africa and more than doubled the company’s previous capacity—enabling it to grow sales volume and meet the rising demand for medicines in Nigeria and broader West African region. The manufacturing plant includes facilities for seven production lines: eye and ear drops, intravenous (IV) fluids, tablets, capsules, liquids, cream/ointments, and dry powder. Within the company’s production lines are products targeting specific therapeutic areas including anti-infectives, gastrointestinal, anti-retroviral, anti-malarial, cardiovascular, analgesic, hematinic, and supplementation products to name a few. IV fluids are some of the company’s new products and the product group positions this company to strategically bridge the supply gap and high demand in the life-saving infusion products sub-market.
Over 25 new products were introduced in different therapeutic areas and across all product lines in 2018, focusing on addressing the needs of the low-income demography of the consumer market.
Speaking during a chat with newsmen in Lagos recently, Fidson’s Managing Director/CEO, Dr Fidelis Ayebae, said the present position of the country’s pharmaceutical industry requires such investments to ensure access to quality products by Nigerians. He also noted that with the factory’s potential being harnessed, the company is assured of a competitive edge that will not only see it deliver better quality and more affordable medicines, it will also generate more employment, increase local content, foster stronger local and international partnerships, as well as consolidate the company’s strategic brand and market positioning.
Meanwhile, the significant competitive advantage of the new facility is already evident after 2 years in operation. Fidson has experienced revenue growth from ₦7.6 billion in 2016 to ₦14 billion in 2017. The contribution of new products (including IV fluids) to Fidson’s turnover was about 10%.
The factory has also earned the company a 3-year tax holiday approved by the Nigerian Investment Promotion Commission (NIPC). Fidson is one of the nine recent beneficiary-companies granted approval for Pioneer Status Incentive (PSI) with an investment totalling ₦277.4 billion in the fourth quarter of 2018 and the creation of 1,733 direct jobs in the period under review.
Other growth indicators are also evident in the company’s proven track record of returns. Fidson has paid out N1.9 billion as dividends to its shareholders in the last 10 years, implying an average dividend yield of 6.5%. The company is also taking advantage of the attractive industry dynamics to position itself for sustainable growth, particularly with the growing prevalence of lifestyle diseases amongst Nigeria’s large and increasingly urbanized population. The increasing preference of the Nigerian government and populace for local products in purchase decisions is also driving demand in the local pharmaceutical industry and Fidson’s diverse and growing product portfolio puts it in good stead for consideration and patronage.
Regulatory harmonization in West Africa and trade incentives for pharmaceuticals are also other attractive industry dynamics to be considered. These, alongside the growth of health insurance in Nigeria, which is offering more people the opportunity to access healthcare over the long term are clear signals of a brighter future for any company that is well positioned to harness these potentials.
Fidson’s proven management and sales team as well as strong local and international partnerships also give the company an edge over the competition. These ensure the company’s ability to be dynamic and deliver quality merchandise across its marketing value chain comprising government healthcare facilities, private hospitals, pharmaceuticals distributors, and retail pharmacies. To develop and access this network, the company recruits only suitable professionals and makes sizeable investments to train and empower them.
Shedding some light to the future of the organization, Dr Ayebae painted a broad picture of where he expects the firm to be in ten years.
“In 10 years, we would have tripled in both top and bottom lines. We would be an exporting company ten years from now and I am sure we would have discovered one or two proprietary medicines as part of our research and development efforts and collaborations. We would be the first full-fledged research and development-based indigenous manufacturing company in Nigeria.”
The company is currently recapitalizing its business to take advantage of the many opportunities in the Nigerian market. It is giving its shareholders and investors the opportunity to reinvest in the business via a 1 for 2 Rights Issue that closes on April 9th, 2019. The proceeds of the equity raise will be used to repay expensive debts that are sitting in the company’s balance sheet and fund working capital. This will ultimately reduce the company’s finance cost and provide the much-needed working capital funds to actualize its growth aspirations and access opportunities in the market.
The future remains bright for Fidson as well as the country’s pharmaceutical sector and the company is primed to take advantage of this.