GlaxoSmithKline Consumer Nigeria Plc plans to broaden its range of health-care products and widen distribution to boost sales after the disposal of its soft drinks business to Japan’s Suntory Beverage & Food Ltd. slashed its revenue.
The unit of the United Kingdom’s biggest drugmaker will sell new variants of brands such as Panadol painkillers and Sensodyne toothpaste in Africa’s most populous country from next year, Managing Director Dayanand Sriram said in a Nov. 24 interview at the company’s headquarters in Lagos. It will also ramp up the effort to boost sales of Glaxo’s pharmaceutical products, he said.
“Half the revenue has gone,” Sriram said. “We hope to build the consumer healthcare portfolio aggressively in the next three to five years.”
Bloomberg said Glaxo Nigeria is mapping out a new phase of growth after selling the local rights to Lucozade and Ribena to focus on health care and to reduce the need for U.S. dollars. Nigerian companies are struggling to access international currencies to pay for imported goods, and the disposal reduces the drugmaker’s foreign exchange needs by about 40 percent, Sriram said. London-based parent Glaxo agreed to the sale of the global drinks brands to Suntory three years ago.
Glaxo Nigeria plans to buy more raw materials and packaging products locally to further reduce the need for foreign currency and plans to manufacture Sensodyne and the Cold and Catarrh variant of Panadol in the country next year, the managing director said.
Nigeria imposed a peg on the naira in early 2015 as part of controls to protect the local currency and conserve reserves in response to the plunging price of oil. The move starved lenders of foreign exchange, and although the regulator let the naira float in June most businesses are still struggling to buy the U.S currency as foreign investors that exited the country are yet to return.
The slump in oil and shortages of foreign currency and power could cause the economy to shrink 1.7 percent this year, according to the International Monetary Fund. That would be Nigeria’s first full-year contraction since 1991.
Glaxo Nigeria reported a loss of 4 billion naira ($13 million) for the nine months through Sept. 30 compared with a profit of 486 million naira in the previous year, it said in an Oct. 28 filing to the Nigerian Stock Exchange. Revenue dropped by 11 percent to 20.5 billion naira.
The stock has declined 58 percent this year, compared with a 12 percent fall on the Nigerian Stock Exchange Main Board Index in Lagos. The shares were little-changed at 14 naira at the close of trading in Lagos.
Even as the company struggles, Sriram is optimistic the economy will resume growth if the government develops infrastructure such as power plants and said the West African nation’s population of 180 million people is a motivation to continue to invest in the country.
Some of the drug variants Glaxo plans to launch in the West African nation are “in the product testing phase, some in registration phase and some in local manufacturing feasibility phase,’’ according to the Sriram.
“The population is the biggest driver for our future consumption growth,’’ he said. “As lifestyle improves, health care improves.’’