The Managing Director/Chief Executive Officer of Fidson Healthcare Plc, Fidelis Ayebae, speaks with SADE OGUNTOLA on the skyrocketing price of pharmaceutical drugs in the country and other related issues.
What is your take on the escalating cost of medications in Nigeria? For instance, in a matter of only a few months, the price of a pack of antibiotics jumped from N10,000 to N40,000.
It is surprising that talks are focused more on the escalating cost of medicines, even though the price of every other commodity is going up. Why is it only drugs, which are one of the most important components of good health, that we also spend money on, like every other thing that people are complaining about? There are other items, whose prices are going up in the face of the devaluation of the naira, a terrible inflationary rate, the lack of availability of forex, and mounting costs. In all of these, what are manufacturers supposed to do?
Well, Nigerians believe that manufacturers of pharmaceutical drugs should be able to tell them exactly what is going on.
The cost of every commodity that we purchase in dollar terms has remained stable. But the macroeconomic situation in Nigeria is causing problems for everybody. The dollar has moved up to over a thousand naira. The official dollar exchange rate is about 800 naira, but you cannot get the official dollar to purchase anywhere. It does not exist. Now, the pegged official rate was N422; it is now at N800.
So, that simply means that the duty that you are paying, which is constant, remains the same. But because the official rate has moved from N422 to N800, the duty component has also increased. VAT has increased. The cost of all the inputs—electricity and diesel—has also increased. There is not a single input for production that has not increased. In fact, the question that the people should be asking is why salaries are as low as they are. If you now add the salaries of staff, the cost of production is going to go up more. I don’t know why the media and the general public are asking questions about the high cost of medications.
A pharmacist insinuated that the cost of drugs is high because many pharmaceutical companies have stopped importing medicines and are therefore rationing what they have in stock. Is this true?
That is entirely untrue. Whoever told you that does not know the dynamics of manufacturing. Every single manufacturer has raw material and packaging material stocked up at any given time for three months. But they only manufacture when there is a demand, and they have buffer stock available in their warehouses. The truth is that demand has dropped. Demand is dwindling. You see, let me tell you the problem with Nigeria that I see: we like to magnify little things. Since GSK left the country, there are brands that GSK sells, and their costs have gone up because those brands are no longer available in the market. There is no doubt that these are the gold standards for pharmaceutical products.
But the truth is that the generic forms of those brands do exactly the same thing as those brands. So, why are the consumers fixated or hell-bent on buying GSK products whose prices have gone up by 300 percent, some by 500 percent in some cases, when the generic brands are lying on the shelf and not patronised? If we don’t patronise brands with international names, we are always not pleased.
There is the belief that generic brands are as good as the branded ones, the so-called gold standards for pharmaceutical products? But is the effectiveness the same?
Pharmacologically speaking, there is only one standard for any drug. If it is paracetamol, it is paracetamol, irrespective of its manufacturer. They will work the same way, except that the manufacturer does not add the correct amount of the active ingredient. For example, if the product is supposed to contain 500 milligrammes of its active ingredient and the manufacturer only uses 300 milligrammes, then it will not be as efficacious as having 500 milligrammes in the product. But you can never see a local manufacturer do that. You can only see that with imported generics because local manufacturers are so strictly regulated by NAFDAC.
The economy is responsible for all the mess in Nigeria. It has nothing to do with an importer, the manufacturer, or the ordinary Nigerian on the street. It has nothing to do with them. The politicians have managed the country to a grinding halt. And for as long as the macroeconomic issues that surround Nigeria are not resolved, we will continue to have these problems. Don’t let us beat around the bush. So, let us look for the exact problem and tackle it appropriately.
If you are saying that the generic brands made in Nigeria are still of good quality, many people have the impression that many Nigerian pharmaceutical companies in the country have folded up, and that some of them only come in to assemble, and not manufacture. What was your take on that?
Before saying they assemble, Nigerians should visit these pharmaceutical companies to see what is going on in these companies and to understand what manufacturing is; what is called manufacturing in India, the United Kingdom, or the United States is exactly what we are doing in Nigeria. The problem is that we have refused to educate ourselves. If the journalists are interested in knowing and seeing products running, please, organise yourselves, or even if it is you alone, I will give you a tour of as many factories as you want in Nigeria to prove the point.
So, it is not true that the pharmaceutical companies in Nigeria are folding up?
The pharmaceutical companies in Nigeria are not folding up. The pharmaceutical companies in Nigeria are having problems, like every other industry, with accessing forex. So, therefore, their daily production may have been reduced in some cases, but not in all. Fidson Pharmaceuticals is running 24 hours a day, manufacturing pharmaceutical products for Nigerians. If you want to go and visit my factory, I will make an arrangement for you to be there to see how manufacturing is done from the beginning to the end of tablets.
Now, let me tell you why the quality of products cannot be different. There is no manufacturer that has his or her own formulation for a drug. We all get our formulation from what is known as a pharmacopoeia, or drug formulation pharmacopoeia. There are about four or five pharmacopoeias, and some countries also have their own. But all are derived from the same source, which is the British pharmacopoeia, which is called BP. So, there is the British pharmacopoeia; we also have the Indian pharmacopoeia, as well as the United States pharmacopoeia (USP); we have that for the European Union; and so on and so forth.
The standard for every drug in these pharmacopoeias is the same. This is because human physiology is exactly the same, whether black, white, Chinese, or Indian. So, the paracetamol that a Chinese man takes is not different from the paracetamol that a Nigerian takes. Therefore, the standards are the same.
It is only when you have people producing spurious products, but I can vouch that you will not get it from a pharmaceutical manufacturer in Nigeria because we are so closely monitored and nobody wants to make blood money, anyway. If you are producing spurious products and making money from people’s lives, that is blood money. My door is open to being given education on drug manufacturing, including a visit to a drug manufacturing plant.
But Nigerians are the cause of their own problems. You see, people must cut their clothes according to their sizes. When the economy is good and you are making money, you can buy branded products. But when the economy is low and your purchasing power is dwindling, what stops you from buying generic products? Why would anybody go and buy an augmenting for as much as N80,000 when there are generics of the same product doing the same thing that are going for N10,000? So, I do not understand why this should be an issue.
But many Nigerians buy drugs based on the products’ names, believing that they are buying quality medications. Is that supposed to be a problem?
We are all educated; for example, if you go to the hospital, when you get your prescriptions, they will not prescribe a branded product for you. No, they will write down the chemical compound you need. If you now choose to go and buy a branded product, do you blame the doctor or do you blame the pharmaceutical manufacturer for your choice? No, because the doctor who has given that prescription, written the chemical compound, and given you the name of the chemical compound knows that any product that is produced with that same chemical compound is as good as the branded products, which are known to be the gold standard.
So, we are the determinants of what we buy, and then we complain. If Nigerians don’t support Nigerian products, we are the losers, and we have ourselves to blame. If you come to my family, we don’t use branded products. We use products manufactured by Fidson. If that product is not being manufactured by Fidson because I don’t have the brand, I will buy the one made by Emzor or other pharmaceutical companies manufacturing in Nigeria. I won’t be looking for GSK or Bayer products or the other imported brands that many Nigerians clamour to buy. The money many don’t have, they end up dashing out because of the choices of medicines they prefer to purchase.
How can Nigerians be re-oriented to have a good understanding of what to do and stop getting disturbed by the cost of imported brands?
I am tired of explaining to Nigerians to believe in Nigeria, to trust Nigeria, to buy Nigeria, and to support Nigeria. Fidson, for example, has 1,560 staff. The least paid person in Fidson earns N70,000, and you eat one square meal free. That is a lot of money. Nigeria’s minimum wage is N30,000. Nigerians are not supporting products from that factory. And they are looking for brands like Pfizer. Nigerian companies, too, should survive. If you employ 1,560 staff, that means that you are feeding over 10,000 families in Nigeria every day. But yet, they are not supporting such establishments but are busy looking for products that, after sales, will be repatriated back to their country.
The current administration in the country is young. What should be done to revitalise the pharmaceutical and health sectors?
You see, the pharmaceutical sector or the health sector is not dead. All it needs is sustainability. It is the vitality that is lost that you now need to restore. It is only due to the in-availability of forex and the devaluation of the naira. The naira has been so battered that the consumer does not have sufficient out-of-pocket money to buy their daily needs. The manufacturer is also suffering because the cost of his input has more than doubled.
Therefore, all he is trying to do is draw back his costs, not even make a profit now. Nobody is even making a profit, including in other industries like breweries. Nobody is able to make a profit because even recovering our costs is a problem. Because you cannot pass on those costs the way they have come to you. And I can tell you the cost. The cost of gasoline has gone up. The cost of diesel and gas that are used for power has gone up. In sane countries, nobody buys a generator to power a factory. Everybody uses public electricity because it is easily available. It is more expensive to put up a factory in Nigeria; it is two times more expensive to put up a factory in Nigeria than it is anywhere else in the world because we don’t manufacture anything. Everything that you use in building that factory is imported.
After you have now put up the factory and everything that you require to manufacture, I am not complaining; I am simply telling you the conundrum. Now, when you have now put up the factory, which is two times the cost as it will be elsewhere, you are also now producing that product at almost twice the cost. So, therefore, when you go to other countries and other cultures, pharmaceutical companies are as big as banks, if not bigger; Pfizer, Johnson & Johnson, GSK, etc, are bigger than banks. But when you come to Nigeria, pharmaceutical companies are small despite all the efforts. So, revitalisation is not the first thing that Nigeria needs; it is stability in the macroeconomy so that people can plan and also have access to forex.
Like I was saying, all the costs have gone up, and that is why we are at this point. Factories already have their installed capacity, but the underutilization of these capacities as a result of the unavailability of forex means that there is a seemingly disruptive disruption of the entire process. But these machines are there; the machines are not dead, and the factories are not dead because their doors are open. The second thing is that the macroeconomic issues that had come into Nigeria between May and now have made it important or necessary for companies to seek additional working capital because if your entire working capital was able to buy, say, $1 million before May 29, if you still have that entire working capital, that capital can only buy $400,000. From $1 million, it has come down to $400,000. It now means that you have a gap of $600,000 to fill. The only way you can do that is to bring in additional working capital by taking out a loan. Now, when you take a loan, you are now faced with a situation because the loan that you used to take at between 13% and 15% interest has now gone up to between 18 percent and 25 percent. So, the issues are many. So until the government finds a solution to stabilising the cost of the economy, reversing inflation, and bringing back forex and dollars into our country, we will continue to have this problem. This is how, gradually, the economies of such countries as Zimbabwe, Somalia, and Afghanistan became what they are today. Let’s think about what the exchange rate was 20 years ago, what it was then, and what it is now. There is no year when you wake up and find that Nigeria’s economy has been better. The dollar has gone from when I was born 66 years ago, where the naira was 80k to one dollar, and has now become 1,000 naira plus one dollar. Where does that happen, and what do people expect in the face of the fact that the cost of consumer products, or healthcare products, will not go down? How is that possible? Are industries supposed to subsidise the consumption of Nigerians when the government is not subsidising the consumption of anybody? This dilemma is the same as the ordinary housewife has. Today, her husband gives her N100,000, for example, for a month for a family of four. But that amount 10 years ago was a luxury. But now, that same amount cannot keep the family away for two weeks. So this is the challenge. It’s a macro-economic challenge. And until the macroeconomy is fixed, we will continue to have an escalation in the costs of all items, not just medicines.
Talking about pharmaceutical companies, do we have any currently manufacturing in Nigeria?
There are 185 to 190 manufacturers of pharmaceutical products in Nigeria, and each of them is manufacturing their products from the beginning to the end.
But it is said that pharmaceutical companies merely bring in the active pharmaceutical ingredients (APIs); that we don’t manufacture anything here; that everything is imported in the form of raw materials, except water, before they are either combined or packed?
Yes, there is nowhere in the world where APIs are not brought in; the manufacture of APIs is a different process. So, the person who is making finished products cannot manufacture API. For example, paracetamol tablets are a combination of about five to six other chemical compounds. It is when you combine those five or six chemical compounds under a process that you know as cracking in a reactor that those chemical compounds will fuse together, their nature will change, and it will become paracetamol. So, that is a different industry; the API industry is a completely different industry. It is the beginning of the pharmaceutical industry; without APIs, you cannot have a pharmaceutical industry. Even India, which manufactures 50 percent of the world’s pharmaceutical needs, imports APIs, and they also manufacture APIs in the country.
It is only in Nigeria that we do not have an API plant yet. So, you must necessarily import everything that you want to use. That is why they are called finished formulations. API is the beginning, and where API stops is where the finished formulation begins.
So, most industries that work with APIs are different from those that work with finished formulations? Is that the case?
Anywhere in the world, nobody combines it because the investments are different, but somebody can have it. You can have an API plant somewhere, and then you have a finished formulation plant elsewhere. That is a possibility. Medicine is life, and that is why people must be prepared to keep their lives going and be ready to pay more for medicines, especially now.
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