• Firm to work with SEC on shareholders’ compensation• Concerns as more pharmaceutical firms may follow
• Firm to work with SEC on shareholders’ compensation
• Concerns as more pharmaceutical firms may follow
• Shareholders urge new govt to rev up ease of doing business
Nigerians were yesterday greeted with the news that GlaxoSmithKline Consumer Nigeria Plc, popularly known as GSK, has totally pulled out all its operations from Nigeria.
The parent body, GSK UK Group, informed GlaxoSmithKline Consumer Nigeria Plc of its strategic intent to cease commercialisation of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products.
The Chairman of the Nigerian company, Mr Edmund Onuzo, had at the last yearly general meeting in June, given indications about the gloomy future of the company in Nigeria.
Reacting to fears about the future outlook of the company, Onuzo said, “While we expect sustained economic growth in 2023, we cannot overlook some factors which must be duly considered in this quest for economic growth and development in Nigeria. The factors include foreign exchange availability for businesses, insecurity, unemployment, and high cost of doing business, coupled with the uncertainty around fuel subsidy removal.
“The challenges ahead are quite significant, as some of you may have read reports from a few media houses regarding the supply constraints on GSK drugs in the market, we must mention that it continues to be very challenging with foreign exchange non-availability affecting our ability to settle foreign currency denominated trade payables with product suppliers.”
According to a statement by GSK, the Haleon Group has also separately informed the Board of its intent to terminate its distribution agreement in the coming months and to appoint a third-party distributor in Nigeria for the supply of its consumer healthcare products.
It noted: “For the above reasons, and having, together with GSK UK evaluated various other options, the Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations. Today, we are briefing our employees whom we will treat fairly, respectfully and with care, meeting all applicable legal and consultation requirements.”
On what happens to the shareholders and their shares quoted on the Nigeria Stock Exchange, the statement said: “The Board is conscious that shareholders will have many questions; we have been working assiduously with our professional advisors to agree on next steps and we will be shortly submitting to the Securities and Exchange Commission (SEC) a draft Scheme of Arrangement, which may, if approved, see shareholders other than GSK UK, receive an accelerated cash distribution and return of capital.”
It further explained: “In the meantime, however, we cannot give you assurance of the final terms of any scheme, or that any scheme will be approved by SEC or by shareholders.”
GSK advised shareholders to seek professional advice and continue to exercise caution when dealing in the company’s shares until a further announcement is made.
Reacting to GSK’s ceasing of operations in Nigeria, Chairman, Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria (PMGMAN) and Managing Director, Daily Need Industries Limited, Tosin Jolayemi, told The Guardian, yesterday: “I don’t have enough information to comment on the pulling out of GSK. However, GSK is one of the most experienced pharmaceutical manufacturers and marketing companies worldwide, and the pulling out cannot be good for Nigeria. The technical know-how, marketing experience, and model being shadowed by Nigerian local manufacturers would not be readily available.”
Meanwhile, GSK’s ceasing of operations in Nigeria may not be unconnected with recent warnings by pharmacists under the aegis of Industrial Pharmacists of Nigeria (NAIP) and Association of Community Pharmacist of Nigeria (ACPN) for Nigerians to brace up for scarcity of essential and non-essential/prescription drugs as prices soar by over 300 per cent due to devaluation of naira.
They attributed the acute inadequacy of local manufacturers to an unconducive working environment. Also, pharmacists had, in June, lamented the scarcity of drugs produced by GlaxoSmithKline in Nigeria. They said the scarcity was due to supply chain shortage, shortage of foreign exchange, and the impact of COVID-19.
President of the Association of Community Pharmacists of Nigeria, Adewale Oladigbolu, said the scarcity is due to supply chain shocks and the impact of COVID-19.
“There is a relative scarcity of GSK drugs and other products from other companies. That of GSK is pronounced because they are marketers of products that are widely known and widely used,” he said.
Oladigbolu said the scarcity is having a significant impact on patient care. “The products have gone up by more than 300 per cent as against what we used to sell, and those products are not readily available. Anytime patients need to use the innovator brand, the patients will have to pay more, but there are generic equivalents of those products, but all over the world, people tend to align with the innovator products.
“If the scarcity continues, it can even lead to the death of patients,” he lamented. Also, chairman of the Lagos State branch of the Pharmaceutical Society of Nigeria, Gbolagade Iyiola, said drugs like Ventolin, Augmentin, Seretide, Cervarix (for HPV vaccine), Duodart, Zinnat, Ampiclox made by GSK are scarce in the country.
“It is basically a forex challenge; the scarcity of forex is the major problem. Almost all their products are scarce. Duodart has been scarce in the last three months. Augmentin and Zinnat, which are in tablets and syrups, are scarce.
“For instance, we used to buy Ventolin at N1, 200 and we sell to other pharmacies at N1, 800, but with the scarcity now, Ventolin is now about N3, 000 or N3, 500. Since there is increased in demand and there is reduced supply, the prices are going up.”
Iyiola said unscrupulous manufacturers might take advantage of the scarcity and deliberately produce poor-quality drugs to the detriment of patients.
MEANWHILE, shareholders have renewed calls for government to adopt a holistic strategy that would accelerate commitment to the ease of doing business and address the impact of the nation’s struggling economy on manufacturing firms listed on the Nigerian Exchange Limited (NGX).
The investors, who spoke in a chat with The Guardian expressed worry on the huge capital flight and the number of companies delisted from the exchange within the period amid general downturn in economic activities.
According to them, the dwindling fortunes of these firms were attributed to rising cost of operations and loss of competitive edge in manufacturing and marketing of consumer goods as many of them had weak domestic bases and relied excessively on importation to survive.
Indeed, the manufacturing sector is faced with myriads of problems ranging from scarcity of forex, high-interest rate and cost of raw materials, to unfavourable policies.
Others are parlous state of infrastructure, poor access roads to the ports, with the associated traffic gridlock, as well as activities of multiple government agencies at the terminals, which have all contributed to the current negative position of the manufacturing industry.
guardian.ng