Nigeria Content Online

While the prices of
quoted healthcare (pharmaceutical) companies at the Nigerian Stock
Exchange have seen marginal improvement since transaction opened this
year, trading activities in the sector have reduced significantly in
volume when compared with the sector’s performance last month.

The over 10 million shares that the sector usually record weekly, on the average, has reduced to half.

Apart from the
recent global financial crisis that discouraged investors’ appetite in
the sector and affected market general performance, analysts say the
challenges facing healthcare companies in Nigeria may further
discourage investors’ confidence in the sector.

Available data at
the Exchange showed that only Fidson Healthcare and GlaxoSmithKline out
of the nine quoted stocks in the healthcare sector rewarded their
shareholders last year. Some other companies listed in this sector
include Evans Medical,

May & Baker Nigeria, Neimeth International Pharmaceutical, and Union Diagnostic & Clinical Service.

David Amaechi, an
executive member of the Shareholders Association of Nigeria,
said,”Manufacturing sectors generally have been finding it difficult to
enjoy operation in this kind of harsh operating environment.” Mr
Amaechi said investing in the healthcare companies should be for long
term for investors to get good return on their investment.

Sector challenges

Afrinvest West
Africa Limited, an investment bank, in a healthcare report this month
said that Nigerian health sector has remained “grossly underdeveloped”
in the last five decades despite seeming better off than their African
peers.

“Healthcare delivery in Nigeria is characterised by inefficient budget execution,

inadequate funding,
poor service quality and a shortage of qualified personnel essential to
the delivery of public health services,” the report said, adding that
the absence of effective methods of addressing the healthcare needs of
the people as well as the low levels of government expenditure,
“currently averaging 5.4 per cent of the total budget since 2008” have
contributed to the nation’s “dismal health statistics.” The report also
said that the Nigerian pharmaceuticals sector has consistently been
under utilized, from a capacity perspective, as a result of widespread
counterfeiting, infrastructural challenges and corruption, despite
evident demand for effective drugs. “In spite of the substantial growth
potential within the pharmaceutical and healthcare industry, the
elements of risk and uncertainty that currently subsist, limit
international interest/investment in the sector,” it said.

However, it noted
that the government has demonstrated its “willingness to make the
country self-sufficient” in terms of drug production, by restricting
imports through partial regulatory regimes and tackling counterfeits.
“The federal government’s restructuring of the National Agency for Food
and Drug Administration and Control (NAFDAC) in view of its past
successes has moderately improved confidence in the sector’s reform.”
Nigeria’s pharmaceuticals sector is regulated by NAFDAC.

Data from the
Pharmaceuticals Manufacturers Group of the Manufacturers Association of
Nigeria showed that the local market of pharmaceutical producers
accounted for an estimated 35 per cent of the market size.

Meanwhile, the
report said access to essential medicines is fundamental to the
realisation of the Millennium Development Goals (MDGs). “Despite
government’s noble intentions, poor availability, high cost and
irrational use of essential medicines continue to plague the
pharmaceuticals sector. Efficient provision of essential drugs depends
on appropriate selection, quantification, procurement, quality and
storage, distribution, human resources and information management,” it
added.

Olumide Ajayi, Director of Business School Netherlands
International, said in spite of these challenges, “businesses can still
explore a number of opportunities and develop initiatives and
programmes that will change the landscape of engagement and provide a
better space for businesses to move Nigeria closer to achieving the MDG
targets as it relates to heath.” Healthcare industry watchers say with
the campaign by NAFDAC in the war against counterfeit, fake and
substandard drugs, the healthcare sector will witness growth this year
and quoted companies in the sector can reward their investors
accordingly.