Fidson Healthcare remains profitable amid sector doldrums

Fidson Healthcare, a leading pharmaceutical firm in Africa largest economy has continued to remain profitable in a sector hobbled by tough operating and macro conditions.

For the first nine months through September 2015, Fidson’s net income increased by 2 percent to N473.48 million, from N466.48 million last year.

Despite the current capacity utilisation rate in Nigeria, high cost of operation due to high interest rate, multiple taxation and lack of power, Fidson was cost efficient as cost of sales fell by 14 percent to N2.89 billion in the review period from N3.38 billion last year.

The drug makers operating expenses fell by 30 percent to N2.18 billion in 2015 as against N3.12 billion last year.

Operating expenses ratio (OPEX margin) was down to 35.38 percent in 2015 from 45.0 percent.

The lower Opex margin means the company’s cost control measures are yielding fruits as it is spending less on operating expenses to produce each unit of output.

Margins improved in the period under review, a sign of improved profitability, as net profit margin moved to 7.68 percent in 2015 as against 6.20 percent last year.

However, Fidson’s sales fell by 6 percent to N6.16 billion in the period under review.

With an estimated size of $1-1.6billion, the Nigerian pharmaceutical industry accounts for less than 0.3 percent of GDP, according, PMG-MAN, Frost & Sullivan.

The new minister for health has a herculean task of re-positioning the sector for better performance as only 30 percent of drugs sold in Nigeria are manufactured locally while 70 percent is imported, largely from China and India, according to Frost & Sullivan.

The research body estimates ‘nearly 17 percent of essential generic medicines and as high as 30 percent of anti-malarial are routinely faked in Nigeria.

Further analysis of Fidson’s financial statements shows total assets moved by 2.03 percent to N16.08 billion in 2015 from 15.76 billion, last year. Shareholders fund were up by 12 percent to N6.40 billion in 2015 from N5.76 billion last year.

Fidson’s share price closed at N3 on the floor of the exchange while market capitalization was N4.50 billion.