GlaxoSmithKline Consumer Plc’ sales continue to decline since the first quarter of last year, confirming consumers are squeezed by accelerating inflation and an economic downturn.
The drug maker’s sales declined 7.46 per cent to N3.84 billion in March 2017 from N4.15 billion as at March 2016, the lowest decline since the first quarter of 2016 when sales was up 2.56 per cent to hit N7.56 billion.
A quarterly analysis of the revenue shows that second quarter 2016 sales dropped 17.64 per cent to N6.32 billion from the first quarter levels. It was slightly up 3.95 per cent to N6.58 billion in the third quarter, while fourth quarter sales declined 6.81 per cent to N6.16 billion as against the 3.95 per cent recorded in the second quarter.
The continued decline in revenues tipped the drug maker to a loss of N8.26 million as rising production costs compounded woes.
The floundering performance of GlaxoSmithKline can be attributed to the unpredictable macroeconomic environment.
Pharmaceutical firms have been grappling with a shortage of dollar that hindered them from importing, drugs, raw materials, and equipment to meet production demands.
Apart from water, Pharmaceutical firms import 95 per cent of raw materials, according to an industry source.
The shortage of dollars caused by a sharp drop in oil price and a battered external reserves forced firms to hike the price of drugs, exacerbating the already anaemic position of consumers whose wallets had been squeezed by rising inflation.
The economy of Africa’s most populous nation contracted by 0.52 per cent in the first quarter, the worst recession in 25 years, according to a recent report by the country’s National Bureau of Statistics.
Inflation for April stood at 17.20 per cent, the highest in 11 years. According to the statistics body, Nigeria’s unemployment rate rose to 14.20 per cent in the fourth quarter of 2016, the highest in 6 years.
Analysts say the decision of GlaxoSmithKline to dispose its soft drinks business to Japan’s Suntory Beverage and Food Ltd could have hurt sales. Suntory paid N21 billion for the business.
The drug maker carried out the strategic plans to broaden its range of health-care products and widen distribution and boost sales.
GlaxoSmithKline plans to source raw material locally to ease the pressure caused by dollar shortages, having booked foreign exchange loss of N6 billion in 2016.
The largest pharmaceutical firm by market value plans to manufacture Sensodyne and the Cold and Catarrh variant of Panadol in the country next year, the managing director said.
GlaxoSmithKline shares has risen 58 per cent this year. It was priced at N17.85 as at the close of trading in Lagos on Tuesday, with as market capitalization standing at N21.34 billion.
BALA AUGIE
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