Dearth of key products sinks Pharma Deko

Dearth of key products caused by the menace of a severe dollar scarcity has sunk Pharma Deko Plc as the drug maker’s inability to carry out expansion plans dampened growth prospects.

For the first nine months through September 2016, Pharma Deko recorded a loss of N110.29 million from a profit of N580.12 million posted last year.

The loss is a result of sharp drop in sales by 34 percent to N743.12 million in the period under review.

“Non- availability of key products during the half year of 2016 affected revenue. Also, the delay in completion of overhauling of equipment and factory,” said Adekule Abibu, managing director of the company in notes to the financial statement posted on the website of the NSE.

“The marginal increase in the cost of sales was due to high cost of operations and increase in the exchange rate for the US dollars,” said Abibu.

Drug makers in Nigeria have been struggling with severe dollar shortages, caused by a sharp fall in oil price since mid-2014 that forced the central bank to peg the currency at N197-N199 for 15 months.

The currency controls exacerbated the woes of manufacturers as they were forced to buy dollars at the inaccessible black market rate. Investors also fled for fret of a sudden devaluation could result in the loss of significant investment.

Naira has been relatively calm at N305.50 as of 2:30 pm in Lagos, while it goes for N480 at the parallel market.

The economic down turn showed face in the numbers of pharmaceutical firms as Union Diagnostic Clinical Services and Evans Pharmaceutical Plc record losses of N326.16 million and N722.06 million respectively.

All the firms recorded a significant drop in revenues as they have decided to scale back on expansion plans to stay afloat.

Local pharmacies are feeling the pains of a recessionary environment as shelves are getting slim while there has been a sudden spike in the price of prescription drugs.

Prices of drugs at stores have increased by over 100 percent, leaving the health of consumers, whose pockets are already squeezed by rising inflation, at danger.

Experts say the present predicaments will make it practically difficult for local manufacturers to compete with importers of cheap medicines.

Folorunso Alaran, national sales manager of EmzoPharmaceutical Limited, one of the largest drug makers in Africa’s most populous nation, said it is cost effective to import drug than produce them locally due to the country’s chaotic drug distribution system which is not the best.

“People in the open market import drugs at cheaper and duty free rates, as compared to local manufacturers who import raw materials for production at high cost,” said Alaran.

Pharma Deko’s share price closed at N1.70 at the floor of the exchange while market capitalisation stood at N368.59 million. Its shares returned -24.44 under-performing the NSE-ASI -10.24 percent.

 

BALA AUGIE