• Tuesday, June 18, 2024
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BusinessDay

FX scarcity hurts drugs, vaccines supply – GSK Nigeria

GSK gets SEC’s approval for Scheme of Arrangement to delist from NGX

GlaxoSmithKline Nigeria, a top manufacturer and distributor of healthcare products in Africa’s biggest economy says the worsening shortage of foreign exchange in the country is hurting its ability to maintain a consistent supply of drugs and vaccines to the Nigerian market.

Omongiade Ehighebolo, the director of communication and government affairs at GSK Consumer Nigeria Plc, in a statement, says foreign exchange unavailability has continued to impact its operations like every other manufacturing company in the country.

“The challenge in accessing currency is affecting our ability to maintain a consistent supply of medicines and vaccines in the market,” he says.

“Sustainable patient access to our medicines and vaccines is a priority and we are doing all we can to limit the period the market will be out-of-stock on our products,” he adds.

According to him, GSK recognizes the current challenge and regrets the disruptions it might cause to patients and healthcare providers.

“We are actively engaging with all our stakeholders to find a solution to enable the sustainable supply of GSK medicines and vaccines to patients in Nigeria.”

“As always, we urge all patients to seek advice from their healthcare providers and ensure their medicines come from a trusted source.”

The continued decline of the country’s external reserves is piling more pressure on the naira, as importers need FX to import foreign products.

The naira is exchanging at close to N765 –N766 in the parallel market at the time of writing, as against N464.51 in the I&E window.

GlaxoSmithKline Consumer Nigeria Plc, which manufactures, markets, and distributes consumer healthcare and pharmaceutical products, generated N4.02 billion in revenue in Q1 2023, down from N7.36 billion in Q1 2022, according to its financial statement. Its profit after tax declined to N155.2 million from N194.4 million.

Read also: Nigerian Breweries to acquire 80% shareholding in Distell Nigeria

How it started

The current foreign exchange crunch started in late 2014 when crude oil prices nosedived due to market volatilities. Crude oil provides over 70 percent of Nigeria’s foreign exchange and any upset of the oil market often hurts the Nigerian economy.

The problem worsened in 2016 when crude oil prices fell below $40 per barrel and further to below $30 per barrel by December 2016.

Consequently, manufacturers began to alter their plans and projections. Some of them, who could not withstand the pressure, had to shut down.

By August 2016, at least 54 manufacturing companies had shut down, with over 220,000 jobs lost in the manufacturing and other ancillary sector, according to the Manufacturers Association of Nigeria.

The Central Bank of Nigeria intervened in the market and ordered authorised dealers in the foreign exchange market to allocate 60 per cent of total their total forex purchases from all sources (interbank inclusive) to manufacturers.

The CBN, in August 22, 2016 circular had said, “Following the review of returns on the disbursement of foreign exchange to end users, it has been observed that a negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector.

“Against this background and in order to address the observed imbalance, authorised dealers are hereby directed to henceforth dedicate 60 per cent of total foreign exchange purchases from all sources (interbank inclusive) to end users strictly for the purpose of importation of raw materials, plant and machinery.

“The balance of 40 per cent should be used to meet other trade obligations, visible and invisible transactions. For the avoidance of doubt, authorised dealers are to continue to publish weekly sales of FX to end users in the national newspapers and to render statutory returns on same to the CBN promptly. Please ensure compliance accordingly, until otherwise advised.”

MAN commended the move at that time but acknowledged that available dollars were still not enough for manufacturers.