The persistent depreciation of Nigeria’s naira has significantly impacted the pharmaceutical industry, with three listed firms reporting a combined foreign exchange loss of N7.86 billion in 2024.
This development underscores the challenges faced by companies reliant on imported raw materials amid a volatile currency environment.
According to the unaudited financial statements of these companies, Fidson Healthcare experienced the most substantial loss, recording a forex deficit of N5.62 billion in 2024, an increase from the N1.26 billion loss reported in 2023.
Despite a 58.5 percent increase in revenue to N84.1 billion, the company’s post-tax profit also rose by 40 percent to N5.04 billion, influenced by a 63 percent increase in its operating profit and a 160 percent in finance cost.
Neimeth International Pharmaceuticals also faced significant challenges, reporting a forex loss of N2.03 billion in 2024, an increase from the N1.26 million forex loss in the previous year. The company’s revenue increased by 102 percent to N4.46 billion, with the pharmaceutical income decreasing by 38 percent to N1.69 billion during the same period.
Similarly, May & Baker Nigeria reported a forex loss of N196 million in 2024. While the firm achieved a 47 percent growth in revenue to N28.9 billion, driven by a similar increase in pharmaceutical sales, after-tax profit increased to N1.69 billion. This increase was attributed to a 16 percent decrease in administrative expenses to N2.25 billion.
Industry analysts highlight that the pharmaceutical sector’s heavy reliance on imported raw materials makes it particularly vulnerable to currency depreciation. Gabriel Idahosa, deputy president of the Lagos Chamber of Commerce and Industry, noted, “Everything in the pharmaceutical industry is imported, from raw materials to packaging.”
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“The Nigerian pharmaceutical sector is significantly impacted by FX fluctuations, as a large portion of active pharmaceutical ingredients (APIs) are imported, leading to price increases and challenges for pharmaceutical companies when accessing necessary forex to import raw materials, resulting in potential shortages and higher drug costs for consumers; this often forces multinational pharmaceutical companies to exit the Nigerian market due to forex instability,” he said.
The naira recorded a significant appreciation on Thursday, January 30 reaching its strongest level in seven months at N1,485.95 per dollar.
This sharp increase is attributed to the policies implemented by the Central Bank of Nigeria (CBN), which have influenced market dynamics and contributed to the currency’s strengthening.
Looking back seven months, the naira had previously been at a similar level, standing at N1,485.53 per dollar in the official market as of June 20, 2024.
This latest movement marks a return to that range, reflecting the impact of recent monetary and foreign exchange measures introduced by the CBN to stabilise the currency and improve market confidence.
As the naira’s value continues to fluctuate, pharmaceutical companies in Nigeria face ongoing challenges in managing forex losses and maintaining profitability.
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