‘A country without food security and dependents on imports for medicine is unsafe’
Nigeria’s lack of self-sufficiency in medicine weakens Africa’s most populous country’s ability to rapidly and effectively deal with national public health emergencies such as Ebola and COVID-19. In this interview Fidelis Akhagboso Ayebae, chief executive officer of Fidson Healthcare Limited analyses both challenges and solutions to speed up local pharmaceutical manufacturing in Nigeria. He spoke to Anthonia Obokoh. Excerpts:
Nigeria currently imports a huge percentage of its active and non-active ingredients from China and India. With the current coronavirus outbreak, do you think there is a call for concern?
Hundred percent of active ingredients are from China and India. I am in a very privileged position, so I know what fight the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (MAN) has had with the government in the last 10 years.
Every successive chairman has always advocated and fought for made-in- Nigeria pharmaceutical products, but we have often always hit a roadblock because someone in government will ask you if you have capacity.
What does it take to build capacity in the pharmaceutical industry? It does not take anything. With the small capacity I have, people are not buying made-in- Nigeria and the government too is not patronising and protecting made-in -Nigeria. So how do I ramp it up?
We are tired of telling people to be smart, Nigerians are the smartest people in the world. Now, coronavirus has started and everyone is claiming to be patriotic with the greatest ideas. This is something we have been singing as a song 20 years ago: Develop made-in Nigeria pharmaceutical products because after food it is medicine.
If you are not secured in food and your medicines as a country and you are dependent on imports, you are not a safe country. You cannot protect your people in terms of crisis and we have seen about three crises, but the well-known ones are Ebola and Coronavirus.
There is no research and development (RD) in Nigeria and the reason is that we are largely a generic manufacturing country.
How can Nigeria curtail proliferation of fake drugs that have been affecting sales in the industry negatively?
It is only support for local manufacturing that can stop fake drugs in Nigeria.
Let me give you an example. Over 10 years ago, the importation of unfinished paracetamol products was banned. There were 18 products, but then two or three products were released through the back door. So, 15 or 16 products were permanently restricted from importation. There have not been scarcities of these products in Nigeria since that time.
So, what is the fear that we have in this country? If we did this 10 years ago when the industrialisation of manufacturing was low, why not now that a lot of pharmaceutical industries have ramped up their capacities and improved their standards?
So, importation of some products should necessarily be curtailed. Let’s forget about this rancor about capacities. If 10 years ago the industry met the needs, today there is not imported paracetamol, metronidazole and the rest in the market, and no scarcity is being recorded. And they are cheap, affordable.
Do the same thing for anti-malaria. Billions of Naira has been spent on importing. I can hazard a guess that over N100 billion is being spent on importation of finished anti-malaria into the country annually and you have over 160 manufacturers that can give you the same products at affordable rates, languishing.
Where are the low-hanging fruits in the Nigerian pharmaceutical industry?
We turn out very low hanging fruits. Nigeria’s hanging fruits are very high. I can tell you because I am on both sides of the divide. You borrow money at 20+ percent. No electricity, you have to generate your own power. No treated water from the government, you have to generate your water, and treat it. Yet some state governments are asking you to pay tax on water you drilled from boreholes.
The low hanging fruits for local manufacturers could simply be for the government and The National Agency for Food and Drug Administration and Control (NAFDAC) to put together about 50 products that we have capacities for and that Nigerians consume a lot. Take those 50 products and restrict importation, and the industry will then begin to grow. In that way, we will attract more investors into the industry.
So, you can go for those very low hanging fruits, which is very easy to do. The capacities are available; the products are generic so you do not need any speciality to do them. The industries will begin to boom. What does it then do? It gradually takes you into research and development and into ability to manufacture or to invest in specialised products.
Fidson healthcare has returned to profitability despite declining sales, according to your 2019 financial statement. What are the things you did right?
What happened in 2018, as we explained before, was a glitch in our Enterprise Resource Planning (ERP). We had it then just newly installed and, for some strange reasons, the implementation was badly done to the extent that nobody saw some of the things we should have seen until it was too late — until the fourth quarter actually. And because we are a very accountable company, we then did a test of the system and saw that there was a problem.
Basically, maybe it was doubly counted and the pricing of that particular product was affected. Because the pricing was affected, the choice that we then had was to manually look at everything. We then discovered that we needed to adjust.
So that adjustment was to be done in 2018. We made a loss not because there was a rare or actual loss but a system error. So, the system error was responsible for the 2018 loss.
Twenty-nineteen was a difficult year, but then we were still able to do what we did because, as usual, we managed our cost properly and we also were able to bring down our cost of funding which was about N1.9 billion in 2018 but now N1.4 billion in 2019.
Hopefully, this year, we are looking at something significantly lower, something that will cost N1 billion for the cost of funding. So, we were able to manage loans better with cheaper loans like the Bank of Industries (BOI) loans and other finance support whose interest rate was around 15 percent. Things are generally better and well managed.
As the CEO, what innovations have you brought to the company?
Nigeria is a country where we throw words around. What every businessman is basically doing in Nigeria is managing their cost better than before. It is a continuous obsession with cost optimisation because the truth is that you can manage very little in a country which is perpetually in a crisis mode? So, to be honest, what most of us do is to see a better way of managing our cost.
Look at turnaround time of your various deliveries. Things that hinder your deliveries in two months before suddenly become three months. So what do you do with the congested ports? What makes most of us chief executive offices (CEOs) look the way we are most of the time are the structural problems in Nigeria.
Most CEOs are not bad business managers. But when you have structural problems that make it very difficult to manage your problems, you will struggle. The only two ports we have are congested.
For pharmaceuticals, you cannot clear from Tin Can; you can only clear pharmaceuticals in Apapa port. You then find a situation where your ships land in Apapa, but because of congestion, the ship is diverted to Tin Can Island to unload.
Until we stop being in a perpetual mode of crisis in this country, there is no innovation. Our innovation is all about how we fight self-inflicted crisis in Nigeria and we are perpetually fighting those crises. Even if you have new ideas to implement, you cannot implement them with the current atmosphere.
We have coronavirus in 2020. The virus has created a situation where the main manufacturer of EPI in the world is based in China because most countries of the world import from China, including India. India consumption of Active Pharmaceutical Ingredient (API), to the tune of 70 percent, comes from China.
So Nigeria’s consumption of APIs comes from between India and China because we do not manufacture APIs at all. Just when we thought we were starting business, we were confronted with the coronavirus scare that is causing a problem in the world, and businesses are on a stand still.
As I speak to you, raw materials costs have risen by at least 100 percent. Some have doubled while others have tripled, but some of these costs cannot be passed onto the consumers. This is because your products will not sell and because your products are not likely to sell given the current situation. These products have a shelf life, so you cannot keep them forever.
You know pharmaceuticals have shelf life. Some of them are six months; some of them are one year; 18 months, and two years. So you are going to manage within all of these.
What are some of the pressing changes you would like to see in the pharmaceutical industry?
Hopefully, the policy makers are learning from the current crisis. This same crisis was there at the time of Ebola. When the big manufacturers of APIs in the world, whether China or India, stopped exporting APIs and we got into trouble.
We made so much noise saying Nigeria had no medicine security, but we went back to our old ways after the crisis and the country did not do anything about it. Government did not provide an enabling environment for manufacturing to thrive.
There is no way that any country with over 200 million citizens can survive on imports. You have to manufacture your things locally to some certain percentage. Is it 20 percent? Is it 50 percent? Step by step, you can get there. But what we find is that we have been paying lip service to local manufacturing.
Except for the entrepreneurs who have taken the risk to establish factories to manufacture, every other person from government official to policy maker to civil servants is paying lip service to local manufacturing and capacity building.
When we come to who the real people manufacturing in this country today are, you find out that mostly they are foreigners. Every Nigerian that has money takes it to treasury bills. We need a total reorientation of what it takes to build a nation.
Why should Nigerians patronise local pharmaceutical products?
Nigerians should look at the Indians of this world. It is the best example. Malaysia is another example. Then you have Indonesia and Vietnam. These countries basically love themselves more than other people.
The patriotic zeal of an average Nigerian is very low, from the elite to the poor. Everyone wants to buy imported products and the truth is that there’s a standard for these imported products.
As it concerns pharmaceuticals, the standards are exactly the same as imported ones because there is only one standard for pharmaceuticals across the board.
Everyone should remember that we have only one country called Nigeria, only one country that our children can be free and proud of and express themselves without reservations.
How has drug regulation impacted local manufacturing?
NAFDAC is the saving grace of local manufacturing. If NAFDAC doesn’t exist or is not doing its jobs, though there is still room for improvement, local manufacturing could have been extinct. The country could have been filled with a lot of fake and substandard products more than it is today.
There is room for improvement and the area where NAFDAC should improve, it must improve. I will suggest it listens less to international propaganda. One of the international propaganda that is out there about standards of manufacturing in Nigeria is on anti-high Nigeria.
We may not be as sophisticated in terms of the investment level as South Africa, but Nigerian-made products are comparable in terms of quality and presentation with those of South Africa, Algeria, Egypt and Morocco. International politics keeps telling us to increase our standards.
The one that we already have that meets the basic GMP patronage is low. How do you then attain WHO GMP?
People are busy borrowing, yet regulation is becoming more stringent. The white men are not as stringent but we take it for granted that their food and drugs authorities are stringent regulators.
We are better than these people, so NAFDAC should love Nigeria more, love manufactures more, apply stringent regulations but also know the disadvantage to which we are placed against imported products. The rate at which we have opened our doors to be raped by importers is not the way the country will ever grow. Drug security can never be attained that way.