• Sunday, July 14, 2024
businessday logo


Trading trumps research in Nigerian pharmaceutical firms

Nigeria’s biggest drugmakers seek relief from FX pain

Pharmaceutical companies in Nigeria are more interested in trading than investing in research and development of drugs, therapies, and treatments, a BusinessDay analysis has shown.

Big pharmaceutical companies in developed countries are increasing their risk appetite for investing in untested diseases and are raking in billions of dollars from product sales and patent rights.

While multinational drugmakers’ investments in research and development grew by the most following the outbreak of COVID-19, attracting additional funds from development donors, research activities in Nigeria’s private drug-making sector were few and far between.

BusinessDay’s analysis of the financials of the six largest drugmakers listed on the Nigerian Exchange Limited shows that none of the producers had a specific budget for research except May & Baker, despite recording 76 percent growth in profit in 2021. They made more in profit and revenue from increased demand for prescription drugs and heightened health consciousness amid the COVID-19 pandemic.

GlaxoSmithKline, one of the companies, for instance, says it charges research and development expenditure to the income statement in the period in which it is incurred. But it did not mention specific research goals targeted in Nigeria.

Its parent company in the UK spent £4.8 billion on research and development focused on the immune system, human genetics, and advanced technologies. Some analysts have described its Nigerian unit as a sales outlet for its products.

Others, including Fidson, Morrison Industries Ltd., Neimeth International Pharmaceuticals and Pharma Deko Plc do not have fixed investment budgets reflected in their books.

What May & Baker has for research and development is categorised under distribution, sales and marketing expenses, which increased to N9.3 million in 2021 from N7.8 million in 2020.

Interest in research has failed to grow, despite incentives such as the N200 billion health intervention fund introduced by the Central Bank of Nigeria (CBN) in 2020. It is targeted at the research and development of candidate drugs, herbal medicines and vaccines for the control, prevention and treatment of infectious diseases.

However, more than 50 percent of the financing has been spent on things outside research and development in a country plagued by different diseases requiring local solutions and where the malaria burden is the highest in the world.

Out of N200 billion, N107.7 billion has gone to 114 healthcare projects, which are focused on medical diagnostics, drugs, dental services, and eye clinics, according to the CBN.

Some analysts say part of the reasons most local drugmakers see research as a lacklustre venture is that they are still stuck with the colonial orientation that research is not an African thing and most African companies do not realise the potential buried in it.

Oyewale Tomori, a retired professor of Virology, identified the lack of foresight, inadequate government support, and the risk of counterfeiting as three major hurdles discouraging local investment in research.

He said,: “Those who are investing in research are not doing it because they love it. They are investing in it because they make money out of it. They see that if they can do research to get a product, then they can sell and have monopoly and patents.

“Their government also supports them to put money in research because the government realises that when they do research and make money, they also get more taxes. So it helps everybody. Our government also does not support it.”

What big players are doing

Before the pandemic began, Pfizer’s research and development expenses stood at $8.4 billion in 2019. In 2020, it rose by 11 percent to $9.4 billion after the pandemic broke out and jumped 44 percent to $13.8 billion in 2021.

Its revenue also followed a similar pattern as it recorded $81.3 billion in 2021 compared to $41.6 billion in 2020 and $51.8 billion in 2019.

AstraZeneca’s research and development budget declined slightly from $6 billion in 2019 to $5.9 billion in 2020 but jumped by 62 percent to $9.7 billion in 2021. The result in revenue was growth from $24.3 billion in 2019 to $26.6 billion in 2020 and $37.4 billion in 2020.

Moderna increased its research and development budget from $496 million in 2019 to $1.4 billion in 2020 and approximately $2 billion in 2021. Its revenue surged from $60 million in 2019 to $680 million in 2020 and $18.5 billion in 2021.

“As we enter our second year as a commercialised company, we are undertaking sustained, long-term investments in technology creation, which is reflected in our R&D investments of $1.99 billion, compared to $1.37 billion in 2020. This gives us the opportunity to build a better Moderna and develop mRNA medicines for everyone,” the company said in its 2021 full-year report.

It plans to expand its global health portfolio through two new initiatives aimed at advancing mRNA vaccines for the prevention of infectious diseases. It aims to advance a portfolio of 15 vaccine programs by 2025 that target emerging or neglected infectious diseases that threaten global health.

The company is also launching a new programme, mRNA Access, that will offer researchers the use of Moderna’s mRNA technology to explore new vaccines against infectious diseases more broadly.

Analysts say if Nigeria does not take a cue in a similar direction, the country will remain a passive actor in the invention of medical breakthroughs and might be forced to wait months for medicines or treatments to arrive in periods of urgent need like the COVID-19 pandemic.

According to the Africa Centre for Disease Control and Prevention, Africa currently imports 70 to 90 percent of its drugs, due to a very poor biotechnology sector. For comparison, China and India, with comparable populations, import 5 percent, and 20 percent.

There is also a severe shortage of human resources as indicators show there are currently only around 1,900 epidemiologists in Africa, far fewer than the 6,000 needed, as stipulated by the Global Health Security Agenda.

The continent continues to struggle to secure medical supplies. More than 70 countries imposed restrictions on the export of medical materials including the raw materials needed to make diagnostics during the early months of the pandemic. Countries couldn’t start procuring medical supplies at a pace that better met demand until the African Union established the Africa Medical Supplies Platform in June 2020.