Nigeria’s pharmaceutical sector has seen high import duties and other barriers weigh heavily on their operations, as they await the implementation of President Bola Tinubu’s executive order whose implementation is facing delays since it was signed over two months ago.
The devaluation of the naira, coupled with high import duties, has significantly increased the cost of procuring essential medical supplies.
Pharmaceutical companies, heavily reliant on imported materials, say they are grappling with inflated production costs, which have driven up the price of medicines across the country.
In June 2024, President Bola Ahmed Tinubu signed an executive order aimed at eliminating tariffs, excise duties, and value added tax (VAT) on specialised machinery, equipment, and raw materials for pharmaceuticals. The goal was to stimulate local production of essential healthcare products like syringes, biologicals, and medical textiles, thereby reducing production costs and making medicines more affordable.
However, findings show that the pharmaceutical industry is yet to benefit from the order because the takeoff is still awaiting an implementation framework.
Nzubechukwu Ebuzoeme, general manager (diagnostics) at ISN Products and Medicals, told BusinessDay that high import duties, along with other taxes such as VAT, have significantly increased production costs, which are passed on to consumers.
“High import duties are among the major barriers manufacturers face,” he said.
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Patrick Ajah, managing director/CEO, May & Baker Nigeria Plc, recently expressed frustration over the delay in enforcing the executive order, noting that pharmaceutical companies continue to face high import costs, coupled with the depreciating naira, leading to higher drug prices for consumers and hindering efforts to expand local production capacity.
“The problem started when Nigeria floated the currency. The exchange rate went from N461/$ to N1600/$. We are struggling for some months now to buy dollars to procure Active Pharmaceutical Ingredients (APIs),” he said.
However, Tashikalmah Hallah, special assistant to the Muhammad Pate, coordinating minister of health and social welfare, said the framework that would guide the implementation is still being developed.
“It has not been concluded. The team is still working on the document,” he said, in response to BusinessDay questions.
The minister had, during an interview with BusinessDay, stated that a framework was critical for the successful implementation of the order, noting that the policy requires collaboration across multiple ministries and agencies, including the Customs, the National Agency for Food Drug Administration and Control (NAFDAC), the Standards Organisation of Nigeria, the Ministry of Finance, and the Ministry of Industry Trade and Investment.
“It has to be governed well so that we monitor the progress on executing that,” he had said.
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A 30-day deadline was initially set for the development of a harmonised implementation framework after the order was signed, but this deadline has long passed, leaving the timeline for the framework’s completion uncertain.
Drug manufacturers and consumers continue to grapple with high production and purchasing costs. The high import duties have exacerbated the cost challenges facing local manufacturers who are heavily reliant on import.
According to NAFDAC, Nigeria relies heavily on imported drugs, with approximately 70 percent of drug consumption and 100 percent of APIs being imported. This high operational cost is often passed on to consumers.
The implementation of the executive order is highly anticipated as it will not only serve as relief for the industry players but will consequently impact on affordability of medicines for all Nigerians.
Since the exit of some pharmaceutical firms such as GlaxoSmithKline and Sanofi, the prices of medicines have shot up and have been out of reach of many indigent Nigerians.
BusinessDay findings show that Nigerians are now paying three times more for essentials like antibiotics . Prices of products such as Augmentin 228mg and 475mg have skyrocketed by 307 percent and 328 percent respectively between August 2023 and August 2024.
Augmentin 228mg and 475mg cost N12,000 and N18,000 today as against N2,950 and N4,200 respectively in August 2023, BusinessDay findings show.
The price of Seretide inhaler, an anti-asthma product of GSK, jumped from N7,000 in the first quarter (Q1) of 2023 to as much as N70,000 in November of that year.
It has now settled at N51, 300, representing a 632 percent jump in price from N7,000 in August 2023. The price of Amoxyl 500mg has jumped 3.5 times to N3,400 in August 2024 from N950 in the corresponding period of 2013.
Francis Meshioye, president of the Manufacturers Association of Nigeria (MAN), has urged the government to ensure that hospitals and medical centers prioritise the purchase of locally produced pharmaceuticals.
“This will significantly boost the health manufacturing sector,” Meshioye said.
