‘Access to forex, market regulations will aid foreign direct investments’

Pascal Brière is the President of Biogaran, a French firm leading in generic medicines and new owners of Swiss Pharma Limited (Swipha). In this interview with FEMI ADEKOYA and BENJAMIN ALADE, he sheds more light on the acquisition of the company and plans to deepen local production of medicines in Nigeria amidst identified challenges.
Can you give an insight into Biogaran-Swipha business relationship?
BIOGARAN is under subsidiary of the Servier Group, the French biggest pharmaceutical group with €4billion turnover. BIOGARAN is the biggest subsidiary of Servier in the world with €700 million in turnover. BIOGARAN is a company that produces, manufactures, distributes and sells to pharma-system patients and physicians 800 different SKUs and also biosimilar products. BIOGARAN was till 2012, a pure French company. It is the first actor in generic medicine, with one third of the total market in France in generic medicines and starts its international expansion in 2012, with an acquisition in Brazil of a company named Pharlab. It was the first acquisition. We have on the map a certain number of countries in which Nigeria was on the top of the list. We made a survey of many countries to check whether there was room for strong development of our BIOGARAN concept abroad but many of such countries were eliminated because they were very mature markets and there was no room for new development to succeed. Nigeria was a different market and had room for development. With Nigeria on the list, we started to look for companies to acquire and we visited Swipha once in 2015 to assess and commence talks. In 2016 we commenced the process and that process is being concluded today, 15th of March, 2017. Swipha belongs to us with more than 95 per cent in investments.

Considering the state of the economy and investors’ apathy, what is the motivation for investing in the economy at this moment?
The economy at the moment is very difficult and tough. Nigeria is facing the craziest recession that started more than two years ago when the oil prices fell and dollar became scarce. But we think it is a very temporary situation and that the cycle will end and Nigeria will recover very likely next year and perhaps depending on economic policies the government is putting in place. Already they have done something on the forex in order to ease access to dollar, which is a very good sign and we have been told that Nigerian people are very energetic and Nigeria may recover very quickly.

Our company is a private company and the shareholders of our group are foundations. So of course, they need to have return on investment. We are here to have reasonable profit and take initiatives in Nigeria where others think it is too risky to invest in. Our shareholding structure as a foundation enables us to have a long-lasting strategy here and to consider what the others consider risky as a huge opportunity. We hope we would be supported by the officials of the Ministry of Health, Ministry of Finance, the CBN, NAFDAC to help us to develop. But we see Nigeria as a true opportunity.

One of the issues pharmaceutical companies have been struggling with is access to raw materials, especially in terms of active pharmaceutical ingredients (APIs). How do you hope to deal with raw material sourcing?
We consider that having a factory here is a fantastic asset. The two assets of the company are the brand, Swipha which is associated to European quality, and the production plant, which is the first company to be ISO 9001 certified and WHO approved. So we want to use that factory as much as we can and we want to do the local content as much as we can. While we were not yet owners of Swipha, we managed to import at least, half a million active ingredients here to get inventory on those shelves. We spent at least $500,000 on active ingredients and we are preparing a new order of goods to be imported. We had access to dollars at the market conditions, which are very tough. We have a very strong link with our supply chain and he is French as well. He supports us and we are very glad to be able to import the goods. But of course it is not that easy and we strongly hope that CBN and the banks would ease access to dollars for importing active ingredients. So we need to be here to have access to dollars and to be able to import active ingredients and manufacture here. We are going to make a very strong forecasting because we have to build inventories in terms of ingredients in order not to have stock outage or inconsistent supply. I hope that the government would continue to put money in the system as they have been doing for some weeks now to ease company like us to have access to dollars to import active ingredients at the CBN rate.

If this does not happen, how do you hope to sustain your supply chain?
We would have to increase capital in any hope. We would import capital and raise capital through importation. We need to increase capital. That is what we would do. We hope the bank will help us because the capital should be used to restore the company to make it very dynamic and I hope the Central Bank would be a real business partner in enabling us first to have access to dollars and second to enable us to use our money to develop the company and commence production in Nigeria.

Considering the challenges with Common External Tariff (CET) implementation, how do you hope to deal with competition from neighbouring countries?
You are right, but I think Swipha’s name is a strong advantage and we conducted a survey here with patients, physicians and pharmacists to check the reputation of Swipha and the survey was incredibly positive. Swipha’s name is associated with quality, reliability and confidence. This is a competitive advantage compared to the other companies operating in the region and that may balance the advantage they have in economy and access to currency. Second is that I think we have competitive manufacturing here, so all the issue is to have access to dollars and for sure, once we have access, we have competitive production here, that enables us to compete efficiently in the market. As far as debt and equity are concerned, we want to keep debt as it is and we reimburse that and face our governance and obligations towards stocks. We want to keep equity in order to develop the company. That is the way we want to do it, we want to keep the loans.

In terms of investments, how much are you bringing into the economy?
It is confidential metrics and I will not disclose that. We have already invested several millions of Euros. I cannot give an estimate but we are entrepreneurial people and we are here to develop the company.  So as soon as we resume market, once there are opportunities to develop, we would grab it. If there is any need to invest in the factory, we would do it. Today, the challenge the people of Swipha are facing is to gather inventories. Then we resume sales and invest in new products, develop the local projection and continue to invest.

Pharmaceutical industry is seen as the lifeline of the national healthcare system. Which of the products will you be concentrating on and what new products will be manufactured locally?
We have very ambitious plans to make our affordable medicine accessible to biggest number of Nigerian people. Swipha as a very strong franchise in Central Nervous System (CNS) products. What we are doing is to continue to expand that franchise for CNS. The second pillar would be antibiotics. Swipha has a franchise as well. There are a lot of antibiotics that Nigerian people are missing and some of them maybe produced here as well. We have selected a couple of products that we are expecting to bring in and to manufacture for Nigeria and to expand our antibiotics range. We will continue to put a serious emphasis on OTC products and Swidar anti-malaria drugs. We are also keen to listen to the needs of other organisations. As a WHO approved company, we expect to be consulted where there is a tender or where there is a need. We are a company with a factory; we have the technical know-how, skilled people and international reputation. We are also here to participate in the community. We are not only here to sell products and to make money, it is part of our goal, of course we need to have profit but we are also here to participate in the community. We are part of Nigeria.

Apart from access to foreign exchange which other areas of policy direction would you like the government to act on in enabling you and other investors do businesses with ease in the country?
Access to finance and to forex is very important. I think there is some kind of efficiency in registering new products but we have not experienced it. So we really expect that market access with NAFDAC would not be difficult and we would not face many hurdles when we bring those quality medicines to them to have clearance. What is important is to have some kind of regulations between what is imported without any local approval; what is counterfeit and what is made by Nigerian pharmaceutical industry because we are facing very different forms of competition which is not normal. This is because when you have people that can import product without getting approvals and when there is a lot of some counterfeit products that are able to enter the business, the market is difficulty to deal with. We do not expect this to cease overnight but am sure that the government has been tackling that for years. If there is access to active ingredients, issues of under-utilisation of local manufacturing production facilities will be addressed.

How do you hope to address issues of job losses arising from your acquisition of Swipha?
We are not financial people and we are not here to cut off jobs to try to make profit. It is not the way we act. We want to develop the company, so we need to keep the people. We want to resume sales first. I used to say there is no problem that sales cannot solve really in the economy. So we want to resume sales; we are not going to cut jobs if people are doing their jobs properly. We are here to develop the company and we have a long-lasting strategic view that is very important. We are very committed people and very voluntary people. We are here for a while and we must rely on people to add value. We need appropriate number of people. There is a lot to do with Swipha. We are going to be very prudent in listening in order to select the best route to develop business.