Nigeria loses N1tr yearly importing active pharmaceutical ingredients
Despite the capacity to locally produce Active Pharmaceutical Ingredients (APIs) and boost indigenous production of drugs, successive administrations have turned a blind eye to developing the pharmaceutical sector to provide medical security for the country. But with the naira-to-dollar free-fall getting into the way of importation and political concerns on global reliance on China and India for API supplies, stakeholders said Nigeria must look inwards before it is too late, CHUKWUMA MUANYA reports.
The ‘resource curse’ theory is self-evident in the local pharmaceutical industry. For each of the drugs imported into the country is at least 50 per cent of potential active ingredients idling somewhere close-by – untapped.
But the alternative to importing drugs or APIs (for local manufacturing) comes at a huge cost that is now too heavy for the affordability of Nigerians and Nigeria. Available data shows that Nigeria loses more than $1 billion (N1 trillion) yearly importing the same from India and China.
Amid the forex liquidity crisis and exchange rate of N1000 to the US dollar in the open market, the cost of drugs has spiked. Findings showed that some of the drugs are fast getting out of stock or becoming unaffordable.
A survey by The Guardian, which was corroborated by medical doctors and hospital pharmacists, showed that prices of drugs and medical services sharply rose by at least 60 per cent to 150 per cent in two months.
For instance, Ventolin Inhaler Brand of Salbutamol (by GSK Pharmaceuticals) cost on the average N4,500 per canister in May. By July, it sold for between N6,500 to as much as N12,000 in some retail shops.
Though the Federal Government plans to reduce the importation of drugs in the country from 60 per cent to 40 per cent to promote the local manufacturing of drugs, at least 70 per cent of medicines consumed in the country are imported.
But subtract the cost of APIs (if replaced by local substitute) and encourage local manufacturing of those ‘high-end’ drugs, the same drugs can be available at half the current price, or less. But is Nigeria ready to optimise the local pharmaceutical potential?
A goldmine untapped
APIs are chemical-based compounds that are produced mainly in countries like the United States of America (USA), Europe, China, and India. APIs have pharmacological activity mainly used with combination of other ingredients to diagnose, cure, mitigate, and treat a disease.
Every single medication is composed of two main components. The first is the API, which is the major component, chemically and biologically active ingredients that have to do the work in the body.
The other component is known as excipients like lactose or mineral oil in the pill, which is chemically inactive that provides, example volume, a sweet flavour, or a colour, which these excipients help in the delivery of APIs in the body system.
According to latest MarketsandMarkets latest report on APIs, the global active pharmaceutical ingredient market is projected to grow from $174.17 billion (N161.11 trillion) in 2021 to $352.98 billion (N326.51 trillion) in 2030 at a compound annual growth rate (CAGR) of 6.6 per cent.
MarketsandMarkets attributed the growth to the advancements in API manufacturing and the rising prevalence of chronic diseases, such as cardiovascular diseases and cancer.
The agency noted that favourable government policies for API production, along with changes in geopolitical situations, are boosting market growth.
“The API market is undergoing immense changes due to supply chain disruption by COVID-19. Countries such as India are being preferred over China for the export of API owing to geopolitical situations and the demand to reduce dependence on China for API products. Furthermore, governments of many countries have formulated plans and granted incentives to promote the production of API,” it noted.
The global COVID-19 pandemic did shine a spotlight on global reliance on China and India for the manufacture of pharmaceutical drugs as well as production of the Active Pharmaceutical Ingredients (APIs) —and this reliance poses a range of risks.
Statistics showed that 31 per cent of API manufacturing takes place in China and India combined. India relies on China for about 70 per cent of its supply of APIs. In 2019 India imported 665,000 tonnes of active ingredients from China. It is estimated that the U.S. relies on China and India for 75 to 80 per cent of its supply of APIs.
There are 62 generic drugs that are produced only in India, including several antibacterial treatments and antivirals. India currently houses over 3,000 pharmaceutical companies and over 10,500 manufacturing facilities. It is also the third-largest seller of medicines in the world.
To mitigate the risks of weaponisation of medications in the brewing international politics between the Global North and South, governments are rallying for investment in the necessary infrastructure to move away from globalisation towards local production.
Past efforts at local APIs?
Before now, the Federal Government had made several attempts to begin local manufacturing of APIs. They had said that Nigeria’s non-production of APIs is intolerable.
The former minister of state for health, Joseph Ekwumankama, had said that all the APIs being used in the manufacturing of medicines in Nigeria are imported from India, China, the United States and Germany.
He lamented that such practice is taking a huge toll on Nigeria’s scarce foreign exchange and hinted that the importation of APIs will henceforth cease, to enable Nigeria leverage on the possibilities that abound for it in the areas of pharmaceutical manufacturing.
“The situation where there is no single pharmaceutical company that produces any APIs or pharmaceutical excipients locally is no longer tolerable. All of the APIs used by the industries in Nigeria are imported from India, China, the USA and Germany, and large amounts of the country’s scarce foreign exchange earnings are spent on their importation,” stated the minister.
Meanwhile, African Export-Import Bank (Afreximbank) had on November 8, 2021, offered the National Institute for Pharmaceutical Research and Development (NIPRD) a $400,000 grant to improve local production of its APIs.
Afreximbank explained that the grant would enable NIPRD to produce APIs locally in Nigeria.
It also disclosed that a contextual training programme would be developed for pharmaceutical industry stakeholders, to ensure that key skills are acquired.
The grant was expected to help the pharmaceutical research institute to establish an active pharmaceutical ingredient API plant.
According to a statement by Afreximbank, NIPRD’s API plant project is a critical step towards Nigeria’s pharmaceutical independence and self-sufficiency.
It said the grant would not only enhance the security of medicine supply in the continent but also promote the industrialisation of the pharmaceutical sector and create jobs.
The collaboration will provide Africans access to sustainable healthcare in Africa while stimulating socio-economic development.
The fund represents a significant portion of the amount needed to construct the API plant.
Also, Emzor had in August 2021 reached an API Manufacturing Technology Transfer and Licensing Agreement with India’s Mangalam Drugs & Organics Limited to locally manufacture in Nigeria and distribute APIs for the treatment and prevention of malaria.
The arrangement includes an API technology transfer and licensing agreement, which establishes a co-development basis for manufacturing four APIs for the treatment of malaria, which continues to be a leading cause of death on the African continent.
This will lead to the development of a world-class API manufacturing facility in full compliance with international standards and the first of its kind in the sub-Saharan African region.
The agreement reaffirms Emzor’s longstanding commitment to strengthening the pharmaceutical sector in Africa. The signed technology transfer and licensing agreement with Mangalam, a leading Indian chemical manufacturing company will provide in-house developed technology for manufacturing antimalarial APIs.
As part of the agreement, Mangalam will also provide consultation and relevant designs for setting up a world-class API manufacturing facility compliant with World Health Organisation (WHO) standards. The initial focus will be on the development of four APIs: artemether, lumefantrine, sulfadoxine and pyrimethamine.
The selected APIs provide chemo-preventive combination therapies for malaria in pregnant women as well as treatment for adults and children. Malaria remains the leading cause of death in Nigeria.
Also, in July 2022, Financial Intermediary in collaboration with Emzor Pharmaceutical began an operation aimed at increasing the manufacturing capacity of APIs in Africa. An allocation of up to $12 million from the COVID-19 essential API Manufacturing in Africa (2020-0584) Global Authorisation is provided to a local manufacturer in Nigeria, supporting the expansion of its facilities to produce several different APIs, which will be used in treatments against malaria.
Unfortunately, The Guardian reliably gathered that until now, despite all the novel plans, the country has not made any significant progress to locally manufacture APIs.
Curing the ‘sick giant’ of Africa
The Guardian investigation showed that although the country has enough cassava pharmaceutical grade starch and raw materials for petrochemical industries for other APIs, it will cost a pharmaceutical industry about $50 million (N46.25 billion) to set up structures for local manufacture of APIs.
The Guardian also reliably gathered that despite the global market for APIs projected to grow from N161.11 trillion in 2021 to N326.51 trillion by 2030, most indigenous firms are unwilling to delve into the business because of so many bottlenecks, including bureaucracy from the Pharmacists Council of Nigeria (PCN), the National Agency for Food and Drug Administration and Control (NAFDAC), Standard Organisation of Nigeria (SON) and possibly National Drug Law Enforcement Agency (NDLEA).
Chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMGMAN) and Managing Director (MD)/Chief Executive Officer (CEO) of Daily-Need Industries limited, Mr Oluwatosin Jolayemi, said medicine security must be prioritised in Nigeria, because a country without a health infrastructure and access to medicine is a sick nation.
Jolayemi said successive Nigerian governments have paid little or no attention to the healthcare of the citizens, evidently through budget allocations and disbursement whereby sometimes health allocations are often returned to the Federation Account for lack of disbursement by the relevant ministry. “A healthy nation is a wealthy nation,” he said.
Jolayemi said the burden faced by the pharmaceutical industries, regarding the importation of APIs, is basically the foreign exchange (forex) burden. He said most APIs prices have gone up in value in the international market as a result of factors ranging from supply chain issues, a residual effect of COVID-19, and global inflation.
The PMGMAN boss said the devaluation of naira from N420 to N850, and then N950, (as a direct result of unification) has jeopardised the capability of many of our members in terms of access to funds (for the purposes of importation of APIs). “The scarcity of forex, in situations where our members have some funds to procure, there is not enough forex to service the industry. This is not peculiar only to the pharma industry, he said.
Jolayemi said the implications of the above on local pharma manufacturing are simple: Most of the operators of pharmaceutical manufacturing companies are in national service and would find every means to procure APIs in order not to allow scarcity of medicines.
He, however, said this implies that the cost of procurement of APIs would reflect in the cost of finished pharma products.
The PMGMAN boss said manufacturing APIs locally is a distant plan and to have an API plant in Nigeria, there are certain parameters that should be guaranteed.
Jolayemi said there should be a big enough market to encourage offtake, because the investment that goes into the production of APIs is close to $50 million or more, depending on the scale, while the volume generation is also huge.
He said with the foregoing, there ought to be a ready market to take the products off the manufacturers of these APIs, or else the project would fail.
Jolayemi said if the Nigerian state is not deliberate about local manufacturing by reducing the amount of importation of finished pharmaceutical products, the manufacturing industry would not be attractive to investors and hence, there wouldn’t be enough off-takers.
He also said basic infrastructure is not in place to encourage real investments and not brief case investors.
“The lack of a petrochemical industry that would help supply inputs for these APIs. Nigeria does not have a single petrochemical industry yet. The refineries by-products are reprocessed to achieve APIs. There ought to be the middle processors- petrol chemical industry- between the refineries and the APIs manufacturers,” he said.
The PMGMAN boss said the idea of cassava as an excipient in pharmaceutical manufacturing is a good idea but only as a binding agent, ‘starch’.
He said the industry at present uses corn starch primarily, and the grades of corn starch differ. There are food grades and pharmaceutical grades. Jolayemi said there is yet to be a processor of pharmaceutical grade starch in Nigeria and that is what NIPRD is working on.
He said there is no doubt as to what Nigeria would save yearly if the country starts to produce APIs locally in terms of foreign exchange preservation and earnings, employment creation, increase in Gross Domestic Product (GDP), West Africa hub for pharma products, etc., the list goes on.
Jolayemi, however, said there ought to be a deliberate and conscious plan to focus on what Nigeria, as a nation, wants to be or whether she wants to put her reliance on foreigners that would not take Nigeria to the desired destination.
On the burden of importing APIs by local manufacturers in terms of naira and kobo, a consultant Pharmacist and Managing Director, Merit Healthcare Limited, Dr Lolu Ojo, said it is difficult to estimate the burden of API importation without sounding immodest.
“We import everything (machinery inclusive) except maybe water. We should be talking about how much we are losing in terms of foreign exchange consumed and opportunity lost. A very conservative estimate will run into about $500 million or half of the estimated market size,” he said.
On the implications for local manufacturers and drug security, Ojo, who is also a fellow of the Pharmaceutical Society of Nigeria (PSN), a past chairman, Association of Industrial Pharmacists of Nigeria (NAIP) and Chairman of the Nigerian Academy of Pharmacy (NAP) Committee on drug and substance abuse, said this means that the local manufacturers would continue to struggle to survive due to high cost of getting the APIs, scarcity of Forex and fluctuating rates.
He said it means they will not be able to compete in the world market and it means that any dislocation in the countries of origin will have a direct impact on local production and availability.
“It means that our country is not secure in terms of medicines availability. It means that we will continue to be an economic vassal of the countries that are supplying. It means that the suppliers can shut down their exports in case of any disagreements or issues that make us want to take a stand different from theirs. It means that we will remain on a cliffhanger forever,” Ojo said.
On plans to harness APIs locally using cassava and petrochemicals, the pharmacist said this is a low hanging fruit that will require a deep collaboration between government and the private sector. “Already, there are companies doing food grade starch and it should not be difficult to upgrade to pharmaceutical grade starch,” he said.
On the challenges towards local manufacture of APIs, Ojo said it needs a stable and supportive environment like other forms of manufacturing. “Our refineries need to be functional to bring out the primary substances and intermediates for synthesis. It needs adequate infrastructures, particularly regular power supply. There must be access to business credit at competitive rates. More importantly, a consistent and stable government policy and support is required,” Ojo said.
On the recommendations on how to manufacture APIs locally, Ojo said Nigeria should stop paying lip attention to development in the manufacturing sector. He said a deliberate policy of API production must be implemented with encouragement for local entrepreneurs.
On how much Nigeria will be saving yearly if she achieves local manufacture of APIs, Ojo said the pharmaceutical sector will expand and become more robust and the contribution of locally manufactured products will increase substantially from the meagre 30 per cent of national consumption to 50 per cent. “There will be more jobs available and the unemployment rate will go down. People will be happy and overall, the country will be saving more than $1billion as a conservative estimate,” he said.
Past President, Pharmaceutical Society of Nigeria (PSN) and Chief Executive Officer (CEO), Togmed Ventures, Mr Olumide Akintayo, it is obvious when one appraises the forex market in Nigeria, at an exchange rate of $1 to about N1,000, that the inflationary trend is almost unprecedented. Akintayo said the products from the stables of major manufacturers and importers have also risen by 200 per cent in recent weeks.
Akintayo said, in cases of companies which have indicated a chance they might exit, an artificial scarcity has been created and one can confirm retail prices in this particular sad chapter have risen by about 300 per cent on the average.
Akintayo said it is almost impossible to synthesize APIs without a petrochemical industry and he is not aware of any plan to start any petrochemical plant in Nigeria.
He said the Dangote Refinery, which has a component of this, does not strike as one that is interested in API production. “Once it dabbles into that dimension, it becomes more vulnerable to regulatory control from the principal pharma regulators including PCN, NAFDAC, and probably NDLEA,” he said.
Akintayo said operating a cassava starch production firm is certainly less complex, but surprisingly people have refused to take up the challenge.
“I remember sending a proposal to one of the state governors (now ex-governor) on the viability of this project, but he didn’t even dignify me with a formal acknowledgement. Yet, there is pharmaceutical grade starch of tremendous value in the brewery, paint, and other sectors apart from the pharmaceutical industry itself,” he said.
Akintayo said Nigeria needs a petrochemical industry base, which is very capital intensive and funds to drive such remains a major disincentive.
Akintayo, however, said a Private Public Partnership (PPP) initiative championed by viable states might suffice.
He said the PPP structure must enlist key local manufacturers who can be made to access a special pharmaceutical manufacturing fund specially driven by the Central Bank of Nigeria (CBN) in collaboration with some of A-list banks.
The former PSN boss said this, however, is a multi-million-dollar project and clearly may transcend into N1 trillion base investment. “It is for those who are lion hearted but remains a viable option to explore,” he said.
Akintayo said the global pharmaceutical market is estimated to be $1 trillion and Nigeria presently accounts for less than $2 billion despite opportunities. He said pharmaceutical manufacturing accounts for less than 0.02 per cent of the GDP of Nigeria and investments in APIs can change all in a few years.
The pharmacist said Nigeria can create an African hut for APIs and the ripple effects of these will catapult pharmaceutical manufacturing for almost a significant five per cent as seen in China and India. “In places like the United States, giant pharmaceutical manufacturers like Pfizer are some of the biggest private sector players. GSK was number two manufacturer in the United Kingdom (UK) at some point. Our pharmacists in academia, research and developments, and industries will compete with the best anywhere in the world. So, we can make these symphonies of progress happen in Nigeria,” Akintayo said.
The pharmacist said the PCN Act 2022 clearly delineates the scope of responsibilities of each cadre of registered facility in pharmacy practice in Nigeria. “We put on record the nefarious activities of some foreign mega wholesalers and distributors who have now assumed the status of sole representatives of many companies,” he said.
Akintayo said in the oil and gas sector, a leading public enterprise currently engages only two mega distributors to supply all drugs running into exclusive hundreds of billions of naira in a process that shortchanges Nigeria’s economy as well as 160 local manufacturers, over 250 Nigerian drug importers and another over 500 registered Nigerians pharmaceutical companies in retail and wholesale practice.
He said some of these mega distributors are the same companies hobnobbing with foreign multinational pharmaceutical companies to cede their business interests in Nigeria to them, because they have existing huge distribution networks and easy access to forex to sustain the business interest of the foreign multinationals in Nigeria.
Akintayo said the attraction in this proposal is that the foreign multinationals were advised to do away with their Nigeria employees as their products can be made available at near zero investment. This, he said, is indeed an attractive proposal to any multinational.
“GSK Plc., which recently announced its intention to exit Nigeria, once gave a Nigerian local pharmaceutical distributor a franchise to distribute its products around 1998. The result was catastrophic as it signaled the emergence of counterfeit GSK products like its foremost anti-malarial Halfan of yesteryears in that dispensation.
“I therefore submit consequent upon the reality that drug matters are on the Exclusive List that the Federal Government and all its apparatus must not allow pharmaceutical multinationals who exit Nigeria to continue to import, distribute, sell and dispense such,” he said.
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