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Stakeholders raise alarm as local drug manufacturing nears collapse

By Chukwuma Muanya
20 August 2020   |   4:20 am
Pharmacists and industrialists under the aegis of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), yesterday, said that local drug manufacturers may soon close shop since almost all finished pharmaceuticals products

Pharmacists and industrialists under the aegis of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), yesterday, said that local drug manufacturers may soon close shop since almost all finished pharmaceuticals products are imported into Nigeria, even those that fall under 14- import prohibition list. They blamed the situation on inconsistent government policies, which deter potential investors and kills local drug manufacturing.

They cited a publication by the Federal Inland Revenue Service (FIRS), which says that raw materials for pharmaceuticals are VATABLE while the finished product is not VATABLE. PMG-MAN said the implication is a typical scenario of policy summersault, which will make nonsense of manufacturing locally. They said the Federal Government cannot give incentive to importers and disincentivise local manufactures that are creating jobs, saving foreign exchange (forex), attracting investors among other economy building ventures.

Chairman, PMG-MAN and Chief Executive Officer of Fidson Healthcare Plc, Dr. Fidelis Ayebae, told The Guardian that pharmaceutical manufacturing sector is a highly, if not overtly regulated sector that returns on investment is not immediate and when compared to other sectors, they are not that rapid. He said the sector is hugely capital-intensive and if the processes are not duly validated it makes nonsense of all investments. “It is like investing in pharmaceutical research,” Ayebae said.

The PMG-MAN boss said enough of the rhetoric’s on ease of doing business, let the country walk the talk and start with low hanging fruits.
Ayebae said the Federal Government could start by ensuring that as many that have verifiable plan for expansion and repurposing their facilities should be able to access the Central Banks of Nigeria’s (CBN) N100 billion intervention fund for the healthcare sector. He said access to Forex should be made available with expedited clearance at the gateways by the regulators and they should work with achievable timeline, enough of duplication of responsibilities. Ayebae said a deliberate radical policy for the pharmaceutical manufacturing sector should be articulated in response to the pandemic and future pandemic and they are ready to work with government to deliver on this.

Reacting to comments by the Director General of National Agency for Food and Drug Administration and Control (NAFDAC), Prof. Christianah Mojisola Adeyeye, that the only thing pharmacists do not import in Nigeria is water, Ayebae said: “Yes! There are many challenges facing the sector, but none, that does not offer opportunity for value adding. Madam DG was quoted out of context, you know She is a strong believer that there are huge potentials untapped in the local pharmaceutical manufacturing sector, but due to inadequate support for the sector, the sector is not living up to close the gap in access to medicine. For Madam DG, local pharmaceutical companies should be able to close the gap, at least produce 70 per cent of the medicine consumed by Nigerians but the reverse is the case, we are still import dependent. She wanted to drive a point home on need, for the sector to be prioritised and incentivised, I guess She is talking of manufacturing Active Pharmaceutical Ingredients (APIs).

“Last week the Supply Chain Management (SCM) -Material managers committee of PMG-MAN met. The feedback on industry challenges are quite frustrating –from your shipment roaming around in Lomé because there is no space for it to berth to over regulation driven by government agencies at the gateways that end up increasing cost of production. Some of the government agencies include Nigeria Customs Service, National Environmental Standards and Regulations Enforcement Agency (NESREA), NAFDAC, National Drug Law Enforcement Agency (NDLEA), Standards Organisation of Nigeria (SON), and National Security Agencies (NSA). Sometimes duplication of duties- to move your container from the port to your facility after the many inspections, what you will pay from the port to the facility will be higher than what you must have paid to freight the container to Nigeria, due to bad roads.

“We are all aware of the challenge of access to forex or opening Letter of credit, all these impacts negatively to the business environment. One thing is having good intention another is the outcome, sometime in the last month there was a publication by FIRS that raw materials for Pharmaceuticals are VATABLE, note by, the finished product is not VATABLE, we have to push back for clarification, the implication of that publication by FIRS is a typical scenario of policy summersault which will make nonsense of manufacturing locally –Another way of saying it is -we all should become importers, with that policy you cannot compete in any way, as of today FIRS is yet to refute that publication signaling negative messages to potential investors. You cannot give incentive to Importers and de incentivize the local manufactures that are creating Jobs, saving forex, attracting investors etc. Last I checked, almost everything finished pharmaceuticals product are imported into Nigeria space, even those that fall under 14- Import prohibition list. When you compare the list to other countries in Africa like Ghana that has 59 prohibited products – you dare not import such prohibited listed products into their country without consequences. Go to our Pharmacy outlets you see those prohibited products competing with ours.”

Former President of the Pharmaceutical Society of Nigeria (PSN), Olumide Akintayo, told The Guardian: “I do not know what led to that statement. Of course I am not also unfamiliar with the context, but everybody knows that excessive imports is a major drawback of our economic life in all sectors, so it is not restrictive to one sector.

“Well, like I said earlier, this is not peculiar to the pharmaceutical sector. If you must know, the importation of pharmaceutical products is not exactly a professionally inclined endeavour. It is an act that borders on open trade with some bit of regulatory control. Over 80 per cent of pharmaceutical importers in Nigeria are not even pharmacists.”

What is the percentage of local inputs in Nigeria’s pharmaceutical sector? Akintayo said: “Very negligible from the APIs, excipients, packaging, machinery and so on. Look, Nigeria is not an industrialised nation, which is why the real sector contributes little or nothing to Gross Domestic Product (GDP). There are major challenges with installed capacity and capacity utilisation which all combines to make local manufacturing of any product a business laden with insurmountable risk factors.

“Everything from the absence of a functional petrochemical industry which triggers meaningful industrial revolution in other climes. The poor incentives for local production, including high tariffs and non-existing waivers remains clog in the wheel of appreciable progress. When you add the problem of poor infrastructures and feeble patronage by Government at all levels, you can then begin to imagine the immensity of the aberrations we are talking about.”

The pharmacist said access to forex remains a formidable and uphill task once “you are not a favoured entrepreneur.” He, however, said NAFDAC and the Nigeria Customs are improving in terms of service delivery at the Ports even though it must get better.

Former Chairman, National Drug Distribution Committee and Chief Executive Officer (CEO) of Merit Healthcare Limited, Dr. Lolu Ojo, told The Guardian: “The NAFDAC DG was referring to the pharmaceutical manufacturers and not pharmacists. It is true that virtually all the inputs into local pharmaceutical manufacturing in Nigeria are imported. The active ingredients, the excipients and even the bulk of the primary packaging materials are imported.

“It is a reflection of the nature of the Nigerian economy where activities are consumption driven. The operating environment is not conducive for local manufacturing in terms of power, infrastructures, access to fund, high cost of fund, ease of doing business, multiple taxation, corruption, insecurity and other vices that are against smooth running of manufacturing business. Have we wondered why the companies that had factories in Nigeria before left the country? What happened to Dunlop, Michelin, P&G, etc.?”

Ojo said that 80 per cent of the total drugs consumed in Nigeria are imported and the rest are manufactured locally. He said for the 20 per cent that are manufactured locally, almost 100 per cent of the inputs like machineries, active substances, excipients, etc. are imported. “This was why the NAFDAC DG made the statement that the only thing that is not imported in that sector is water,” he said.

Ojo said manufacturers in Nigeria couldn’t compete with their counterparts in India and China where most of the country’s imported drugs come from. “Over there, they get easy access to cheaper fund and are encouraged to produce for foreign markets,” he said.

The DG NAFDAC claimed things are changing under Buhari. Are they? Ojo said: “Possibly yes on paper. In real life situation, nothing has changed. It will cost less than $2000 to transport a 20-ft container from Mumbai, India to Apapa port in Nigeria (7,620km), but it will cost about N500,000 to transport the same container from Apapa to Isolo (16.6km). This is just an example of the multiple misnomers in Nigeria and Government if fully aware.”

On the ease of doing business and access to forex, Ojo said: “The operating environment in Nigeria is not conducive for business. It appears that everything is staked against the businessman. Nigeria is ranked as 131 out of 190 countries in ease of doing business in 2019, which was an improvement from the 146th ranking in 2018. We cannot be in this type of position if we want manufacturing to thrive in Nigeria.

“The situation with Forex has worsened over the past months. Government has moved the official exchange rate from N307 to over N380 now and the parallel market has responded appropriately. It is now between N465 and N500 to $1.”

A pharmaceutical chemist and Project Lead of Bloom Public Health, Prof. Chimezie Anyakora, told The Guardian: “The situation exposes the many challenges of the pharmaceutical sector. How true is this statement? The Director General of NAFDAC is absolutely correct. But the good thing is that the country is waking up and things are happening fast. There is a renewed awakening that I am so excited about.

“I think this happened because there has never been a concerted effort to solve this. Unlike now the pharmaceutical sector has not had a sustained drive for growth. Most interventions have been cosmetic or even detrimental to its long-term growth. In the past five years a lot of leaders have emerged in the sector to lay a solid foundation for its growth. These include leaders at NAFDAC, Pharmacists Council of Nigeria (PCN), PSN, National Association of Industrial Pharmacists (NAIP) and PMGMAN. What these great leaders are doing now will forever change the landscape.

“The present and the immediate past leadership of PMGMAN have really put in a lot of selfless effort to lay this foundation by engaging all the relevant stakeholder and advocating strongly. The present and past leadership of the pharmaceutical society of Nigeria have really been extraordinary too. I have worked very close with the two regimes and it is so encouraging to see the passion to move the sector. This is the turning point and it is so critical that if we don’t get it right I doubt if Nigeria will ever be a major player in the pharmaceutical sector. But I am convinced that we are on the right track.”

Anyakora said the pharmaceutical value chain is the set of activities and often times interrelated, that occur to bring a pharmaceutical product to the market. He said some of these activities in the pharmaceutical value chain include: calibrations, validation, qualification, equipment supply or fabrication, research and development, packaging, personnel trainings, logistics, distribution, bioequivalence studies, clinical trials, API manufacture, excipients manufacture, lab services etc. Anyakora said of all these only a few can be procured locally and they include: training to some extent, lab services to some extent, logistics and distribution, packaging to some extent. “As you can see in the core manufacturing activity there is practically nothing we can boast of. This gives an inkling of the tough terrain our local pharmaceutical manufacturers operate in. But for me I see the good part of this situation. We need to capitalize on this opportunity. Yes it is an opportunity, a huge opportunity for pharmacists and pharmaceutical scientists and engineers to create value and economic benefit for themselves and offer employment to many Nigerian,” he said.

Anyakora said the government should see this as an opportunity to grow the economy and at the same time improving the health outcome and medicine security in the country. He explained: “Examples abound on how different governments have stimulated growth in their pharmaceutical sector over the years. India, Pakistan and Bangladesh are good examples. Bangladesh supplies over 95 per cent of their medicines’ need in country and the sector contribute significantly to their GDP. It was not an accident. It happened through a sustained plan and interventions by the government. India is practically the pharmacy of the world because decades ago they put in place some interventions, which they sustained over the years.

“The government should see their intervention beyond cosmetic short-term waivers. It should be aligned with a long-term growth of the sector. We cannot make intervention today and expect result tomorrow. It requires focus and effort over a long period of time. Every year hundreds of millions of dollars are spent on donor medicines that come to Nigeria. I think the government should be putting a timeline to have those hundreds millions of dollars put into the Nigerian pharmaceutical sector yearly. It can happen and Nigeria has the potential to be the leader of the pharmaceutical sector on the continent and beyond if we put enough effort in this direction.”

The pharmaceutical chemist said there is no way Nigeria can compare local manufacturing with importation. “Local manufacturing increasing the national pride, develops local expertise, creates jobs, grows the economy in a sustainable way and above provides medicines security. The pandemic has shown how fragile our medicines supply chain is. We cannot continue to rely on externally sources only. We have a large population and it is the job of the government to ensure an uninterrupted supply of essential medicines. We should have a national strategy that fosters and encourages local manufacturing of medicines,” Anyakora said.

On the ease of doing business, Anyakora said: “The solution lies in what the Association of Industrial Pharmacists of Nigeria is putting together in partnership with Bloom Public Health. We are working on putting together a pharmaceutical hub which will provide solutions to all these issues that pharmaceutical sector is facing and make the price of drug much cheaper and the quality much better and competitive so that Nigerian manufacturers will be able to participate in international tenders. This is going to be the culminating impact of all the interventions and awakening. This project will launched in a few weeks and dare to say that this is going to be the biggest intervention the Nigeria pharmaceutical will ever see. It is going provide such huge economic opportunity for various entrepreneurs. It will be a case study on how the pharmaceutical sector can be a vehicle for a huge economic transformation. Nigeria is reaping less than 10 per cent of what the pharmaceutical sectors. This intervention will move it to above 50 per cent within years. Everybody should be interested in this project.”

General Manager, Green Life Pharmaceuticals Limited, and the National Chairman of NAIP, Gbega Falabi, told The Guardian: “It will depend on how you determine, how much value placed upon those inputs, your approach and finally, your objective for the discourse. If we use the “3Ms” to determine our inputs, that is Men, Material & Money, then I would say we have got qualified hands here from factory floor to executives. We have the money though may be expensive, and in terms of materials, we depend heavily on importation.”

On the percentage of local material inputs in the pharmaceutical sector, Falabi said: “Very low, put it at 20 per cent if we consider packaging materials be made locally however, critical analysis may reveal that the plastic resins were imported in the first place.”

He said the pharmaceutical industry either get its active drug component from vegetable drugs (herbs) or from chemical precursors which substantially come from the petrochemical industry of which Nigeria does not have any viable one.

Falabi said the country’s short-lived industrialisation era saw Nigeria moving from a budding industrial nation to an import dependent one because of unfavourable policies. He said the manufacturing sector especially since the 1980s has encountered a hydra-headed problems from low capacity utilisation; poor; and high cost of capital from banks; non-supportive macroeconomic environment; multiple taxation by the different agencies of government to mention but a few.

The pharmacist said the paltry contribution of the industry to GDP has made subsequent government not to invest or take the matter of drug security on the front burner until this COVID-19 pandemic that reveals just how susceptible the nation is when India restricted goods that we can import from them.

He said doing the business of production is not easy with the huge financial and human capital outlay. “Lead time for imported inputs to arrive, long wait for Forex in the bank, Conversion time for manufacturing compared to importing finished formulation for ready market,” he said.

President, Pharmaceutical Society of Nigeria (PSN), Mazi Sam Ohuabunwa, who is an advocate for local production of drugs, is not happy on the many challenges the sector is facing. “Pharmacists are not overwhelmed at all. The problem has been the problem of national orientation and focus. Our country has not been consistently supportive of local drug production until now. By policy pronouncements we paid lip service but did not follow with appropriate actions and investment. The sort of thing which the Central Bank of Nigeria (CBN) did this COVID-19 period by providing dedicated long term funding to support research, development and capacity enlargement are what we have cried for several years and no body seemed to listen,” he said.

The septuagenarian added: “It did not make sense to borrow 90 days money to invest in project with five year gestation period. We tried doing so in Neimeth and it hurt us. Because Neimeth went into Research and Development (R&D) with short term and commercial prices loans and it did hurt. So many people followed the least line of resistance, which was importation or tertiary manufacturing. But now with the change of attitude through CBN, watch the pharmaceutical industry will perform in the next three years onwards. We have competent pharmacists and pharmaceutical scientists who can compare with the best in Africa if not globally.”

Ohuabunwa at resumption of office as the President of PSN pledged among other things to ensure that the increased reliance on local production of drugs as enshrined in the national health and drug policies are pursued determinedly to help promote national security and create more jobs for pharmacists in the industry.

On the breakthrough on COVID-19 vaccine by Russia, the pharmacist said: “Ordinarily this should be good news. But reports say that no scientific data has been published on the Russian vaccine, which seem to have been developed in a hurry. What is more they approved the vaccine before conducting a Phase 3 clinical trial. They are just beginning such trials after announcing the approval. That is not the international protocol.

“No way. Life is too precious to take such risks. It is not worth it. Luckily for Nigeria, the case load mortality at two per cent is comparatively low and will not support such desperate gamble.

“Vaccines if not properly tested and validated can become very lethal, because rather just help to build immunity to the disease may actually precipitate the disease and that will be very dangerous. We should await for an internationally valid vaccine expected early next year.”