No medicine for the Nigerian pharmaceutical industry

I have complained so often about the trials of manufacturing in this country that I sound like a cracked record. It continues to defeat reason that government rhetoric is about the need to develop our manufacturing base to provide employment, increase our tax base, attract investment and reduce the use of our foreign exchange for imports while its actions have the opposite effect.

During much of 2013 and 2014 when Kola Jamodu was president of the Manufacturers Association of Nigeria (MAN), we battled against the impending disaster that was the new ECOWAS Common External Tariff. After wrestling some concessions with little support from our then government who could barely be bothered to attend ECOWAS meetings, the new tariff was approved. It took effect here from June 2015.

Nigeria is now in the ludicrous position that we charge ZERO duty on imported pharmaceutical products, including poor quality and even dangerous cheap Chinese and Indian fakes, while we impose duties of 5 percent and 20 percent on the critical raw materials and packaging used by our own manufacturers.

Who benefits from this nonsense? The ECOWAS Common Tariff is a concoction of the EU to impose open borders on their West African markets for the benefit of their own exporters in the name of ‘free trade’. As few of the other markets in ECOWAS have a significant industrial base but rather benefit from being an ‘entre port’ for trade with the region’s powerhouse, it is in their interests to support this policy. In an ideal world, no one would support protectionist trade barriers as they encourage inefficiency and poor standards. However, we do not live in an ideal world. We live in one with a dysfunctional power sector; a collapsing carbon-based economy, infrastructural decay and a burdensome regulatory system. Even with modest duty protection we struggle to be competitive. Now our market is thrown open to those economies with an efficient or even subsidised infrastructural base, our local manufacturers are condemned. Several of these economies seem more to encourage ‘passing off’ than they do to restrict it and Nigerians will suffer from inferior medicines even more than is already the situation. It will be more a case of only khaki being available rather than it not being leather!

Who will suffer from this? Nigeria has over 150 pharmaceutical factories out of which four have complied with World Health Organisation (WHO) current Good Manufacturing Practice (cGMP). Even so the industry continues to struggle. While NAFDAC has done its best to protect Nigerian consumers, the industry itself has invested some N100 billion in the last few years to improve standards and build capacity. It employs some one million people directly and indirectly. All of this is now at risk.

Sounds pretty bad huh? Well, it gets worse. An important aspect of the pharmaceutical industry’s value chain is the distribution of medicines. The importance of an efficient distribution system cannot be overemphasised as it ensures that quality medicines readily get to the consumer at reasonable prices. The current drug distribution system in Nigeria is chaotic and continues to expose consumers to the dangers of Substandard and Falsely-Labelled Counterfeit (SSFFC) medical products. In a bid to find a lasting solution to the medicine distribution challenge, the last government (through the Federal Ministry of Health) introduced the National Drug Distribution Guidelines (NDDG).

However, in common with so many of our industrial policies, the solution to a problem has been defined without proper consultation with stakeholders and on the basis of those with the loudest voice or with the closest seat to government. The guideline restricts the current wholesalers’ network to only purchasing medicines from the limited number of, mostly foreign-owned, distribution companies registered under the new code. Consequently, according to the local industry, the NDDG has essentially handed over the pharmaceutical business to largely foreign-owned syndicates, which will increase the cost of essential medicines in the country by inefficient and suspect ‘faux’ regulation of the distribution chain. Despite protestastions of the pharma sub-sector of MAN and the Pharmaceatical Society of Nigeria, the FMOH, in a press briefing on June 26th, 2015, insisted on the full implementation of the NDDG effective from July 1st, 2015.

The local industry has now made its plea to the new administration. Their recommendations are threefold:

(1.) That Import Adjustment Tax of 20 percent is immediately imposed on imported finished pharmaceutical products with HS Code 3003 and 3004 because Nigerian manufacturers have the capacity to produce these medicines.

(2.) Under the National List within the CET, input into pharmaceutical manufacturing (raw materials, excipients and packaging) should be allowed to be imported at 0 percent by bonafide pharmaceutical manufacturers.

(3.) As the July 1, 2015 date for the implementation of the National Drug Distribution Guideline is unrealistic, it should be reviewed in consultation with stakeholders and a proper framework for implementation be put in place by Federal Government, the Pharmacists Council of Nigeria (PCN) and the National Agency for Food and Drug Administration and Control (NAFDAC).

I sincerely hope PMB and his new team act swiftly on this before this industry is poisoned by the government’s own medicine.