With profit at an eight-year high, pharmaceutical May & Baker Nigeria Plc reported a 56 percent growth despite high operation costs, foreign exchange scarcity and high inflation impacting the sector.
In 2024, the company saw its profit rise in the first, second, and third quarters by 130 percent, 102 percent, and 1,477 percent, respectively.
However, in the fourth quarter (Q4) the firm reported a 69.2 percent decline in its after-tax profit during the period driven by high operational costs and fewer gains from income-generating activities.
Profits released by drugmaker manufacturers have been discouraging so far, May & Baker and Fidson Healthcare bucked the trend as it recorded strong growth to end the 2024 financial year.
While Neimeth International Pharmaceuticals and Morrison Industries Plc reported a loss in their profit during the period.
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Industry Overview
In 2023, GlaxoSmithKline (GSK) discontinued operations in Nigeria ending its 51-year existence in the country, while French pharmaceutical manufacturing company, Sanofi, exited Nigeria in November last year.
The exit was attributed to forex as the major reason these pharmaceutical multinationals from Nigeria.
The cost of drugs in Africa’s fourth biggest economy has become very expensive, as the prices of imported drugs are dominated by dollars.
The Federal Government introduced an executive order to suspend import duties and value-added tax on essential medical supplies imported into the country.
Experts in the pharmaceutical industry believe the high cost of locally produced pharmaceuticals will ease and importation will increase.
The FX liquidity challenges, which worsened last year as a result of the naira devaluation, have led to a scarcity of pharmaceutical raw materials that led to an increase in the prices of drugs.
According to the unaudited financial statements of listed drugmakers, Fidson Healthcare experienced the most substantial loss, recording a forex deficit of N5.62 billion in 2024, an increase from the N1.26 billion loss reported in 2023.
Neimeth also faced significant challenges, reporting a forex loss of N2.03 billion in 2024, an increase from the N1.26 million forex loss in the previous year. Similarly, May & Baker Nigeria reported a forex loss of N196 million in 2024.
Recently, the FG disclosed that it is currently developing a single platform for pooled procurement of healthcare products in order to reduce costs and ensure the accessibility of essential medicines.
Pooled procurement is a model where financial and other resources are combined across different purchasing authorities, to create a single entity for bulk buying of health products on behalf of individual purchasing authorities, according to the World Health Organisation.
Forging own path
In its 2024 full-year unaudited result, May & Baker shrugged off a harsh operating environment coupled with cash-strapped consumers to record a 47.4 percent jump in revenue to N28.9 billion from N19.6 billion recorded in the same period in 2023.
The revenue growth was largely driven by sales of pharmaceutical products and beverages amounting to N28.7 billion and N200 million respectively.
The cost of sales for May & Baker grew by 56.4 percent and shrank the gross margin by N1 to N28 from every N100 sales.
Gross profit grew 26.7 percent to N8.34 billion from N6.58 billion during the period. Operating profit rose while other income rose 96.5 percent.
The growth in interest income pushed net interest income out of negative territories and lifted pre-tax profit.
Earnings per share (Basic), the portion of a company’s profit that is allocated to each outstanding share of common stock and an indication of the company’s health improved to N98.10 from N62.78.
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