Pharmaceutical company May & Baker Nigeria Plc reported a 56 percent profit gain, an eight-year high, despite the industry’s impact from rising inflation, foreign exchange shortages, and high operating costs.
The company’s profit increased by 130 percent, 102 percent, and 1,477 percent, respectively, in the first, second, and third quarters of 2024.
However, due to high operating costs and fewer benefits from income-generating operations, the company recorded a 69.2 percent fall in its after-tax profit during the fourth quarter (Q4).
May & Baker and Fidson Healthcare defied the trend by recording robust growth after the 2024 fiscal year, even though drugmaker manufacturers’ profits have been disappointing thus far.
Morrison Industries Plc and Neimeth International Pharmaceuticals, on the other hand, recorded lower profits during that time.
Industry Synopsis
While French pharmaceutical manufacturer Sanofi left Nigeria in November last year, GlaxoSmithKline (GSK) ended its 51-year presence in 2023 by ceasing operations.
Forex was cited as the primary cause of these global pharmaceutical companies’ departure from Nigeria.
Due to dollar-dominated import drug pricing, the cost of drugs has skyrocketed in Africa’s fourth-largest economy.
The federal government issued an executive order to reduce import taxes and value-added taxes on vital medical products entering the nation.
Pharmaceutical industry experts predict that imports will rise and the high cost of locally made medications will decrease.
Drug prices have increased due to a shortage of pharmaceutical raw materials brought on by the FX liquidity issues, which were made worse by the depreciation of the naira last year.
According to the unaudited financial accounts of listed pharmaceutical companies, Fidson Healthcare had the largest loss, with a currency deficit of N5.62 billion in 2024, up from the N1.26 billion loss recorded in 2023.
Neimeth also had many difficulties; in 2024, they reported a forex loss of N2.03 billion, up from N1.26 million the year before. In 2024, May & Baker Nigeria also reported a forex loss of N196 million.
To lower prices and guarantee the availability of necessary medications, the FG recently revealed that it is now creating a single platform for the pooled buying of healthcare supplies.
The World Health Organisation defines pooled procurement as a methodology in which financial and other resources are aggregated across many purchasing authorities to establish a single company to acquire health items in bulk on behalf of individual purchasing authorities.
Making Own Way
May & Baker’s 2024 full-year unaudited results showed a 47.4 percent increase in revenue to N28.9 billion from N19.6 billion during the same time in 2023, despite a challenging operating climate and cash-strapped consumers.
Sales of beverages and pharmaceutical items, which totaled N200 million and N28.7 billion, respectively, were the main drivers of the revenue growth.
For every N100 sold, May & Baker’s gross margin decreased by N1 to N28 due to a 56.4 percent increase in their cost of sales.
During that time, gross profit increased 26.7 percent to N8.34 billion from N6.58 billion. While other income increased by 96.5 percent, operating profit also increased.
Pre-tax profit increased due to the increase in interest revenue, pushing net interest income out of negative territory.
Earnings per share (Basic), which measures the health of a firm by allocating a percentage of its profit to each outstanding share of common stock, increased from N62.78 to N98.10.
