HomeHEALTHNaira Depreciation: Import Costs Soar to N900 Billion

Naira Depreciation: Import Costs Soar to N900 Billion

The escalating prices of pharmaceutical products in Nigeria are poised to persist in 2024, potentially exceeding N900 billion, primarily attributed to the depreciation of the Naira. The International Trade Center’s data reveals that Nigeria imported $1.05 billion worth of pharmaceutical products in 2022. At the 2024 exchange rate of N902.45/$, this is expected to cost N950.81 billion. The absence of foreign trade records for Q4 2023 necessitates reliance on 2022 data.

Pharmaceutical products encompass various items such as dried glands, medicaments, and medical preparations. Nigeria predominantly sources these products from countries like India, China, Malaysia, Netherlands, and Belgium. The country’s pharmaceutical imports have consistently exceeded $1 billion since 2019, reaching $2.84 billion in 2020. However, 2024 is anticipated to witness a surge due to the strategic shift of foreign companies like GlaxoSmithKline Consumer Nigeria and Sanofi towards importation.

GlaxoSmithKline Consumer Nigeria, after 51 years of operations, disclosed plans to transition to a third-party direct distribution model for its pharmaceutical products in August 2023. Similarly, Sanofi, a French multinational, announced its departure from Nigeria, opting for a third-party distribution model from February 2024. Consequently, drug prices soared by over 100%, attributed to Nigeria’s escalating inflation and foreign exchange challenges, especially impacting the pharmaceutical industry.

The vulnerability of Nigeria’s pharmaceutical industry to economic shocks is emphasized by Professor Boladele Silva from the University of Lagos. The country heavily relies on importing active pharmaceutical ingredients, making it susceptible to fluctuations in foreign exchange rates. 

Sesan Kareem, the Founder and CEO of HunPharm Africa, attributes the surging drug prices to fluctuating exchange rates. In a free-market system, prices are influenced by factors like currency depreciation, impacting the cost of importing pharmaceutical products and raw materials. The scarcity of foreign exchange further compounds the situation, leading to higher operational costs for manufacturers.

Concerns over the soaring drug prices have prompted responses from healthcare professionals and political figures. The Chairman of the Nigerian Medical Association’s state branch, Dr. Benjamin Olowojebutu, emphasizes the urgency of addressing the unaffordability of medical services. President Bola Tinubu, during a Federal Executive Council meeting, endorsed resolutions to tackle the rising pharmaceutical costs, including sector regulation and addressing the crisis of human resources in the health sector.

However, the persistent depreciation of the Naira and strategic moves by foreign pharmaceutical companies are driving up drug prices in Nigeria, posing challenges for both the industry and consumers. Efforts to address these issues involve regulatory measures and a focus on human resources in the health sector.



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