Nigerians Spend N80.98 billion On Drugs In 2022 – Companies That Benefited From It

Nigerians bought N80.98 billion worth of drugs in 2022, increasing the amount spent in the preceding year by 22.95 per cent, Prime Business Africa learnt.

Five companies; Fidson Healthcare, Glaxo Smith Kline, May and Baker, Pharma Deko as well as Morison benefited from this whopping spend.

However, the industry is far from being largely profitable, as two of the companies suffered significant losses during the year in review. 

The N80.98 billion generated by the five pharmaceutical companies is well above the N65.86 billion grossed by the drugmakers in 2021.

Prime Business Africa gathered that the drugmakers are burning most of their turnover on manufacturing their brands of drugs, as 66.38 per cent of the industry’s revenue is spent on making medicines available in the market or pharmacy. 

The cost of sales grew by 35.38 per cent last year, recording a higher growth when compared to the 22.95 per cent growth in turnover for the same period. 

This weighs on the drug companies’ bottom line, although the publicly listed firms managed to squeeze out N6.98 billion profit after tax amid the rising cost of sales, surpassing the N5.83 billion net profit reported in 2021. The industry’s profit after tax growth was slowed by losses reported by Morison and Pharma Deko. 

Companies that benefited from high drug spend in Nigeria

This list is determined by the growth rate in profit after tax of the listed firms. 

May and Baker 

Despite not being the market leader, May and Baker was the highest beneficiary of the industry’s increased drug sales, as the firm reported 48.03 per cent in net profit. 

• May and Baker’s profit after tax closed 2022 with N2.16 billion, surpassing the N1.46 billion net profit recorded in the preceding year. 
• This was after generating N14.32 billion in revenue from sales of its drugs, which climbed 20.39 per cent when compared to the N11.90 billion turnover grossed in 2021. 
• The company was able to raise its net profit higher than other market rivals despite spending N10.41 billion on the cost of sales in 2022, which increased by 44.62 per cent when compared to the N7.20 billion cost of sales the previous year. 

Fidson Healthcare 

Fidson Healthcare reported the highest growth in revenue for the financial year of 2022, recording 31.67 per cent, as turnover hit N40.63 billion, against N30.86 billion. 

• However, its profit after tax was second to May and Baker, as it grew by 11.17 per cent year-on-year, posting N4.13 billion last year. In 2021, Fidson reported N3.71 billion net profit. 
• The company didn’t escape the impact of the cost of sales which gulped N23.45 billion in 2022. This is 48.83 per cent higher than the N15.75 billion spent in 2021. 

Glaxo Smith Kline 

Glaxo Smith Kline came third on the list, as the company reported N692.05 million bottom line last year, which is 5.05 per cent more than the N658.81 million profit after tax earned by the drugmaker in 2021. 

• The company’s net profit was burdened by the high cost of sales worth N19.33 billion in 2022. It surpasses the N16.27 billion expenses gulped during the year before. 
• At the end of last year, Prime Business Africa learnt that Glaxo Smith Kline had generated N25.39 billion, raising its turnover by 13.12 per cent when compared to the N22.44 billion of the preceding year.  

Losers of the drug market

Morison 

Morison made the losers list as the cost of production increased by 78.96 per cent, after spending N121.86 million in 2022, up from the N68.09 million cost of sales reported in 2021. 

• It contributed to the N91.52 million loss suffered by Morison last year. The management of the company failed to tame the loss, considering in 2021, it recorded N38.93 million. 
• This is despite Morison recording 10.13 per cent growth in its revenue for the period in review, as it closed 2022 with N154.85 million, above the N140.61 million grossed in the corresponding period. 

Pharma Deko 

Pharma Deko closed last year with a N141.60 million loss after tax, surpassing the N137.90 million loss recorded by the company in 2021. 

• The loss arises from the firm suffering a -8.18 per cent decline in turnover after generating N469.58 million in revenue in 2022, which is below the N511.44 million grossed the year before. 
• When it comes to the cost of production, it recorded the lowest hike of 6.31 per cent, disbursing N435.21 million on production cost last year, above the N409.38 million expended in 2021. 

Fakoyejo Olalekan

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