Prices of GSK’s signature products, Augmentin 228mg and 475mg, have skyrocketed by 307 percent and 328 percent respectively between August 2023 when the company left Nigeria and August 2024, BusinessDay’s market findings show.
Augmentin 228mg and 475mg cost N12,000 and N18,000 today as against N2,950 and N4,200 respectively in August 2023, findings show.
The price of Seretide inhaler, an anti-asthma product of GSK, jumped from N7,000 in the first quarter (Q1) of 2023 to as much as N70,000 in November of that year. It has now settled at N51,300, representing a 632 percent jump in price from N7,000 in August 2023.
The price of Amoxyl 500mg has jumped 3.5 times to N3,400 in August 2024 from N950 in the corresponding period of 2013.
However, Augmentin 625mg price has declined slightly, falling from N14,000 in August 2023 to N13,400 in the corresponding period of 2024.
The price of another anti-asthma product, Ventolin inhaler, has also dropped marginally from N9,100 to N8,700, due to increased supply by drug distributors across the country.
The general price hikes only capture half of the financial difficulty GSK’s exit poses on Nigerians, most of whom already grapple with strained pockets and weak purchasing ability.
Shortly after GSK announced its withdrawal from Nigeria and plans to rely on a third-party distributor, product shortages emerged as suppliers and retailers stockpiled goods, forcing up prices.
As of the Q1 of 2023, Augmentin 1g was sold at around N5,000; 625mg at N4,000; 475mg at N2,700-N3,000, and 228mg at N2950.
However, at the hoarding and gouging peak that rocked November 2023, Augmentin 625mg jumped by 525 percent to N25,000 in some pharmacies. The 475mg and 228mg brands were sold between N8,000 and N9,000. The one-gram brand hit N4,000.
Meanwhile, large pharmaceutical chains sourcing from fulfillment centers (FC), usually third-party suppliers, still retain prices relatively the same as they were in the Q1 of 2023.
BusinessDay understands that the decline recorded in the last year with products such as Augmentin 625mg and Ventolin inhaler has been due to increased supply in the market, easing the scarcity.
“Ventolin inhaler was and some Augmentin products were scarce and sourced by FC late last year. But they are now supplied by the distributors, hence the reduction in selling prices,” a source running a large pharmacy outlet told BusinessDay.
Samuel Okwuada, CEO and co-founder of Remedial Health, warned that supply may have increased along with parallel imports, and counterfeiting could be playing a role in the supply mix, as bad actors are also taking advantage of the exit.
Nigeria’s economic challenges amplified by inflationary pressure and exchange rate volatility have threatened the pharmaceutical sector in the past one year.
GSK’s departure followed years of declining profit margins and insurmountable challenges in accessing foreign exchange through official channels, which severely hampered its operations.
Patronage of cheaper brands or generic versions of these products has been the coping mechanism for many Nigerians facing the hardship of high drug costs.
Analysts expected that the exit of multinationals, including Sanofi, from Nigeria would open an opportunity for existing companies to explore and expand their market share.
Meristem in its 2024 outlook projected that these exits would create an opportunity for existing companies to further capture market share and also anticipated an increase in pharmaceutical and consumer health product prices in 2024.
The firm projected a strengthened financial performance at the industry level, driven by growth in sales volumes and projected price adjustments to align with the prevailing macroeconomic conditions.
It, however, noted there would be a matching increase in production costs and operational expenses due to expected increases in transportation and energy costs as well as sustained high inflation.
So far, MeCure Industries has been the only local company that has attempted to produce amoxicillin-clavulanic acid tablets locally, a potential substitute to GSK’s antibiotic, Augmentin 625mg.
Fidson Healthcare Plc was already handling contract manufacturing of Panadol, a type of paracetamol, before GSK’s exit.
According to analysts who spoke with BusinessDay, Nigeria’s current challenge with high exchange rates, high interest rates and a tough operating environment are disincentives for investors.
Patrick Ajah, chief executive officer of May & Baker, told BusinessDay that fixing the exchange rate is the major solution to resolving these issues.
He also noted that the government must be deliberate about providing support to pharmaceutical companies such as intervention funds.
“There are companies with the ability to make things like ampicillin and cloxacillin, but they are small and lack the support required. Many of them have closed down or paused operations. It is important to encourage companies to come up,” Ajah said.
“My company was trying to build a facility last year. We had done the market assessment and found a location to build. You can’t build such a facility on the same site where you make other things to prevent contamination. By the time we were done with analysis, the devaluation of the naira stopped us. The amount I needed had tripled. We couldn’t start.
“The major thing that the government needs to do is to fix the issue of exchange rate. That is the greatest problem leading to the prices that we are seeing. All our imports are in dollars. There is no way you can catch up from an exchange rate that was N460 last year and is now over N1500. This is one major reason why multinationals are leaving. It is not the fuel subsidy removal.
“All the money multinationals were bringing had to go through the banking system at the official rate. You brought in money to come and build a facility at the exchange rate of N360 and now you are going to remit at over N1,500 and can’t even find the dollar. Many companies won’t cope. Fixing the exchange rate is one single thing that will immediately reset our issues,” Ajah noted.
