THE CODEINE BAN: IMPACT ON THE PHARMACEUTICAL INDUSTRY
Following the upsurge from the BBC documentary, a beautiful piece of investigative journalism that revealed the decay in the Nigerian Pharmaceutical industry, the addiction to cough syrup by some Nigerian youths and the negative influence codeine has had in the Nigerian ecosystem, the Federal Government, through the Minister of Health, Prof. Isaac Adewole directed the National Agency for Food, Drug Administration and Control (NAFDAC) to ban further issuance of permits for the importation of codeine as an active pharmaceutical ingredient for cough syrup preparations. In its stead, the Minister directed that codeine-containing cough syrups be replaced with ‘dextromethorphan’ which is less addictive. He also directed the Pharmaceutical Council of Nigeria (PCN) and NAFDAC to supervise the recall for labeling and audit trailing of all codeine-containing cough syrups in the country; and banned sales of codeine-containing cough syrup without prescription across the country.[i] How do these directives affect the Nigerian Pharmaceutical industry?
THE NIGERIAN PHARMACEUTICAL INDUSTRY
Nigeria is one of the most promising and rapidly growing pharmaceutical markets in West Africa with more than 150 pharma-formulation manufacturing facilities. There are about 130 pharmaceutical firms operating in the country and 5 indigenous companies control 58 percent of the manufacturing of pharmaceutical products.
The Nigerian pharma industry is growing at 13 % annually with an estimated market size of $1.8 billion. In the ECOWAS (Economic Community of West African States) West-Africa sub-region, approx. 60% of drug manufacturing takes place in Nigeria, underlining the huge sub-regional market.[ii]
Currently, there are about 23,000 pharmacists registered in Nigeria but only about 14,000 have practicing licenses.[iii] Performance indices for the sector suggest poor performance; capacity utilization is 40%; the sector is only able to satisfy 25% of the local demand for drugs while imports mainly from Asian countries account for the remaining 75%.[iv]
As at 2013, pharmaceutical imports reached a value of $481 million and are estimated to reach $789 million by 2018. The global pharmaceutical sector is growing rapidly and is expected to more than double to $1.3 trillion, but Nigeria does not feature among the identified 17 growth markets in the sector.[v]
Chemical and pharmaceutical products under the manufacturing sector grew by 1.36% in Q1 2018 from 4.80% in Q4 2017 and 0.24% in Q3 2017. These stats may however change, owing to the directives by the Federal Government on codeine and codeine-containing cough syrup earlier this year.
HOW DOES THE CODEINE BAN AFFECT THE PHARMACEUTICAL INDUSTRY?
The cough syrup with codeine is one of the lines of no fewer than 22 pharmaceutical manufacturing companies. With the ban on importation of codeine and manufacturing of codeine-containing cough syrup, these 22 or more pharmaceutical manufacturing companies are faced with losses as this line of products is grossly affected. The cough syrup market was booming prior to the addiction discovery and some of these companies placed heavy reliance on its production as a major output product. The consequence of this, should the companies not have an alternative commodity, target market, is that there will be a huge revenue loss and, in some cases, a total shut down of operations.
Some of these manufacturing industries have warehouses of large amounts of stored cough syrup. It would have been soothing if the Federal Government gave a time-frame before enforcing the ban, but the impromptu nature of the directive entails that the manufacturing companies will try to recoup their manufacturing expenses in a bid to avoid a loss, and owing to the fact that it is now illegal to make sales and distributions, these operations might prevail in a ‘black market’. This cannot be ruled out, however, the National Agency for Food, Drugs Administration and Control (NAFDAC) has stated that there has been compliance in some states.[vi]
The directives, for those pharma-manufacturing companies that have been shut down due to their lack of compliance and more, have occasioned job losses. Looking at the manufacturing company, the logistics companies, the wholesalers, the retailers, the distributors, through the entire channel of distribution, jobs are affected and lost. This adds to the already gross unemployment statistics of Nigeria. The current rate of unemployment in Nigeria stands at 18.8%[vii]. With these development and other factors, this figure might well increase, depending largely on special interventions by the government at various levels.
Still on losses, codeine, also called methylmorphine, a naturally occurring alkaloid of opium, the dried milky exudate of the unripe seed capsule of the poppy Papaver somniferum, that is used in medicine as a cough suppressant and analgesic drug. Basically, Papaver somniferum is grown by farmers. These farmers are affected by the directives in that the demand and supply for Papaver somniferum, which translates to codeine, is greatly reduced. This means, post-harvest losses, and little or no income from their farm produce due to grossly reduced demand for the produce. It is worthy of note that Nigeria is not the only country fighting the codeine addition nemesis; Australia took the same initiative (ban on codeine in pharmacies) due to the addictive nature and abuse of codeine earlier this year.[viii] This suggests that farmers of Papaver somniferum are facing a huge challenge as this is definitely not the last of these we shall hear before the year runs out.
Another area affected by the directive is the business of importation. The importers of codeine used in the pharma-manufacturing companies are affected as it will be illicit to further engage in the importation of the product despite the ban. This results in job losses, cuts in revenue sources or total termination of businesses. This also affects the Bureau-de-changes who are patronized by the dealers in the importation of codeine. Generally, there is a termination of financial flows in the codeine importation line of business.
While these are the negative sides to the story, the Federal Government has acted for the greater good, considering that the youth are the most affected in this chain of events. Moving forward, it is recommended that the pharmaceutical industry is properly regulated and monitored for best results.
[ii] Nigeria Manufacturing Expo 2017
[iii] Pharm N.A.E. Mohammed. ‘Pharmacy Practice Reformation In Nigeria: The Significance Of The New Pharmacy Law’
[iv] Dr. Okechuwku Ugbam, Ephraim A. Okoro: ‘A Strategic Study of the Nigerian Pharmaceutical Sector: Organizational Leadership, Market-share, and Competitive Performance’, International Journal of Business, Humanities and Technology, Vol. 7, No. 1; p.March 2017
Christian Egwuogu is a Business Analyst at ACIOE Associates where he leads engagements in Information and Communication Technology, while also leading other key projects.
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