INVESTMENT OPPORTUNITIES IN THE PHARMACEUTICAL SECTOR IN NORTHERN NIGERIA

INVESTMENT OPPORTUNITIES IN THE PHARMACEUTICAL
SECTOR IN NORTHERN NIGERIA

 

By

Mustapha Muktar, P.hD

mmuktar75@yahoo.com

Department of Economics

Bayero University Kano

Introduction

•      The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals liscensed for use as medications

•      Pharmaceutical companies deal in medications and medical devices

•      They are subject to vareity of laws and regulations regarding the production, patenting, testing, safety, efficacy and marketing of drugs.

•      Pharmaceuticals are crictical for the health and well being of populations

Importance of pharmaceutical Industry

•      It contributes significantly to any nation’s economy

•      It helps in ensuring the health of citizens

•      It helps in wealth creation

•      It helps in poverty reduction

•      It helps in employment creation

•      It helps in improving the general well being of the populace and hence an improvement in the societal welfare

Overview of the Nigerian Pharmaceutical Industry

•      The pharmaceutical industry in Nigeria is fairly well developed in comparison to most of the other developing countries in Sub-Saharan Africa

•      There are over 200 local manufacturers, some were affiliated with multinational companies

•      Some of the companies repackage medicines and/or produce pharmaceutical products from imported raw materials

•      The existing large market size, strong demand and the need for management of infectious diseases, especially HIV/AIDS, malaria, TB, and neglected childhood diseases constitute enormous opportunity for pharmaceutical firms to produce drugs to meet the health needs of Nigerians.

Investment Opportunities in Northern Nigeria: The Case of Kano State

•      Kano State is the commercial and investment hub of Northern Nigeria and the third largest non- oil and gas economy in Nigeria with an estimated Gross State Product of $15- 19 billion.

•      Its economy is driven largely by commerce, manufacturing and subsistence agriculture - which is the dominant activity

•      Its huge population of approximately 12 million  people would provide enormous market opportunities and serve as a potential reservoir of skills

Investment opportunities in Kano State (Economic factors)

•      Large population of approximately 12 million people would provide enormous market opportunities for pharmaceutical products

•      potential reservoir of skills; In terms of population Kano State is 7% of Nigeria, 13% of Northern Nigeria and is even bigger than Switzerland, Singapore and United Arab Emirates( Kano  Sate investors hand book, 2013)

•      Gross State Product of $15- 19 billion.

•      Third largest commercial centre in Nigeria

•      A pharmaceutical market valued at $ 66 Million (BMI, 2013)

Other factors ( Financial institutions, airport, railway links, road networks, industrial estates etc)

Investment opportunities in Kano State (Medical factors)

•      The growth of the pandemics and increasing number of people on treatment

•      An improving health insurance and coverage  environment, and a consequent increase in the number of people with access to healthcare

•      An ageing population leading to increased  prevalence of old age disorders

•      An increase in lifestyle diseases associated with growing economic prosperity and urbanization

•      Health care reforms, by the state government and intervention by NGO’s and etc

Kano State Incentives for Investment

•      Availability of land on concessionary basis for the construction of both factories and staff quarters to any investor wishing to invest in the rural areas

•      Long lease on land for industrial development

•      Fast-tracking the issuance of construction permits and the registration of property by investors

•      Establishment of Kano One-Stop Investment Center KOSIC to facilitate ease of doing business for the investors and etc

Kano State Incentives for Investment (Free Trade Zone)

•      Access to a large Nigerian Market estimated at about 160 million people

•      Nigeria's membership off Economic Community of West African States [ECOWAS] provides access to the West  African markets

•       Favorable business environment and strong support

     by the Government to provide sector initiative  through the government economic reform agenda that is private sector driven

•      Tax incentives 

•      Customs and Immigration incentives and etc

Challenges Facing Investment in Pharmaceutical Industry in Kano State

•      Inadequate infrastructures which lead to high cost of production

•      Influx of foreign brands into the country

•      Low capacity utilization due to low demand and poverty

•      Influx of counterfeit and fake drugs

•      Undercapitalization/weak financial base

•      Upward swing in exchange rate

•      High interest rate and comparative cost disadvantage

Concluding Remarks

•      There exist untapped investment opportunites in  pharmaceutical industry in Northen Nigeria that if well utilized will respond to the health needs of  Nigerians and will contribute to the overall socioeconomic development of the country and West Africa as well

•      Investors need improved infrastructure to enable them produce at low cost  so as to compete favourably with the foreign companies (respective governments should make concerted efforts to improve the infrastructures)

•      Kano State government should enhence and  contenue its  anti-counterfeiting and illegal marketing measures as it will make the Nigerian manufacturing companies grow and invest more

•      Respective governments should mediate on high interest rate to enable investors access funds and have strong financial base

•      The Investors and state government should collaborate with educational institutions to embark on research and development for effecient and profitable investment in the industry