Job losses loom in pharmaceuticals as industry competitiveness dips
A number of Nigerian pharmaceutical firms are currently planning to lay off staff as their competitiveness level in relation to imports reaches an all-time low, BusinessDay has gathered.
The job losses could run into thousands as major firms in the industry that employ most of the workers are already compiling names of staff members to go.
The key reason for the looming mass sacks in the sector is the ongoing Common External Tariff (CET) guidelines which place zero duty on finished drugs but impose between five and 20 percent tariff on excepients and raw/packaging materials.
Imported drugs are now 10 to 30 percent cheaper than locally manufactured drugs. The implication of this is that many local pharmaceutical companies are now losing drug supply bids to importers as their price quotations are often higher, BusinessDay’s investigations have shown. Local pharmaceuticals bid for drug supply at government ministries and agencies as well as private firms and hospitals.
The CET, which now guarantees uniform tariff across the ECOWAS region, has opened a door for unbridled drug importation into Nigeria, as traders now have a field day and smile to the bank to the detriment of local manufacturers.
The industry is on the verge of going the way of the textile industry that was squeezed by unbridled importation. If nothing serious is done by the federal government to save the sector from this threat, investment of N300 billion made so far by players will go, analysts say.
This will also expose the country to security threats that will emanate from lack of capacity to produce essential medicines, experts say.
BusinessDay understands that even before the CET implementation, when there was still zero duty on raw and packaging materials for pharmaceutical raw and packaging materials, finished medicines, which attracted tariffs ranging from 10 to 25 percent, still competed better than locally made drugs in terms of price.
At the dialogue between ECOWAS and Nigerian drug makers in Ikeja, Lagos, last Thursday, chief executive officers of major pharmaceutical companies said staff sacks have just begun as they can no longer afford to keep all the workers when they are losing their market share.
“Today, I have an investment of $48 million which I am about to lose,” Fidelis Ayebae, managing director/chief executive officer , Fidson Healthcare plc said at the dialogue session.
“Companies are compiling names of people to go. The sacks will affect everybody because young people go to school and come out without jobs for years. What then will happen if pharmaceutical companies die? We do not seem to be looking at the human angle,” said Ayebae.
One of the chief executives of a pharmaceutical company in Ikeja area said he has told his staff members that 40 percent of them will have to go because the firm’s top- and bottom-lines are squeezing at an alarming dimension.
Emma Ebere of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), said the rate at which finished drugs are now coming into the country deserves urgent attention.
“This is an emergency,” said Ebere at the dialogue.
“Every day’s delay of this creates more problems for manufacturers. This should be treated as an emergency because so many things are at stake,” he said.
Africa’s largest economy suffers from acute unemployment as the private sector continues to create fewer jobs, owing to harsh economic realities, ranging from policy inconsistency to power cuts and multiplicity of taxes. The government remains the biggest spender and favoured borrower from financial institutions, while the private sector remains squeezed. Nigerian pharmaceuticals employ one million Nigerian people, according to industry data from PMG-MAN.
Steve Orya, chief executive officer, Chi Pharmaceuticals Limited, said the problem is still better now because most importers’ goods are still on the high sea.
“When the goods berth, you will see more problems,” Orya said.
“Nigeria will have more unemployment problems,” he added.
The revelation of Ernest Bediako, chief executive of Ernest Chemist in Ghana, that raw and packaging materials’ importation is still zero percent in the country rattled Nigerian drug makers. Bediako went further to startle Nigerian drug makers when he said that Ghana has not even started implementing the CET.
Reacting to this, Okey Akpa, president, PMG-MAN, said the issue at stake is that of life and death. The visibly emotional Akpa, who is also the chief executive of SKG Pharma Limited, said no country has ever succeeded in international economics unless it first puts its house in order.
“China closed its economy until it was ready. India and the United States closed their economies until they were ready. Why can’t we do the same here,” Akpa said, adding that ECOWAS countries must realise that economic indices among all countries are still the same.
Kunle Ekundayo of Drugfield Pharmaceuticals Limited said Nigeria is paying for the labour of other countries while dragging its citizens into joblessness.
“ I am happy to hear from ECOWAS today that we can apply tariff on those products which can cause joblessness in our country,” Ekundayo said, in his advice to the government.
ODINAKA ANUDU