Managing Director, Neimeth International Pharmaceuticals Plc, Pharm Matthew Azoji is leading one of Nigeria’s oldest pharmaceutical companies to break new ground in local pharma research and production. In this panel interview, Azoji speaks on the prospects of the Nigerian pharma industry,the roles of healthcare in national economy and strategic initiatives to reposition Nigeria’s competitive advantages among others. Deputy Group Business Editor, Taofik Salako reports.
How would you rate the performance of the Nigerian pharmaceutical sector in terms of innovation, research and development?
Innovation is important to the pharmaceutical industry. It is through innovation that key breakthroughs are made in the global pharmaceutical sector. You cannot develop a novel therapeutic agent to address any critical health need without innovation. On the other hand, innovation in the pharmaceutical industry is achieved mainly through research and development (R&D) and through consistent investment in infrastructural and technological development.
The African Union Study Project Report titled “Strengthening Pharmaceutical Innovation in Africa” defined pharmaceutical innovation as the discovery, development, production and delivery process that enhances the availability of medical products and people’s access to them. “Medical products” in this context include diagnostics, drugs, vaccines and medical devices. One major key objective of pharmaceutical innovation established in this definition is access to medicines for people. Access to medicines is a well-established universal human right; but one that is far from being guaranteed for majority of people in low-income countries including Nigeria and the rest of Africa.
So how would I rate the performance of the Nigerian pharmaceutical sector in terms of innovation? My answer is that in consideration of the above definition and particularly, in terms of modern medicines and the discovery of molecules and candidate medicines, the Nigerian pharmaceutical space still has a lot to do. We have not done enough as stakeholders in the Nigerian pharma space and the current outcome achieved is not satisfactory especially if you consider that the Nigerian pharmaceutical space is nearly a century old. There have been efforts in various sectors of the Nigerian pharma space to discover and develop medicines that will address the unique health needs of Nigerians, especially relying on indigenous phytomedicines but this has resulted in few successes of such discoveries getting to the stage of manufacturing and delivery to end users. The reasons for this situation have been a combination of economic, infrastructural and technological constraints. The other challenge is poor level of collaboration and partnership between researchers, policy makers and pharmaceutical manufacturers. There is a lot of communication gap between the various players in this space leading to long lead times before effectively harnessing the benefits of work already successfully done and at the end of the day the patient suffers.
Focusing on the area of pharmaceutical Innovation, there must be collaboration at different levels. For now, most Nigerian and indeed African pharmaceutical manufacturers are reproducers of generic medicines whose patents have expired. Product re-formulation, rather than discovery and development of candidate medicines or new molecules dominate technical research in Nigeria. Yet the country houses a large stock of herbal and natural products that can be developed as medical commodities.
Now, Neimeth is one of those companies in this country that is focused on developing quality medicines for Nigeria and Africa with emphasis on Africa-specific diseases. With our new vision; “To be the leading innovative healthcare provider out of Africa”; Neimeth is reinvigorating her effort to build on past achievements and put more safe, quality and efficacious remedies at the disposal of Africa and Nigeria in particular to effectively deal with the many healthcare challenges besetting the people. We have committed a substantial amount of money to R & D in the recent past. Our strategy includes working with medical and pharmaceutical scientists and researchers to develop new products conduct drug clinical trials and in-vitro drug studies. These drugs could be natural, or chemical (synthetic), oral, or parenteral. To this end, we review research work in our indigenous universities and relevant government agencies based on local raw materials, focusing on specific disease areas that are generally neglected by the global multinational companies. We seek to provide new local health remedies in these areas at affordable costs. Our first success in this area was Ciklavit; the first homegrown natural product for the effective management of Sickle Cell disorder. It was a product of a research done at the University of Port Harcourt by late Prof. G.I. Ekeke. Neimeth took up that research and developed it to Ciklavit, which is one of the most important medicines for Sickle Cell Disorder today. As we have said in several fora, Prof. Ekeke is late, but we are still paying his family royalties. So, there are still other projects going on like that, from our farms and gardens to develop effective medicines.
Secondly dependence on foreign research and development can be minimized by government funding. It is therefore heart-warming that the Central Bank of Nigeria; with the advent of COVID-19, has floated the Health Sector Research and Development Intervention Scheme (HSRDIS) to help strengthen the public healthcare system with innovative financing of R & D in new and improved drugs, vaccines and diagnostics of infectious diseases in Nigeria. The scheme is expected to activate passionate national research and development activities that could lead to development of Nigerian vaccines, drugs and herbal medicines against Covid-19 and any other communicable or non-communicable diseases through provision of grants to eligible researchers and organizations. The limit of the grant is N50 million for research activities and N500 million for development and manufacturing activities.
Besides new products innovation a lot is also happening in the distributive and supply chain arm aimed at delivery medicines especially life-saving medicines to hard-to-reach communities in a timely manner using drones for instance. These kinds of innovation in supply chain help to improve patient outcomes. All stakeholders in the Nigerian pharma space are encouraged to invest more resources in innovation to enhance access to medicine and thereby improve patient outcomes.
How are you curtailing the challenge of counterfeit drugs?
The incidence of substandard or outright fake products is a global phenomenon. It exists in every sector and in every economy. But this becomes a source of worry when it is rampant or tries to overshadow the good products like the case appear with certain health commodities in the country.
I must also point out without being prejudiced that most of these fake health commodities come from outside the country. That puts the onus for their control on agencies that oversee importation of products into the country.
It is gratifying that NAFDAC has been making concerted effort to limit if not eradicate the prevalence of these undesirable products. But that effort must be supported by other agencies and the society. Members of Pharmaceutical Manufacturing Group (PMGMAN) also support NAFDAC in her efforts to curb prevalence of fake and substandard medicines by complying with relevant regulations of NAFDAC and Pharmacists Council of Nigeria (PCN) regarding manufacturing, sales, marketing and distribution of pharmaceutical products and by taking specific individual corporate actions to prevent the faking of their own individual company products.
Beyond these efforts, I think the decision by Nigerians to reject fake products will play a key role in eradicating this menace. Nigerians can do this at two levels. The first level is for people to stop patronising such products. I can tell you that many Nigerians ignorantly buy fake drugs by aiming to buy the cheapest products in the market. They do this as a result of poverty. People go to medicine vendors to buy drugs but because of the higher prices of the good products they knowingly or unknowingly opt for the fake ones. This is because in most Nigerian homes illness is not provided for in the household budget. Rather the purchase of drugs is done as out of pocket expenditure when one or two members of the family fall sick. This scenario can be contained with effective health insurance package for most homes.
The other way Nigerians can curb fake drugs is to encourage business persons who import these drugs wherever they can be identified by communities to jettison the practice by embracing quality control measures of both exporting and importing countries and where such persons refuse to adhere to advice, they should be made to suffer social isolation. If fake products are not brought into the country, we shall have little or no reason to encounter it.
How has government assisted pharmaceutical companies to achieve growth and improved capacity especially in the light of the African Continental Free Trade Agreement?
The government can and indeed has been helping the Nigerian pharma industry in many ways. Some of these assistances have come in the form of policy initiatives. For instance, the New National Drug Policy 2021 seeks to grow local production capacity by 70 per cent by 2025. This it plans to do by boosting local production through articulated policies that will enhance capacity. Among these are the use of tariffs and other fiscal measures to bar importation of medicines which local pharma companies have adequate capacity to produce. It also seeks to promote patronage of locally made .medicines by encouraging public procurement entities in the health sector to give priority to locally made medicines.
Government has also promoted Nigerian pharma industry with capacity support funds such as the CBN’s N100 billion loan and similar facilities designed to make local producers manufacture with less pains.
But beyond these palliative measures, we need to institute structures and schemes that will galvanize the industry. For instance, we have been talking about the petrochemical industry for many years now. As I said earlier, industry depends over 90 per cent on imported raw materials and other inputs. Where local pharmaceutical manufacturers depend over 90 per cent on imported inputs, I see two key levels of action. The first will involve the development of the petrochemical industry. Substantial raw materials for synthetic medicines depend on the petrochemical industry. Nigeria is a petroleum exporting country, as we are blessed with large deposits of this commodity, so all we needed to do is to develop that industry by extracting the rich reservoir of chemicals contained in crude oil which can be used to synthesize many pharmaceuticals. This process is called; “cracking the petroleum”, to get substances to synthesise active pharmaceutical ingredients, excipients, and others for fertilizers, plastics and other essential industrial chemicals. In other words, the development of the petrol chemical industry in Nigeria is critical to industrial development in this country, and the pharmaceutical sector is one of those industries that will benefit immensely from that development. We therefore encourage the government, even though it is a capital intensive project, but if Nigeria prioritizes industrial development, we, as a nation can afford it. It is an investment that will positively impact on many sectors of the Nigerian economy and has potential to create millions of jobs. If that sector can be developed, we shall rely less on imports.
Similarly we also need to develop the agricultural sector. For instance, starch is a major input in the pharma sector but we do not have pharmaceutical grade starch in Nigeria. Nigeria is among the largest producers of cassava, maize and other starch products. But pharmaceutical grade starch is still being imported in Nigeria. Nigeria is blessed with high-starch containing agricultural products like maize, rice, cassava etc. Nigeria is Africa’s largest producer of maize with output estimated at over 33 million tonnes per annum, and yet we are importing pharmaceutical grade starch, it should not be. Also, Nigeria is regarded as world’s largest producer of cassava and there is discussion going on how to develop pharma grade starch from cassava. These products can be processed to generate the requisite volume of standard starch for the industry.
The government can support local manufacturing industry take full advantage of Africa Continental Free Trade Agreement (AfCTA). Now with the take-off, the Africa market has become one. That means other African countries can supply medicines to Nigeria. If Nigeria does not have the capacity to produce competitively, it means Nigeria may become a dumping ground. This must be avoided by all means by creating enabling environment for Nigerian Pharma manufacturers to compete in the African space by producing quality and efficacious medical products that affordable to the average African patient. Again, this is why the PMGMAN has been clamouring for a loan of N300 billion to enable the pharma industry develop itself so that it can produce competitively.
You are raising N3.67 billion through right issue, what do shareholders stand to benefit in the short to long term?
The whole essence of the existence of the company is to continue to create value for all stakeholders especially its investors. This is the essence of our being in business. There are two ways we add value to investors. One is the declaration of dividends after a successful business year and the other is the multiplication of the wealth of the shareholders through capital gains. And these are key driving factors for shareholders.
Neimeth returned to dividend payment in 2020 and we are determined to remain consistent in this direction with increase in the amount we payout to shareholders. For instance, Neimeth increased dividend payout by eight per cent to 7.0 kobo for the 2021 business year, sustaining the trend started in 2020 when the company paid a dividend per share of 6.5 Kobo; after it had earlier successfully used its profit to restructure its balance sheet and counterbalanced earlier losses.
Beyond cash dividend payouts; shareholders of Neimeth have seen significant capital gains as the investing public continued to react positively to the improvements in the company’s fundamentals. The share price of Neimeth increased from 40 kobo as at September 30, 2019 to N1.75 by the end of our last business year on September 30, 2021, representing a 338 per cent gain, more than an average of 100 per cent gain per annum. This implies that a shareholder who had N1 million worth of shares on September 30, 2019 has seen its value rise to N4.75 million. The trend has remained largely the same in 2022.
In fact I can see the share price of the company jumping astronomically in the months ahead, far beyond the current price of below N2.00. So for discerning investors this is the time to take advantage of the stock by investing in the shares of the company and the rights issue is one good opportunity.
This optimism is based on the very viable strategy and strong fundamentals of the company Neimeth is pursuing a multi-prong strategy to strengthen its position as a leading Nigerian pharmaceutical company and to develop a competitive global capacity that allows it to tap into emerging continental opportunities. As part of the expansion plans, the company is building a new multi products manufacturing facility at Amawbia, Anambra State which will comply to World Health Organization (WHO) current standards of Good Manufacturing Practice (cGMP). It is also upgrading its Oregun factory which is billed to be completed this year. The Oregun factory upgrade alone is expected to increase the Neimeth’s manufacturing capacity by more than 300 per cent, particularly of liquid products. This will enable the company to grow more rapidly in both turnover and profit.
The Amawbia project is also expected to have reached advanced stage of implementation by the end of the current financial year and is expected to contribute to the next business year in 2023.
Also, in pursuit of its corporate vision to be the leading innovative healthcare provider out of Africa, the company is pioneering research and development into African home-grown solutions to various diseases. Already; it has many therapeutic formulations that will provide solutions to various human and animal diseases. Neimeth is also partnering with overseas pharmaceutical companies to formulate medicaments for various common ailments on the continent. Currently; it has about 13 different human pharmaceutical lines undergoing registration while about nine veterinary products are underway. About 25 other human pharmaceutical products are scheduled to be submitted to the National Agency for Food and Drug Administration and Control (NAFDAC) for registration soon. Most of these products are expected to be introduced into the market in the current business year, thus expanding the company’s product portfolio.
So the money we are looking for has been mapped out for highly strategic investments which will catapult the company into an investment heaven.
Manufacturers often complain of unfriendly government policies, what’s your view on this?
I don’t think that government has deliberately made unfriendly policies against the local industry. Rather some policies intended for other purposes may adversely affect local companies. For instance, the decision of government to provide subsidy only for Premium Motor Spirit (PMS) or petrol and not for diesel and aviation fuel has left the price of diesel which manufacturers use to power their factories at the mercy of the forces of demand and supply. As a result, the current disruption in the supply of petroleum products due to Russia-Ukraine war has led to less than 135 per cent increase in the price of diesel but price of PMS has remained largely stable except the time the bad petrol supplied to the market caused scarcity and proliferation of black markets of the product. The current very high prices of diesel have therefore heavily affected the manufacturing industry, significantly increasing the cost of production which cannot be passed 100 per cent to consumers because of the overall adverse economic situation in the Country. The meaning is that profitability is significantly reduced for the average manufacturer but that is not the intention of Government.
Also, in the process of making open the procurement process government often throws open the purchase of drugs for government facilities and programmes to both local manufacturers and importers. And you know that some of the foreign manufacturers operate in environments which enjoy low cost of production. This makes products of local pharmaceutical companies un-competitive. This procurement policy has for a long time stifled patronage of local health commodities by government and government agencies.
There are many such policies with unintended negative consequences. Even the African Continental Free Trade Agreement (AfCFTA) which government signed to promote trade in the continent can breed negative aftermaths if the industry does not rise to take advantage of the platform.
Regarding what government is doing for the pharma industry, I can say that some things have been done right by the government and more needs to be done to promote the industry. The COVID 19 pandemic woke government up to the cries of PMGMAN for a fund to boost capacity in the sector. Government through the Central Bank of Nigeria gave out a N100 billion capacity expansion low-cost loans from which many manufacturers benefited.
Last year the government launched the new National Drug Policy 2021. That policy seeks to promote local pharmaceutical sector by encouraging local production. For instance, the policy seeks to ensure that by 2025 Nigeria would be able to achieve 75 per cent local manufacture of essential medicines needed in the country. The policy goes ahead to seek the use of fiscal and other measures to promote local production of drugs in Nigeria. The Pharma Industry will need to rise to the occasion and work closely with Government to take advantage of this new policy.
However, we request the government to do more to actively create better enabling environment for the local pharma industry to thrive for the benefit of Nigerians in the areas of enhancing access to medicines, creation of jobs and generate foreign exchange through export to other African Countries.
For instance, the pharma industry is a part of the larger economy and whatever happens to the economy is bound to affect the sector. All the problems of the economy, namely infrastructure deficit, poor power supply, high interest and exchange rates, corruption and others that perennially plaque the economy impact the sector negatively. Tackling those challenges will help tackle problems in the pharma sector.
But specifically, interventions such as the CBN intervention fund are a welcome idea. This fund will definitely energize multiple efforts in the industry to ramp up capacity. The fund will also assist ameliorate the issue of revenue and profit drop which has bedevilled the pharmaceutical industry in the past few years because it offers a minimal interest rate of 5.0 per cent in the first year, which will later be increased to 9.0 per cent.
There is an aspect that the government needs to look into again. Being the biggest buyer of medicines, government can deliberately make a policy that they will always patronise local products. They can only buy imported medicines if there are no quality locally-manufactured alternative brands in Nigeria. The Executive Order to patronise made in Nigeria goods have not been extended to pharmaceuticals. The government should sign an Executive Order that medicines and other health commodities that are made in Nigeria are on priority list of purchase in Nigeria public hospitals. That is a way of creating adequate market for local pharmaceuticals. So, if the Government is buying from local manufacturers, this can boost their capacity.
Infrastructure development is another area we need government assistance. In moving drugs from one area to the other we need good roads, and then constant supply of power is crucial to local manufacturing. Every company manufacturing in Nigeria will have to run on generator and this is quite expensive, especially with the current price of diesel at about N730.00 per litre. So, the power plan needs to be fast-tracked. And of course low interest loans being offered by CBN should be expanded.
How has your company managed to stay relevant in the pharmaceutical sector over the years?
Neimeth came into being as the result of the Mazi Sam Ohuabunwa-led management-buy-out of the 60 per cent equity Pfizer New York’s holding in Pfizer Products Plc. The company had already been operating in Nigeria for 40 years manufacturing, marketing and distributing pharmaceutical and veterinary products under the Pfizer brand including tablets, capsules, ointments, creams, powders, injectables, and oral liquid forms.
During those first 40 years, the company had established Nigeria’s first pharmaceutical manufacturing plant, although sadly that was destroyed during the Nigerian civil war. Undeterred, in 1976 the company established the most modern pharmaceutical plant in the West African sub-region at Oregun
Today, we are focused on manufacturing essential family medicines, having become a trusted name in the area. We supply products to the Nigerian and West African markets .and aims to expand its business to the entire African market. Neimeth’s innovation isn’t simply a directionless quest for the new, however. Its research and development are heavily targeted on the challenges that face its customers in Nigeria and Africa as a whole. The company has expanded its remit, moving away from its position as a pure pharmaceutical company into something far more encompassing. It is now a healthcare company.
What does winning the 2021 Nigerian Investor Value Awards as the best performing healthcare stock meant for the company?
The Nigerian Investment Value Award (NIVA) celebrates public companies which have created sustainable value through strategic intelligence, operating efficiencies, market leadership and organizational values for investors. It celebrates the wealth building capabilities of quoted companies in Nigeria. We won again in 2021 as the best performing stock in healthcare sector of the Nigerian capital market. That was the third time since 2019 the company had won similar awards which were based on the performance of quoted companies on the Nigerian capital market, beating other leading pharmaceutical companies quoted on the Nigerian Stock Exchange.
Neimeth has shown consistent improvement in creating values for investors in Nigeria’s capital market through the performance of the company’s shares on the Stock Exchange. Over the years she has continued to improve her financial performance which has not escaped the watchful eyes of regulators of the Nigerian capital market. Besides the NIVA Award Neimeth was also nominated along with Airtel West Africa and FBN Holdings Plc for the Award of Listed Company of the Year in 2021. This recognition was made as a result of the wealth creation capacity of the company because the Listed Company of the Year Award is meant for only those organisaions that created the most value for investors. Neimeth was one of the few companies that increased shareholder value by over 300 per cent in 2021.
These recognitions only remind us at Neimeth, of the value of hard work and to me the reward for such hard-work are indeed more work. Our corporate strategy is to continue to create value that would enable us play greater roles in the healthcare industry in Nigeria, Africa and beyond.