Neimeth Sustains Steady Resurgence Amid Challenges

Kayode Tokede

Despite macroeconomic challenges, Neimeth International Pharmaceuticals Plc’s first quarter (Q1) ended March 2024 and half year (H1) ended June (2024) unaudited result and accounts show that the company is on the recovery path as the management continued to drive revenue while remaining prudential in cost management.

 In Q1 2024 the company declared N77.65million profit compared to a loss of N189.5million in Q1 2023, and in H1 2024 it declared N198.23 million profit before tax, an increase of 144 per cent from N452.6 million loss for the same period in 2023.

On the backdrop of this impressive performance, the company saw its share price rise from N1.6 to N1.95 in July, 2024 marking a 21.9per cent gain with a Year-to-date gain of 0.52per cent.

The company is projecting a N211 million profit for 2024 financial year (FY) against a net loss of N2.8 billion in 2023. Neimeth has innovative products which will enable it to improve on revenue and profits amid stiff competition in the pharmaceutical sector.

The first two quarters of the year so far   show a significant increase in revenue and moderation in operating expenses. The latest H1 2024 result and accounts indicate a N1.66 billion revenue, representing 73 per cent increase from N957.4 billion in H1 2023, driven by sales of pharmaceutical products.

Move to Grow Turnover

At the 65th Annual General Meeting of the company held in June, the Management had promised shareholders that it aims to grow its turnover by more than 127.7 per cent in the 2024 financial year compared to what it made in 2023. The company plans to generate sales of N5 billion in the current business year against a turnover of N2.2 billion it made in the prior year.  From this quantum leap the company hopes to make a profit of N211million. So far, it has generated N198.23 million profit and is expected to hit the N200million in nine months of 2024.

The Managing Director/Chief Executive Officer of Neimeth International Pharmaceuticals, Pharm. Valentine Okelu, had disclosed that the planned 128 per cent growth in revenue is an ambitious bold step towards solidifying the company’s position as a leading healthcare provider in Africa. “We have planned to move the company on a severe growth trajectory. For instance, for 2024, we plan to deliver N5billion revenue.   We are looking at delivering N211million as profit and if we stretch it up to 2028 to 2029, we are projecting N700million in profits,” he stated.

He said the company is growing its production capacity to effectively meet demand of the market. Neimeth he said recently undertook a facility upgrade of its Oregun, Lagos factory increasing installed capacity by about 300 per cent.

“After our factory upgrade we are now working on capacity upgrade to overcome the challenges of meeting customer demands,” he explained.  Okelu said the plan is to continue driving sales northwards to a level where losses would be contained and profit achieved in 2024.

Meanwhile, Cost of Sales (CoS) closed H1 2024 at N722.8 million, about 10per cent from N656.85 million reported in H1 2023.

The reported N722.8 million was influenced by N118.5million production salaries and wages in H1 2024 from N125.69 million in H1 2023, while cost on power and fuel stood at N79.16million in H1 2024 from N64.13 million in H1 2023.  The relationship between revenue and cost of sales dragged gross earnings to N933.9 million in H1 2024, about 211 per cent increase from N300.6 million reported in H1 2023. Consequently, the proportion of gross earning/revenue stood at 56.4 per cent in H1 2024 from 31.4 per cent H1 2023.

Furthermore, Neimeth International Pharmaceuticals in terms of Operating Expenses (OPEX) declared N525.6 million, a decline of 29.4 per cent from N744.12million reported in corresponding period of 2023. The breakdown of OPEX shows that as marketing and distribution expenses stood at N263.87 million in H1 2024, about 42 per cent from N453.62 million in H1 2023, administrative expenses closed H1 2024 at N261.72million, about 10 per cent decline from N290.51million reported in H1 2023.

In terms of finance cost, the company in H1 2024 declared N293.38 million, representing 138 per cent increase from N67.92 million reported in H1 2023, to bring operating profit to N198.23million from an operating loss of N475.38mllion reported in H1 2023.

With the resurgence in profit, the company’s basic Earnings Per Share (EPS) moved to 5 kobo in H1 2024 from negative 11 kobo.

Neimeth Pharmaceuticals’ Solid Assets Quality

In the period under review, Neimeth International Pharmaceuticals solidified its balance sheet size position in total assets and shareholders’ fund.  The company’s total assets rose to N9.56 billion as of June 2024, a growth of 6.94 per cent from N8.94 billion reported in 2023.

As non-current assets moved from N3.66 billion in 2023 to N3.88 billion as at June 30, 2024, current assets stood at N5.65billion as at June 2024, representing an increase of nearly eight per cent from N5.24 billion reported in 2023 full financial year.

Liabilities stood at N7.90 billion as at June 2024 from N7.47 billion reported in 2023FY, driven by N7.39 million current liabilities as at June 2024 from N6.97 billion reported in 2023 and non-current liabilities of about N503.40million as at June 2024 from N496.91 million reported in 2023.

The company, thus closed June 2024 with N1.67 billion total equity, about 13.61 per cent increase from N1.47 billion reported in 2023FY.

Neimeth International Pharmaceuticals Growth Plan

Despite the challenges of the economy, Okelu believes that investment in pharmaceutical manufacturing in Nigeria is a good and viable business decision. He said the Nigerian pharmaceutical industry is projected to be worth $1.7 billion by 2024 with an annual growth rate of 8.08 per cent.

Neimeth International Pharmaceuticals over the years is pursuing a multi-pronged 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 N5 billion manufacturing facility at Amawbia, Anambra State which will comply to World Health Organization (WHO) current standards of Good Manufacturing Practice (cGMP).

It had upgraded its Oregun factory which has been completed. The Oregun factory upgrade is expected to increase 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 revenue generation in the near future.

Also, in pursuit of its corporate vision to be the leading innovative healthcare provider out of Africa, the company is pioneering research and development of African home-grown solutions to various diseases. Already, it has many therapeutic formulations that will provide solutions to various human and animal diseases on the continent.

Neimeth is also partnering with overseas pharmaceutical companies to formulate medicaments for various common ailments on the continent. Currently, it has several human pharmaceutical lines undergoing registration with the National Agency for Food and Drug Administration and Control (NAFDAC) while veterinary products are underway. Many 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. Investment in Neimeth is certainly an investment in the near future with vast opportunities for profit.