May & Baker CEO, Ajah: Cost of Medicine Will Remain High till Power, Forex Situation Improve

•Says zero tariffs on pharmaceuticals yet to take effect since June announcement

Sunday Ehigiator

The Managing Director and CEO of May and Baker Nigeria Plc, Mr. Patrick Ajah, has warned that the cost of medicines in Nigeria will remain high until the power and forex situations in the country improve.

He also disclosed that an executive order signed by President Bola Ahmed Tinubu on June 28, 2024, exempting essential medical imports from duties and VAT, has yet to be implemented, despite being over two months old.

Ajah made this statement at a press conference in Lagos, commemorating May and Baker’s 80th anniversary in Nigeria.

He attributed the high cost of medicines to local manufacturers’ reliance on imported Active Pharmaceutical Ingredients (APIs) and packaging materials, which are affected by the high and fluctuating exchange rate.

According to him, the pharma industry has done a lot to reduce the cost of medicines, including depriving themselves of profits, despite paying high forex, and tariffs to import APIs and packaging materials.

His words: “When GSK left, prices of things like Ventolin Inhaler, which we know many asthmatic patients need, skyrocketed.

“Any asthma patient that goes into crisis and doesn’t have inhalers is going to die. There’s nothing you’re going to do about it, and the doses are very technical, there is no company in Nigeria that can make them because they don’t have the machine to make those inhalers.

“It used to cost about N1,800 when GSK was fully on the ground. The month they announced they were leaving. It was not available anywhere. It’s not just Ventolin, there’s Seretide and the others, also inhalers. The cost of Ventolin went as high as N25,000 and Seretide as high as N50,000.

“And some of the key reasons are because we’re still importing. Most of the APIs that we use are imported. I just came back from India. Most, if not all the APIs are imported including packaging materials and so many other things that we use to produce these medicines, they are imported.

“The difference you’re going to have is if that product can be made by a local company like us, the cost will be less than if you were importing the finished product because you’ll be importing everything.

“When Nigeria floated Naira, the exchange rate went from N461 to a dollar, to N1,600 to a dollar. We’ve been struggling for some months now to buy dollars. The least we can get is N1,509. Multiply that increase by how much we buy active ingredients, like paracetamol.

“So, if you multiply it, you find out that most companies are not making a profit. And that’s why companies are collapsing. If the government doesn’t do anything about the exchange rate, I’m sorry to say the price of drugs will not come down.

“We have on several occasions held ourselves from doing price increases. The other time, it started coming down, it came down to N1,300, and we were rejoicing that it is coming down, but we know where it is now, over N1,500 to a dollar.

“Some months back, the government made an announcement and said effective immediately there are goods they are removing tariffs from. We all heard it, you know these things are said in the newspapers and on television and people are going to be expecting that, the price is going to go down tomorrow.

“As we speak, I’m in the committee that was set up to help the government on implementation. Since that time, it’s more than two months old. Nothing has been done.

“So yeah, we can make this announcement, but if it’s not implemented, nothing is going to happen; but having said that, even implementing that is not going to change much, because you’re just dealing with maybe 5 per cent of the problem.

“If the forex situation is not addressed, we’ll have a long way to go. Take customs in Nigeria for instance. They are in Nigeria and operate in Nigeria, but the moment the forex situation changed, customs changed tariffs based on the exchange rate, and so many other things.

“So that is what’s going on. But as local companies, it will still be much better than if you were importing the drug, because our own cost of operation, once we have covered that, we try as much as possible not to do an increase beyond what we think people can afford.

“We also need people to be able to afford our products. As we speak, and I’ll just say this and leave it at that – the cost of power has increased by over 300 per cent. So, as we speak, every month, like I said, I’m not going to put numbers.

“But I know that a friend of mine who has a company told me that his cost for power is between N250 million to N300 million in a month.

“This man is also going to need to recover the cost of producing the medicine. So, it is a whole lot. And I know it’s all driven by the forex situation. But we’ll keep doing our best in the areas where we can reduce prices to hold it on.”