Exploring The Untapped Potential In Local Pharmaceutical Sector
During the Seventh Joint African Union (AU) Conference of Ministers of Economy and Finance and the Economic Commission for Africa (ECA) Conference held in Abuja, Nigeria, in March, leaders and key multilateral organizations made commitments to strengthen support for the local production of essential medicines on the continent.
In the high-level meeting organized by the AU and some United Nations agencies, it was recognised that there is a huge untapped potential in the local pharmaceutical sector. In the words of Eratus Mwencha, African Union Commission Deputy Chairperson:
Local production of generic medicines promises affordability and availability of needed drugs, employment opportunities and overall public health benefits, including shortened supply chains, hence helping to reduce stock outs, as well as enhancing the capacity of local regulatory authorities to oversee the quality standards of essential medicines for their countries.
Like African leaders, some local pharmaceutical companies are optimist. A boost in the sector will contribute greatly to Africa’s development. Not only will the cost of drugs be cheaper, the industry will also be able to provide employment opportunities and improve lives.
Pharmacist Usman Sambo, a local pharmacist based in North-central Nigeria, sheds light on the reality of operating a health related venture- highlighting the opportunities and challenges facing a local pharmaceutical company.
Despite operating in one of Nigeria’s youngest states that was once ranked 7th easiest place to start business in Nigeria, Sambo says there are still many obstacles hindering entrepreneurial growth in the state amidst the opportunities.
Here is the one-on-one interview held in his office based in Lafia, Nasarawa state.
Pharmacist Usman Sambo, launched his business, Eternity Pharmaceuticals Limited, in Lafia Nasarawa State in 2011. This was after 20 years of serving as a Civil Servant in a government parastatal. Sambo says, he started his business out of necessity.
I am not very good at buying and selling even though I am a pharmacist. I always believe that service to humanity is the best work of life. I worked in [public service] right from the time I graduated in 1979 up to the time I was retired in 2007. I would say it is necessity, which they say is the mother of invention, that made me launch my business. Initially I started with consultancy. Unfortunately I wasn’t getting much job. And I’m not used to sitting down at home doing nothing. So I felt since I am a pharmacist, I should be able to establish a business. I’m hoping that this will catapult me into opening a pharmaceutical manufacturing unit.
Meeting People’s Needs
We offer services ranging from filling of prescriptions, counseling- how they are going to take the medicine, what they’ll expect when they take the medicine, drug interaction. We want to believe that as far as professionalism is concern, based on pharmaceutical company, a patient comes before company. The patient is the main reason why you are in the business. If you concentrate on him and make him feel better, you would have achieved your aim.
The Ease of Doing Business in Nasarawa
To start up in Nasarawa state [NS] is very easy in the sense that your start up capital is minimal. And there is market here. We share a border with Federal Capital Territory [FCT]. Our cost of living, transportation is low.
The truth about it is that the FCT was carved out of Nasarawa (NS), Kogi and Niger State. Nasarawa shares a boarder with the FCT. And a lot of the people that are working in the FCT also live in NS, from where they commute to work daily. Because of that and the influx of people into the FCT, goods and services will have to be made available to carter for their needs.
Besides that, you will notice that Kogi, Benue, Plateau, Kaduna and Taraba state also bound Nasarawa state. So with this mix of cultural integration, definitely trade and commerce will boom within those areas.
Our people are simple, friendly and accommodating. The other important thing is the issue of start up capital. If you are going to start business in the FCT, you are going to spend a huge sum of money for renting, for your own accommodation and transportation. But if it is in Nasarawa, you’ll need much more smaller capital.
The Purchasing Power
The purchasing power is very low in Nasarawa. The people are not buying as much as they are supposed to. People just buy the basic necessities and most of them like to go for cheap drugs because they believe they just want to take it to make them better. Certainly some businesses can be profitable depending on the location. Pharmaceutical [companies] generally are profitable business if they are well managed.
The Aha moment of start-up
I was retired and waiting for my gratuity. It didn’t come on time so my family, some friends and I felt there was need for us to go into business. It is like a partnership.
Just shortly after we started in November 2011, the FCT administration gave me a contract to supply some drugs to them. Capital was a big issue so I approached a local bank, which incidentally is our bank, to assist us with a loan to execute the business. Initially, I was made to understand that I have to provide collateral. Unfortunately after I gave them they said my account has not stayed with them for six months. So I had to run around to some friends to bring up the capital.
When you are in this kind of business, location is very important. My location is not very good. In our business we are not expected to go and be advertising. Our services should advertise for us. This is what we have been trying to rely on the most.
A lot of people come because they know they are coming to get good advise and at the end of the day they’ll be satisfied. So they make sacrifice to come.
Challenges of starting up a pharmaceutical company
The main challenge is the issue of time. First you have to register a company. It involves going to Corporate Affairs Commission (CAC) through your lawyer. They do what they call search. That takes time. After that you now do the registration. As soon as you finish the registration, you now search for a suitable location. Once you get it, you will now have to apply to pharmaceutical council of Nigeria for inspection.
They want to come and see the place– is it okay? Is it adequate? Is it near another pharmaceutical premises? Once they establish that you have met the standard, they will grant you permission to start your business. They will come for a second and final inspection. Once they do that and they are satisfied with what they see, they will now recommend you for registration. Actually, the pharmaceutical council delegates authority to director of pharmaceutical company in the state to carryout the inspection on behalf of the state.
Another challenge is the purchasing power of the people. Nasarawa as far as I am concern is a poor state. Sometimes somebody wants to buy drugs for malaria and says “I have N70, what can you give me?” No matter how you try to educate them, the money is not there.
You as a professional will have to crack your brain to see what you can do. I know there are people who give under dosages to people but as a professional I know it is wrong because it will make the condition of the patient worse than when they came.
If the person can’t afford it (drugs) and you can’t give it for free, I think the best thing is to let him go rather than for you to complicate the issue.
Part of the problem we are having is the issue of empowerment. I believe Nasarawa state government can empower some of the businesses that are here. And how do they empower us? They should at least give us contracts so that we can make profit. If we make profit, we should be able to establish more branches, employ more people and the issue of unemployment of the youth that is causing so much social tension in Nigeria will reduce.
Another challenge is capital. The prices of drugs are going up. I think it has to do with the fact that NAFDAC wants to encourage local manufacturers to produce some of the basic drugs we need in Nigeria. It is a welcome development. At the end of the day, we can’t keep relying on imported drugs. A lot of the drugs that are coming from China and India have low cost of production there so they are sold cheap. They cannot be competing with our local drug industry [that] would have invested huge amount of money to provide employment and to also do business.
Some of our locally produced company drugs are a bit more expensive because of the challenge of poor infrastructure, light, water, inaccessible roads.
Unfavourable Government policies hindering business growth
The issue of tax is a very serious one. When you do a contract, there is what they call withholding tax. The Federal Inland Revenue Services [FIRS] has given each company what they call TIN number. The amount is deducted from the amount you make. So at the end of the day this money is remitted to the account of FIRS. Yet when you go to look for clearance certificate, you are expected to produce evidence that the tax was deducted. And you are not the one producing this evidence. It is the same FIRS that produces the withholding Tax certificate. They say sometimes that they have sent it to the organization that you did the work for. So you need to go and collect it. And that is how they keep posting you between the FIRS and the office you did the contract. At the end of the day you don’t get it and if you go for Tax clearance, they’ll tell you without Tax clearance certificate you can’t have the clearance, even if the money has been paid into their account.
If the government is doing this to medium and small-scale enterprises, how do they want the entrepreneurs to be able to make it? This is one of the reasons why I feel bad about doing business in Nigeria.
Besides the infrastructural difficulties, some of the policies that the government are implementing are terrible. I am a law-abiding citizen; I believe I should pay my Tax.
I think there is need for more public enlightenment on how FIRS operate.
Opportunities in the health sector
Sometime in the year 2000, the United Nations brought about this Millennium Development Goals (MDGs). Goal 2, 4 and 6, which relate more to health- the issue of infant mortality, maternal mortality and reduction of HIV/AIDS, TB and Malaria. From all the report that we got from the Senior Special Adviser to the President on MDGs, we are not likely going to meet the target. A lot of children below are still dying, a lot of mothers are dying in the course of giving birth, and children are dying because of malaria. There are a lot of people, even though the rate has reduced, who are dying because of HIV and AIDS [related diseases]. The issue should be looked at from two perspectives- prevention and curative medicine. As far as prevention is concern, I think the government needs to do more.
Recently, there was an outbreak of measles in Nigeria, a lot of children died. There was an outbreak of Cholera, a lot of children died. These are all preventable.
If boreholes are not provided, people will keep drinking unsafe water. If accessible roads are not provided for people to move from villages to where health facilities are, definitely there will be more deaths.
Nigeria is blessed with abundant human and material resources and I believe if we have leaders who can harness these, our problems will be less.