Nigeria Pharmaceuticals & Healthcare Report Q1 2008

Nigeria's US$271.4mn pharmaceutical market remains a challenging operating environment for foreign drugmakers. The market has high potential for growth due to a rapidly expanding population and Nigeria's position as the dominant economy in western Africa. However, the market is held back by several factors including extremely low drug expenditure per capita and limited healthcare infrastructure. Consequently, BMI forecasts the market to experience a CAGR of around 4.5%, reaching US$339.6mn by 2012.

The regulatory environment poses a particular challenge to foreign drugmakers looking to set up manufacturing operations in Nigeria. At the same time, an import-only presence is unattractive due to a discriminatory tariff regime. The National Agency for Food and Drug Administration and Control (NAFDAC) is making a concerted effort to rein in the country's rampant drug counterfeiting industry, with some success. However, intellectual property (IP) laws remain basic.

Slow uptake of the National Health Insurance Scheme (NHIS) is threatening to put into jeopardy a Presidential decree to provide universal healthcare by 2015. A major challenge is to encourage uptake of the scheme in the private sector and to extend into the informal sector.

In BMI's all new Middle East and Africa (MEA) Business Environment Rankings, Nigeria remains in 13th position out of 14 markets surveyed. The country scores poorly in the pharmaceutical market category due to its small market size, low per capita drug expenditure and sluggish forecasted market growth. However, in terms of the structure of the country, Nigeria scores better, suggesting that it could be set up for future market growth if it can overcome some of the issues holding the sector back.

Indian and Chinese firms have been demonstrating a growing interest in Africa. Chinese firm Sichuan Zhongkang Guangda has begun to construct a factory to produce artemisinin combination therapies (ACTs), while Indian firm Alpa chose to establish an import presence for its generics range. The highest rates of growth may in fact be seen in the traditional medicine sector, with the government keen to encourage the testing and subsequent commercialisation of African medicine. Asian firms may again have a large part to play in this - the Nigerian government is reportedly looking to draw on the experience of Chinese firms that have had success in winning acceptance for traditional Chinese medicine (TCM).