Nigeria Pharmaceuticals and Healthcare Report Q2 2008

Nigeria's drug market remains subdued due to due to readily available counterfeit drugs, poor healthcare infrastructure and the limited spending power of citizens. The market was estimated to be worth US$278mn in 2007 and it should grow at around 5% year-on-year (y-o-y), reaching US$369mn by 2012.

Despite government efforts to promote domestic manufacturing, Nigeria remains heavily reliant on imported pharmaceuticals. The National Drug Policy sets a target for 70% of the country's demand for drugs to be met by local industry. However, in 2007 BMI estimates that imports supplied 54% of the market. On the whole, domestic players do not appear ready to manufacture high tech, so we expect imports to remain dominant.

Indeed, domestic drugmakers seem to be increasingly looking to diversify into consumer health products, most likely in response to the difficult operating environment in their core market. In January 2008, both Fidson Healthcare and Neimeth Pharmaceuticals announced they were to launch consumer health lines.

Neimeth revealed it would do this through two newly created subsidiaries - one concentrating on food and nutraceuticals, the other on herbal remedies.

Healthcare, and in particular how to expand access, continues to be a hot topic throughout Africa, with a variety of solutions being pursued by national governments - Nigeria's solution being the National Health Insurance Scheme (NHIS). There are encouraging signs for private sector involvement in African healthcare after the World Bank's International Finance Corporation (IFC) unveiled a US$1bn support package for the development of private healthcare on the continent. With the NHIS struggling in terms of participant numbers, BMI believes that increasingly popular health savings accounts (HSAs) could provide a solution for citizens unable to benefit from the NHIS - particularly those employed in Nigeria's large informal sector.

In BMI's updated Business Environment Rankings, Nigeria remains in 13th place out of 14 Middle East and Africa (MEA) countries surveyed. Nigeria's score continues to be held down by a combination of low consumer spending power and a weak regulatory environment. Both of these factors should remain in play over the forecast period, making it unlikely that Nigeria will overtake Egypt, which is one place ahead.

Having said this, Nigeria's score in the country structure category is more promising, suggesting that there is potential market growth if the previously mentioned weaknesses can be remedied.