Nigerian pharmaceutical companies are facing financial challenges as inflation rises, consumer purchasing power declines, and the naira devalues. To cope with these challenges, these companies have increased their borrowings to maintain their liquidity in a high-interest rate environment.
Data from May & Baker Nigeria Plc, Neimeth International Pharmaceuticals Plc, Morison Industries Plc, and Fidson Healthcare Plc show a 19.2 percent increase in total borrowings to N24.2 billion in the nine months of 2024 compared to N20.3 billion in the same period in 2023.
These companies have mostly increased their short-term borrowings to finance their day-to-day operations, as evidenced by negative cash flow from operating activities reported by Morison Industries and Fidson Healthcare. The pharmaceutical industry is under pressure due to fluctuating raw material costs and regulatory requirements, leading to the need for more capital-intensive funding for drug development and production.
Despite the challenges, companies like Fidson Healthcare, Morison Industries, May & Baker, and Neimeth International Pharmaceuticals are adapting by securing loans to bridge funding gaps and exploring financial strategies to manage the impact of rising costs. Fidson Healthcare reported a 29.5 percent increase in total loans and borrowings, while May & Baker saw a decrease in borrowings by 5.7 percent.
Overall, Nigerian drugmakers are navigating a challenging economic environment by leveraging short-term loans to maintain their operations and pursue long-term growth opportunities.
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