Currently, the Nigerian economy is experiencing a significant slowdown. The year-on-year (YoY) GDP growth in the second quarter of 2023 was recorded at 2.51%, a noticeable dip from the 3.54% growth in the same period the previous year. The recent shift of global drug manufacturing companies in Nigeria – like GSK (which announced its decision in August 2023) and Sanofi (November 2023) – from direct operations to third-party distribution models adds to the concern.

However, this economic climate does not spell a hopeless future for pharmaceutical manufacturing companies in Nigeria. A McKinsey & Company report addressed similar economic downturns and market uncertainties in 2017. Yet, it maintained a positive outlook, suggesting that success in Nigeria is attainable with a long-term perspective and innovative, context-specific strategies.

The true cornerstone of Nigeria's potential lies in its people. Almost 44% of its 200 million-strong population is under 15, making it one of the youngest countries in Africa. Approximately 111 million Nigerians are within the working age bracket of 25 to 64 years, surpassing the 95 million who are not of working age. The Lancet projects that by 2100, Nigeria will rival economic giants like China and India to emerge as the world’s second-largest working-age population.

Simultaneously, Nigeria's middle class is expanding. This growth is predicted to fuel an increase of $94 billion in household consumption in the decade following 2016. In a country where healthcare is predominantly financed out-of-pocket, this surge in spending power is expected to translate directly into increased healthcare expenditure. For drug manufacturers in Nigeria, this implies a growing market for pharmaceutical products and services, driven by a population increasingly capable of, and interested in, investing in health and wellness.

Medicine manufacturing companies in Nigeria are largely privately owned; 65% of the top 20 market leaders are private companies. Of 132 licensed drug manufacturing companies in Nigeria, 75% are headquartered in Lagos; the remaining companies are scattered across the states of Ogun, Enugu, Oyo, and Imo. Many indigenous companies partner with African and international organisations through contract manufacturing and licensing agreements. For instance, a European Investment Bank (EIB) investment helped Nigeria’s Emzor Pharmaceuticals to enter a tech transfer and licensing agreement with India’s Mangalam Drugs & Organics for malaria treatment APIs.

Despite a vibrant and dynamic manufacturing landscape, as an industry, drugmakers in Nigeria collectively face some challenges. And despite these challenges, they have persisted on their paths to pharmaceutical self-reliance.

For pharmaceutical manufacturing companies in Nigeria, infrastructure is a challenge, but this challenge is exceeded by the difficulties of insufficient technology transfers, API and raw material sourcing, and investment shortages to address infrastructural and operational issues. This is reflected in the fact that pharmaceutical manufacturing facilities in Nigeria operate at only about 40% of their installed capacity. If the issues at the root of this problem are tackled systematically, this challenge is, in fact, not a challenge at all but a foundation upon which to expand the scale and number of drug manufacturing companies in Nigeria.

In Nigeria and the rest of Africa, a significant hurdle is the mismatch between installed and planned capacities versus manufacturing targets. A market-shaping strategy by the Clinton Health Access Initiative (CHAI) highlights that while drug substance (DS) capacity falls short of demand, there is an overcapacity in drug product (DP) manufacturing. The existing installed capacity on the continent is around 2 billion doses, yet the projected pan-African demand by 2030 is only 1.5 billion doses. If harnessed with the right technology and skills, this idle capacity could transform from a challenge to an opportunity – it could be repurposed to produce vaccines not just for Nigeria or Africa but potentially for the global market.

Indian manufacturing companies in Nigeria have made a significant impact with generic drugs, while European multinationals dominate with their branded products sold mainly to the private sector. But apart from these companies and some homegrown drugmakers, Nigeria depends on pharmaceutical imports and donations. Pharmaceutical imports into Nigeria have witnessed a steep increase over the years, from $400 million in 2013 to over $800 million in 2018. The challenge is exacerbated by the fact that 75% of excipients and most active pharmaceutical ingredients (APIs) are imported from countries like India and China. Drug manufacturers in Nigeria largely bring machinery in from Asia and quality control equipment from Europe.

Drug manufacturers in Nigeria have persisted in transforming this challenge into a triumph. While earlier estimates suggested that Nigeria only produced about 30% of its domestic pharma demand, the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN) estimates that post-Covid, 45% of drugs consumed locally are produced locally. A large proportion of primary and secondary packaging materials are indigenously sourced, and local manufacturers have also begun to source or fabricate spare parts domestically, even making use of skill transfer initiatives. Government initiatives, like the loans worth ₦100 billion disbursed by the Central Bank of Nigeria (CBN) in August 2022, have bolstered the indigenous pharma industry and provided a much-needed impetus to medicine manufacturing companies in Nigeria.

The widespread presence of informal distribution and retail networks in the pharma sector has led to the emergence of counterfeit drugs and parallel imports into Nigeria. In some therapeutic areas, parallel imports account for as much as half of all drugs sold. Meanwhile, the counterfeit drug problem is harder to pin down, though fake malaria medicines are estimated to cause approximately 12,300 deaths annually.

In this case, not just Nigeria’s robust regulatory bodies but also private players have stood up to the challenge. Tech startups like mPedigree, Medsaf, RxAll, True-Spec Africa, and FD Detector support the work of local drugmakers by helping their customers distinguish fake drugs from the real deal. This, again, is a story of a challenge being surmounted to achieve victory in supply transparency and, ultimately, public health and safety.

Finally, we can’t talk about the top drug manufacturing companies in Nigeria without talking about the regulatory environment that enables their success. The World Bank’s ease of doing business (DB) rankings encapsulate a story of remarkable improvement and ongoing challenges for Nigeria. From a personal lowest rank of 170 out of 190 in 2014 and 2015, Nigeria has climbed to 131 in 2019, the last year for which rankings are available. While more progress is needed and anticipated in the areas of 'property registration', 'cross-border trading', and 'access to electricity', Nigeria’s performance has been stellar in 'access to credit', 'protecting minority investors', and 'starting a business', with impressive progress in 'dealing with construction permits' and 'enforcing contracts'.

The West African pharma manufacturing landscape has been rife with challenges, but slowly and steadily, pharmaceutical manufacturing companies in Nigeria have surmounted the obstacles in their path. With the market’s growth, the population’s young energy, and the post-Covid renewal in the journey towards pharma self-sufficiency, Nigerian pharma is expected to break through the barriers that are still standing. Ultimately, regional and continental free trade agreements, coupled with innovative rural electrification programmes, pave the way for a more conducive environment for pharmaceutical localisation.