In line with analysts’ expectations, the impact of the prevailing macroeconomic challenges on corporate and retail businesses remains to be seen. Pharmaceutical manufacturing and marketing companies are the latest to decry the impact of higher operating costs, finance losses on high borrowing costs, and foreign exchange devaluation on their essential and non-essential products, which has soared by over 300%.
GlaxoSmithKline Consumer Nigeria Plc (GSK Nigeria), a marketing and distributor of consumer healthcare and pharmaceutical products, has disclosed the intention of its parent company, GSK UK Group, to cease commercialization of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products. Effectively, the GSK products will have to be channelled through alternative distributors in Nigeria while GSK Nigeria seizes operation (and delist from the market) due to supply chain constraints and recent policy decisions that altered the business operating environment. The company’s fundamentals suggest that its sales and profitability growths in recent years have been import-dependent and unpredictable, subjecting it to supply chain shortages, foreign exchange losses, and the impact of COVID-19.
Experts say GSK incident indicates Nigeria’s progressively difficult business environment. Rising domestic costs and a falling naira have whipsawed profit and put the company in a business sustainability challenge. Equity observers expect more import-dependent companies to be brutalized by the exchange rate liberalization policy of President Bola Tinubu’s administration.
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