May & Baker Nigeria upbeat on growth outlook

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May & Baker Nigeria upbeat on growth outlook
December 16, 2019

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Taofik Salako, Capital Market Editor

 

THE management of May & Baker Nigeria Plc at the weekend undertook a review of the operations of the company and its prospects in the increasingly competitive pharmaceutical sector and assured investors that the company is on a stable upward trajectory.

The management of the company said in spite of the top-line pressure and regulatory headwinds in the industry, May & Baker Nigeria now makes higher profit on every unit of sales while growing and diversifying its product base.

Managing Director, May & Baker Nigeria Plc, Mr Nnamdi Okafor, said noticeable improvement in the profitability of the company was due to improvement in operating efficiency, reduction in interest expense due to recent recapitalisation and extraordinary incomes from short term investments.

According to him, the company made more profit per unit of sale compared with 2018. Consequently, pre-tax profit margin improved by three percentage points to 11.8 per cent in third quarter 2019 as against 9.3 per cent in third quarter 2018. Net profit margin also improved by almost two percentage points from 6.3 per cent to 8.0 per cent.

“We are very upbeat about the future of the business, we are on the upward trajectory, the business is stable and we have made some strategic investments and we will be leveraging on these investments in the years ahead,” Okafor said.

He said the company’s world-class outlook and strategic initiatives that will rank it as leader in the healthcare industry in Sub Saharan Africa. noting that the company’s World Health Organisation (WHO)’s manufacturing facility in Ota is growing into a hub of pharmaceutical manufacturing in West Africa.

“It is our desire to achieve breakthrough performance in the coming years,” Okafor said adding new products and contract manufacturing such as the partnership with Sanofi would drive growth. The company had recently signed manufacturing agreement with Sanofi Nigeria, a subsidiary of a French pharmaceutical giant to produce their key products from the Ota facility.

According to him, the Sanofi agreement will not only increase the capacity utilisation of the company’s factory which currently run at about 50 per cent but will also signal to the world that Nigeria has arrived in pharmaceutical manufacturing with facilities that can make medicines fit for the world.

He outlined that the company successfully completed its recapitalisation that saw injection of about N2 billion into the operations of the company and the net proceeds fully applied for various purposes including facility expansion, debt repayment, investment in vaccine production subsidiary and marketing and promotions.

“We also invested in key strategic initiatives in 2019. We took steps forward in actualising our new anti-sickle cell medicines and nutraceuticals. Given the stage we  have reached, we are hopeful these products will be launched in 2020,” Okafor said.

He added that the company’s joint venture with the Federal Government, Biovaccines Nigeria Limited is now running fully as an independent company with its board and management and currently perfecting steps to actualise local vaccine production.

He said local production of vaccine may start between 2023 and 2024 which will help to significantly reduce Nigeria’s current annual vaccine import bill of N8 billion while contributing to national health management.

He, however, noted that the performance of the pharmaceutical industry was adversely affected by the general decline in consumer purchasing power and unfavourable economic indices which led to revenue drop for a number of companies across different sectors of the economy.

“In the course of the year also,   the Federal Government banned the production and distribution of codeine based cough syrups because of their misuse in parts of the country. Consequently manufacturers like us had to contend not only with the loss of revenue from these products but also tied down funds already invested in finished goods and raw materials for the same product. The drop of our codeine based cough syrup tied down over N350  million worth of raw materials and  finished products and denied us annual income  of over N700 million,” Okafor noted.

He pointed out that the company also faced the challenge of a major restructuring of its product portfolio, which compelled it to discontinue production of some of its top cash cow brands as a result of age and change in national treatment protocols and policies.

According to him, some of the products involved were sulpha-based brands;thiazamide and Thalazole as well as chloroquine based ranges; the Nivaquines and 221 brands.  These products were responsible for over N1.2 billion of the company’s annual revenue in 2017.

He reiterated the need for government to support the Nigerian pharmaceutical industry with a bailout of N500 billion to strengthen the domestic manufacturing capacity against likely negative consequences.