How COVID-19 is shaping Nigeria’s pharmaceutical industry
Meristem Securities says in the near term, lock-down measures employed worldwide could impede the ease of importing raw materials. Also, the congestion at Nigeria’s seaport has only gotten worse, posing potential risks to logistics costs. Eniola Olabode, Senior Investment Analyst at Meristem Securities joins CNBC Africa to breakdown the impact of the Covid-19 crisis on some key pharma stocks.
Mon, 15 Jun 2020 14:09:36 GMT
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AI Generated Summary
- The challenges faced by Nigeria's pharmaceutical industry due to COVID-19, including difficulties in importing raw materials and increased logistics costs
- The contrasting fortunes of Fitsin and Nemith, with Fitsin experiencing a positive turn in fortunes driven by increased sales volume, while Nemith struggled with intense competition in the over-the-counter drug segment
- The positive outlook for Nigeria's pharmaceutical earnings, driven by the essential nature of the companies' products and expected increased demand, tempered by the risk of rising direct costs impacting earnings
The pharmaceutical industry in Nigeria has been facing significant challenges due to the global COVID-19 crisis. Lockdown measures around the world have made it difficult to import raw materials, while congestion at Nigeria's seaports has worsened, posing risks to logistics costs. Eniola Olabode, Senior Investment Analyst at Meristem Securities, discussed the impact of the pandemic on key pharmaceutical stocks during an interview with CNBC Africa. Two companies, Fitsin and Nemith, have experienced contrasting fortunes in recent times. Fitsin saw a positive turn in its fortunes at the beginning of 2020, driven by increased sales volume and consumer acceptance of new pricing policies. On the other hand, Nemith, which focuses heavily on over-the-counter drugs, faced intense competition in that segment, leading to a decline in revenue. Despite this, Nemith's Q1 results were impressive and helped offset the revenue decline in the second quarter. Looking ahead, the outlook for Nigeria's pharmaceutical earnings is positive, with the essential nature of the companies' products expected to drive increased demand. However, rising direct costs, including raw materials and logistics, pose a risk to the firms' performance. While improved turnover is anticipated, the impact of increased costs on earnings remains a concern for the industry.
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