GSK’s industrial exodus: Effects, lessons and solutions

By Benjamin Oluwatosin Olowojebutu

Over the last few years, there has been a consistent increase in the exodus of multinationals from Nigeria, and this trend is becoming more worrisome. We have seen the likes of Mufex, Framan Industries, Surest Foam Limited, MZM Continental, Moak Industries, Stone Industries, Nipol Industries, and Procter & Gamble all exit and or reduce their involvement in the Nigerian market.

As many will recall, GlaxoSmithKline (GSK) recently announced that it is leaving Nigeria after 51 years of doing business in the largest African market. This is a disturbing development as it can potentially set a crippling tone for other multinationals. The sad reality is that little or nothing has been done to ease the difficulty of doing business in Nigeria. The ever-increasing petrol and diesel prices, multiple taxation, epileptic power supply, rising interest rates, foreign exchange volatility, bureaucratic bottlenecks, extortive proclivities of some regulators, insecurity, and policy inconsistencies have all combined to stifle the growth and development of many industrial verticals with the health space not sparred.

Government economic policies should drive and create positive changes and foster growth and development. But sadly, in our clime, judging from previous administrations to some might argue that even the recent one, the plethora of policies have yielded no gains but pain and exacerbated hardship.

GSK is a leading pharmaceutical company that distributes various medicines, including vaccines, in Nigeria. It was incorporated in 1971 and listed on the Nigerian Stock Exchange in 1972. On the 3rd of August 2023, it officially announced its exit from Nigeria and unveiled its plan to adopt a 3rd party distribution model.

Although not apparent yet, the ripple and maybe crippling effect of this will no doubt be detrimental to the economy, patients, health care practitioners (HCP), health care organizations, and Nigerians. I will attempt to highlight some of these multi-faceted implications of this action:

Blockage of technology transfer: As a manufacturing authorization holder, NAFDAC gives a 5-year moratorium, after which GSK was expected to have a manufacturing plant in Nigeria. However, 51 years later, GSK owns no pharmaceutical plant in Nigeria. Therefore, the hope for a technology transfer, which is crucial for national development, is shattered.

Inimical effect of single 3rd party distribution model: Adopting a 3rd party distribution model can be likened to turning the country into a ‘dumping ground.’ This model encourages monopoly, extortion, and manipulation of the health system.

The harsh effect of a single distributor, who in this case are foreigners, will be child’s play compared to what has been ongoing in the country in the past 9 months, where GSK medicines have been and are still being sold at a staggering 400% increase.

This model has been resisted in countries such as Ghana and China. In Ghana, a policy to prevent this and promote indigenous distributors was implemented, giving indigenous distributors the benefit of first refusal, while in China, it was met with stiff opposition and huge fine from the authorities.

Reduced opportunities for capacity building: GSK, being the biggest pharmaceutical company in Nigeria, has been the biggest funder of HCP education, providing grants and donations for research and patient support programs, pharmacovigilance, and medical information, to mention but a few. All these will undoubtedly come to a sad stop as there will be no accommodation for them within the distributor model.

Loss of jobs: GSK is the largest employer of pharmacists in the country; about 150 pharmacists and over 700 people will be directly and indirectly thrown into the unemployment market.

Risk of mirror effect by other pharmaceutical companies: If GSK’s action is left unchecked, it may be mirrored by other pharmaceutical multinationals in Nigeria. The cumulative effect poses a great danger to the health sector and, by extension, our nation’s economy.

Furthermore, turning Nigeria into a dumping ground for their medicines negates the president’s policy aimed at forex conservation. Their new adoption will further weaken the health system by reducing the opportunities for capacity building of health care practitioners, lesser access to new medicines, zero access to research either for the purpose of determining medicines beneficial to our patients or for training purposes, job losses and the likely risk of adopting similar model by other pharmaceutical multinationals.

In the light of the aforementioned issues raised, permit me to canvass some workable solutions going forward.

Formulation and adherence to national laws: It is useless and time-wasting to make laws that are not adhered to. The government must promulgate laws that benefit our nation’s development and are economically fair to manufacturing companies.

Ease the difficulties of doing business in Nigeria: Manufacturers and business owners need an enabling economic environment to thrive. The government must do more than it currently does to identify and ease the difficulties associated with doing business in Nigeria.

Erring government officials must be punished: Punitive measures must be meted out to erring government officials caught sabotaging government efforts. Personal gains must not be allowed to negate national benefits. Closer monitoring must be given to government agencies like NAFDAC, SON, etc.

Better trade negotiation: We must devise a better trade negotiation with existing and incoming foreign investors. Creating an enabling ambience for business is different from permitting extortion and manipulation. We must ensure knowledge sharing to enhance technological development and sternly prevent our nation from being a dump site for foreign manufacturers.

NLC must protect workers’ rights: In the advent of layoffs or breach of workers’ contracts, the Nigeria Labour Congress must always ensure that workers’ rights are protected at all times.

The time to act is now! The government, stakeholders, press, and Nigerians must take a keen and critical look at issues and their potential ripple effects. Sadly, we have seen GSK leave our shores without the concomitant development of a manufacturing plant in Nigeria to support technology transfer and development. Worst still, they have chosen the most beneficial route with zero benefits to Nigeria, her patients, and the health system.

We cannot jeopardise the health and economy of our nation. This is a big concern on that needs to be tackled frontally and headlong. The earlier we tackle it, the better for our nation.

As we strive to establish a country that we can all be proud of, we must pay attention to our national health and prevent pyrrhic victories. The best time to plant a tree was 50 years ago. The second best time is now.