On August 3, GlaxoSmithKline (GSK) announced plans to cease operations after considering the pros and cons of switching to a third-party distribution model for its pharmaceuticals and consumer healthcare products.
Instead, choose to offer medications in 29 sub-Saharan African regions using a distributor-led strategy.
GSK is a British pharmaceutical company that has existed in Nigeria for 51 years. On June 23, 1971, GlaxoSmithKline Consumer Nigeria Plc was established in Nigeria. Beecham Limited was the company’s original name when it opened for business on July 1, 1972. The Company began trading on the Nigerian Stock Exchange in 1977.
GSK Nigeria’s half-year revenues decreased to N7.75 billion from N14.8 billion in the same time a year before, according to a report by the ICIR.
This data suggests that, apart from the half-year performance of GSK, which had a decrease, the last year recorded an increase. The corporation never reported a huge profit, but according to its financial statements, GSK hasn’t experienced a loss either in the previous five years.
Over the past five years, the group’s profit has fluctuated, rising in 2019 to falling in 2020, rising slightly in 2021, and rising further in 2022. The group’s profit increased by 25% from its profit in 2018 and 2022.
The GSK group’s revenue climbed by 38% during the course of five years, from N18.4 billion in 2018 to N25.3 billion in 2022. Over the previous five years, the group’s revenue has increased at a progressive rate.
It appears then that the pharmaceutical giant is not bowing out due to past business failures. Rather, it may be bowing out due to present pressures and foreseen business struggles.
According to Indeed, businesses base their strategic choices on various variables, including market conditions, the regulatory landscape, corporate performance, and changes to their global operations.
READ ALSO: From notorious energy crisis to high import costs: Why Nigerian factories are shutting down
How would this affect Nigeria and its populace?
The exit of GSK Nigeria might affect a variety of parties, including the healthcare system as a whole, in a number of significant ways.
Highly renowned for its quality products, including Theraflu, Neosporin, Panadol, Sensodyne, Advair, and Neosporin, the exit of the pharmaceutical company could reduce people’s access to safe and potent medications.
A significant pharmaceutical business leaving the country could considerably impact the economy. It could result in employment losses, decreased tax receipts, and a decline in the pharmaceutical industry’s economic activities, including manufacturing, distribution, and research and development.
Investor trust in the nation’s pharmaceutical and healthcare sectors may be impacted, which can result in a future decline in foreign direct investment and partnership.
Due to the withdrawal, Nigeria would now import these prescription and over-the-counter medicines at a greater cost since the company had previously produced them mostly in Nigeria.
Nigeria has about 115 pharmaceutical companies operating in it, but the exit of GSK brings the number to 114 pharmaceutical companies.