Pharmaceutical giant GSK announces it is leaving the Nigerian market

Haleon, GSK’s consumer health division, which is responsible for popular brands such as Panadol painkillers and Sensodyne toothpaste, is also moving to a similar distribution strategy in Nigeria.

While the company has not given a reason for closing its long-standing local subsidiary, the Nigerian economy has been struggling under a range of challenges, foreign exchange availability and the high cost of doing business.

In the pharmaceutical and healthcare sectors there is also increased competition from companies in lower-cost markets such as India and China.

Look-alike products have crowded them out

In an interview with TheCable, a Nigerian-based online newspaper, Ade Popoola, the Managing Director of Reals Pharmaceuticals explained: “The look-alike[s] from India crowded them out. You find out that if you have been selling 250,000 units per year, when cheaper alternatives come in, it will first of all reduce to 200,000, and subsequently to 150,000, and 100,000.

“Later you will find yourself struggling to sell 50,000 because the hospital buying from you prefers alternatives because the other companies, too, may be quality. Once they crowd you out, you find it difficult to maintain your volume – and when you can’t maintain your volume, you cannot pay your cost[s].”

News agency Reuters says GSK Nigeria’s recent half-year report showed sales had dropped to 7.75-billion naira (US$9.82-million), from 14.8-billion naira in the same period a year ago.

According to the London-based Financial Times, GSK began adopting a local distributor model across its various African markets in 2018. The newspaper said it had been told that about 160 employees will be affected by the change in approach in Nigeria.