BUSINESS STRATEGY

Pharmaceutical giant GSK announces it is leaving the Nigerian market

By our News Team | 2023

Company opts for a third-party distribution model amidst tough business conditions and increased competition from lower-cost products.

GlaxoSmithKline, the international pharmaceutical company commonly known as GSK, has announced that it is exiting the Nigerian market after more than 50 years in the country.

 

Instead, it is moving to a third-party distribution model for pharmaceutical products like Bactroban, Flixonase and Ventolin.

Business Strategy

The GlaxoSmithKline head office in London, prior to the 2022 logo change. Photo by Ian Wilson via Flickr

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.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.