Domestic manufacturing is largely concentrated in lower-end medicines that require relatively simple production processes. The more complex and higher-value pharmaceutical products continue to be imported.
This pattern has persisted for decades. It reflects two things. First is the limited impact of policies aimed at reducing import dependence. The other is the entrenched interests across pharmaceutical companies. An incentive structure that favours imports over local production.
I recently completed my doctorate studies focusing on the political economy of pharmaceutical manufacturing in Nigeria, with comparisons to Uganda, Bangladesh and India. My research looked at how the industry had evolved and analysed how the distribution of organisational power and manufacturing capabilities has made it difficult for reforms to work.
I found that policy interventions have largely failed because weak institutions cannot influence manufacturers to expand their production capabilties.
The biggest obstacles stem from how power and benefits are distributed across political, bureaucratic and pharmaceutical actors.
Any policy that does not fully take this into account will likely be resisted.
Factors militating against Nigerian manufacturers
Nigerian manufacturers face:
. a lack of protection and incentives to produce certain medicines
. high levels of imports of finished medicines
. pressure to import as well as manufacture
. low manufacturing capabilities.
. high levels of imports of finished medicines
. pressure to import as well as manufacture
. low manufacturing capabilities.
Weak incentive structure:
The first policy to specifically support domestic manufacturers of medicines was introduced in 2005, when the Nigerian government restricted the importation of 17 lower-end medicines. The prohibited medicines included paracetamol, aspirin and metronidazole (antibiotic) tablets.
The protectionist policy has not been expanded since then. So manufacturers have no incentive to invest in technological upgrading to make more complex medicines.
The first policy to specifically support domestic manufacturers of medicines was introduced in 2005, when the Nigerian government restricted the importation of 17 lower-end medicines. The prohibited medicines included paracetamol, aspirin and metronidazole (antibiotic) tablets.
The protectionist policy has not been expanded since then. So manufacturers have no incentive to invest in technological upgrading to make more complex medicines.
Importation of finished medicines:
At least 100 manufacturers also import medicines – including some that are produced locally. In some cases, manufacturers both produce and import the same medicine, marketing them under different brand names.
Two medicines illustrate this. The antibiotic ciprofloxacin (tablet form) is currently imported by at least 93 registered pharmaceutical companies, even though 21 domestic producers make it too.
A similar pattern is evident for artemether-lumefantrine, a widely used antimalarial medicine. Fewer than 30 pharmaceutical companies produce it locally. More than 200 import it – including some established manufacturers.
At least 100 manufacturers also import medicines – including some that are produced locally. In some cases, manufacturers both produce and import the same medicine, marketing them under different brand names.
Two medicines illustrate this. The antibiotic ciprofloxacin (tablet form) is currently imported by at least 93 registered pharmaceutical companies, even though 21 domestic producers make it too.
A similar pattern is evident for artemether-lumefantrine, a widely used antimalarial medicine. Fewer than 30 pharmaceutical companies produce it locally. More than 200 import it – including some established manufacturers.
Manufacturers as producers and importers:
Many companies combine local manufacturing with importing finished medicines as a way of managing risk.
This creates commercially attractive, lower-risk revenue streams for manufacturers. They are likely to resist policy or reforms that would limit imports in favour of expanded local production.
Many companies combine local manufacturing with importing finished medicines as a way of managing risk.
This creates commercially attractive, lower-risk revenue streams for manufacturers. They are likely to resist policy or reforms that would limit imports in favour of expanded local production.
Low manufacturing capacities:
Nigerian pharmaceutical companies have low manufacturing capacities. And the learning process involved in complex manufacturing is time consuming, costly and risky.
It is also difficult to compel a company to do something where governance is weak.
In the absence of adequate and sustained policy support, many manufacturers rely on political networks to protect their interests or challenge policies that threaten them.
An example is the modification of a regional tariff in 2016 because it threatened locally manufactured medicines. The regional trade policy had imposed zero duty on essential finished medicines and up to 20% on the raw materials used in medicine manufacturing. This was to increase the availability and affordability of essential medicines across the region. Nigerian manufacturers exerted pressure on government to reject it.
In the absence of credible policy support for upgrading into technologically sophisticated medicines, manufacturers continue to rely on imports. Similarly, they continue to influence policy decisions that could disrupt existing revenue streams.
Nigerian pharmaceutical companies have low manufacturing capacities. And the learning process involved in complex manufacturing is time consuming, costly and risky.
It is also difficult to compel a company to do something where governance is weak.
In the absence of adequate and sustained policy support, many manufacturers rely on political networks to protect their interests or challenge policies that threaten them.
An example is the modification of a regional tariff in 2016 because it threatened locally manufactured medicines. The regional trade policy had imposed zero duty on essential finished medicines and up to 20% on the raw materials used in medicine manufacturing. This was to increase the availability and affordability of essential medicines across the region. Nigerian manufacturers exerted pressure on government to reject it.
In the absence of credible policy support for upgrading into technologically sophisticated medicines, manufacturers continue to rely on imports. Similarly, they continue to influence policy decisions that could disrupt existing revenue streams.
Why the problem persists
When some pharmaceutical companies manufacture medicines locally while others import the same products, it weakens collective action. It’s harder to mobilise around shared policy demands.
The Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria, an influential trade association, illustrates this challenge. One of its objectives is to lobby for increased market protection for locally produced medicines. But member firms have differing commercial interests in locally manufactured and imported medicines. This often works against policy objectives.
It impedes how member firms form alliances to support or oppose policies. It also affects influence over them.
Nigeria’s reliance on imported medicines has less to do with the commonly cited capability constraints. It is the outcome of a policy vacuum that has made it more attractive to import products.
This dynamic is also evident in some other African countries, such as Ghana, Kenya, and Uganda. Manufacturers similarly import more complex medicines and produce simple medicines locally. There is limited support for domestic manufacturing of more complex medicines.
When some pharmaceutical companies manufacture medicines locally while others import the same products, it weakens collective action. It’s harder to mobilise around shared policy demands.
The Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria, an influential trade association, illustrates this challenge. One of its objectives is to lobby for increased market protection for locally produced medicines. But member firms have differing commercial interests in locally manufactured and imported medicines. This often works against policy objectives.
It impedes how member firms form alliances to support or oppose policies. It also affects influence over them.
Nigeria’s reliance on imported medicines has less to do with the commonly cited capability constraints. It is the outcome of a policy vacuum that has made it more attractive to import products.
This dynamic is also evident in some other African countries, such as Ghana, Kenya, and Uganda. Manufacturers similarly import more complex medicines and produce simple medicines locally. There is limited support for domestic manufacturing of more complex medicines.
Moving forward
High levels of imports limit the rewards for expanding manufacturing capabilities and any credible path to competitiveness. The significant revenues generated from imports also weaken incentives to invest in learning how to produce more complex medicines.
Recognising this matters for policymakers and international development organisations.
The challenge is not simply increasing financial support or political commitment. It is designing policies that reconfigure current benefits. They need to make it worthwhile to invest in more complex pharmaceutical manufacturing.
High levels of imports limit the rewards for expanding manufacturing capabilities and any credible path to competitiveness. The significant revenues generated from imports also weaken incentives to invest in learning how to produce more complex medicines.
Recognising this matters for policymakers and international development organisations.
The challenge is not simply increasing financial support or political commitment. It is designing policies that reconfigure current benefits. They need to make it worthwhile to invest in more complex pharmaceutical manufacturing.
