Introduction:
The recent announcement by GlaxoSmithKline (GSK) UK Group to wind down operations in Nigeria due to the country’s forex crisis has sent shockwaves through the pharma space. As we delve into the implications of this decision, Lekan Adekoya Director at OneHealth, explores the potential impact on consumers, pharmacies, HMOs, healthcare services, pharma investors, and employers offering health benefits.
This article aims to shed more light on GSK’s popular products whose prices would be affected by the change, provide alternatives that are available to the public, and draft out effective strategies that can be used to overcome the implications for various stakeholders.
Earlier this week, GlaxoSmithKline (GSK) announced that it would cease its operations in Nigeria, according to a recent report by Business Day, GSK officially announced its intent to cease operations in Nigeria but will treat its employees fairly and will meet all applicable legal and consultation requirements and would provide shareholders with a cash distribution.
The company also stated that its shareholders will also be provided with a draft Scheme of Arrangement, which may see them receive an accelerated cash distribution and return of capital.
GSK Nigeria said that it has been working with its professional advisors to agree on the next steps, and will be submitting the Scheme of Arrangement to the Securities and Exchange Commission (SEC) shortly. The company announced its plans to engage a local third-party distributor in Nigeria for the distribution of its products.
“We are grateful for the support of the GSK Group in this endeavour, and we aim to share comprehensive details in the near future,” the company said.
This decision by GSK was due to the forex crisis in Nigeria, which has made it difficult for GSK to import its products into the country.
The organization is a British multinational pharmaceutical company that has been operating in Nigeria for over 50 years.
Its products are used by millions of people in Nigeria, and its decision to cease operation is a major blow to not only the country’s healthcare system but to the Nigerian economy as a whole because as of 2020, GSK’s total economic contribution to Nigeria was estimated to be $1.2 billion.
With Nigeria being an import-dependent country the current forex crisis a lot of businesses have found it difficult to import goods and services, which is a result of the naira constantly depreciating against the US dollar, making it more expensive for businesses to buy foreign currency.
GlaxoSmithKline (GSK) imports most of its products into Nigeria, and the forex crisis has made it difficult for the company to obtain the foreign currency it needs to import its products. This spurred the decision for GSK to cease its operations in Nigeria, this decision has raised concerns among stakeholders, including shareholders and consumers.
Shareholders are concerned about the impact of the decision on GSK’s profits. The company’s revenue from Nigeria is significant, and the decision to cease operations could lead to a decline in profits.
Consumers are concerned about the availability of GSK’s products in Nigeria as the company’s products are used by millions of people in Nigeria, and its decision to leave the market could have a significant impact on the availability of these products.
Grace, a concerned patient, shared her worries, “I’ve been using GSK’s vaccines for my kids for years. They’ve kept my family healthy, but now I’m not sure what our alternatives are. I hope we don’t face shortages or have to compromise on quality.”
How will GSK leaving Nigeria affect the price of its products
GSK’s exit could trigger a domino effect in the pharma space. With a strong presence in Nigeria, GSK’s withdrawal may lead to a reduction in the availability of certain medicines and vaccines. This, in turn, could result in higher prices for essential healthcare products.
Pharm. Clara, a renowned pharmacist and healthcare economist, warns that “the reduced competition may create a gap in the market, leading to potential supply chain disruptions and longer waiting times for patients seeking medical treatments.”
GSK’s product portfolio in Nigeria is diverse and spans a wide range of therapeutic areas. Notable products include:
- Medications for chronic diseases: GSK produces a number of medications for chronic diseases, such as;
- Asthma (Ventolin (albuterol),Advair (fluticasone and salmeterol), Breo Ellipta (fluticasone furoate and vilanterol), Serevent (salmeterol), Flixotide/Flovent (fluticasone propionate)
- Diabetes: Avandia (rosiglitazone), Tanzeum (albiglutide), Byetta (exenatide) and
- Hypertension: Coreg (carvedilol), Avapro (irbesartan), Tekturna/Rasilez (aliskiren)
- Antibiotic: Augmentin: An antibiotic used to treat various bacterial infections.
- Vaccines: GSK also produces a number of vaccines, such as the measles, mumps, and rubella (MMR) vaccine and the human papillomavirus (HPV) vaccine.
- Over-the-counter medications and consumer products: GSK also produces a number of over-the-counter medications and consumer products, such as Panadol Ribenna Sensodyne just to name a few.
GSK’s exit from Nigeria is expected to have a significant impact on the price of its products in the country, according to Lekan Adekoya, Director at OneHealth. He points to the following notable effects:
- Increased prices: As GSK is no longer manufacturing or distributing its products in Nigeria, there will be a decrease in supply. This will likely lead to increased prices for consumers.
- Scarcity of some products: Some GSK products may become scarce in Nigeria, as there will be no local supplier. This could be especially problematic for essential medicines
- .Increased demand: it could also lead to increased demand for them. This could also drive up prices, as people are willing to pay more for products that are in short supply.
Overall, it is likely that the price of GSK’s products will increase in Nigeria after the company leaves the country. This could have a significant impact on patients who rely on these products, especially those who are already struggling to make ends meet.
- Poor-quality substitutes: If there is a shortage of GSK products, consumers may be forced to purchase substitutes from other manufacturers. These substitutes may be of lower quality, which could have negative consequences for patients’ health.
- Decreased competition: With GSK out of the market, there will be less competition for other pharmaceutical companies. This could lead to higher prices for GSK’s products, as other companies will be able to charge more without fear of losing customers to GSK.
- Currency fluctuations: The Nigerian naira has been depreciating against the US dollar in recent years. This means that it will cost more naira to buy the same amount of US dollars. This could also lead to higher prices for GSK’s products, as the company will need to charge more in nairas to cover its costs.
It is important to note that the specific impact of GSK’s exit on the price of its products will depend on a number of factors, such as the availability of alternative products and the level of competition in the market. However, it is clear that GSK’s exit could have a significant impact on the affordability of medicines and vaccines in Nigeria.
Effective Strategies to Overcome Implications:
1. For Individuals who buy GSK Products:
In the face of GSK’s exit from Nigeria, it is important for individuals and employers to feel assured that their healthcare needs will be met without compromising on quality. This is where OneHealth‘s comprehensive microinsurance plan, OneWellness comes in, the OneWellness micro-insurance scheme is a lifeline to a healthier future.
With OneWellness, individuals and their families gain access to a network of expert doctors who can recommend cost-effective and practical treatment plans. Whether it’s finding suitable GSK alternatives or exploring other reputable pharmaceutical options, OneWellness ensures that essential medications are within reach.
- Seek guidance from healthcare professionals to identify suitable alternatives.
- Consider generic medications as cost-effective options.
2. For Pharmacies Procuring and Selling GSK Products:
Nigerian pharmacies need to diversify their product offerings by collaborating with other pharmaceutical companies and looking for other methods of applying digital solutions for efficient inventory management.
Don’t let GSK’s exit dampen your business prospects, partner with OneHealth to unlock a world of opportunities. Our digital health solutions can help you reach a wider range of customers, for example, HMO enrollees in your area.
By partnering with OneHealth, you will gain access to tools that streamline medication dispensing processes, leading to increased revenue opportunities.
Don’t miss out on this chance to thrive in the evolving healthcare landscape.
3. For HMOs and Healthcare Service Providers:
Partner with alternative pharmaceutical suppliers to ensure a consistent supply of essential medicines. Many HMOs are currently using traditional methods at the moment, and implementing and utilizing telemedicine solutions to enhance patient access to healthcare services and alternatives that suit their health needs is core to closing the gap left by GSK.
To ensure smooth medication fulfilment for your enrollees, OneHealth’s Medication Fulfillment Platform offers seamless integration with over 1000 partner pharmacies, providing access to a vast array of GSK alternatives with extensive coverage and pharmacy accessibility.
With OneHealth’s Medication Fulfillment Platform, you can confidently meet the healthcare needs of your members without disruptions. Embrace efficiency and excellence with our robust platform.
4. For Pharma Investors:
Now is the moment for local pharma to shine! Support and empower local pharma companies to fill the void left by GSK’s departure. Pharma investors should seize this opportunity to secure a promising future in Nigeria’s healthcare market by bridging the gap left by GSK’s exit.
By joining forces with OneHealth you will gain access to a diverse range of GSK alternatives and you can leverage our supply chain excellence… By partnering with OneHealth, your pharmacies or health companies would gain access to a wide array of pharmaceutical options.
5. For Employers Offering Health Benefits:
Empower your employees by helping them navigate alternative healthcare options. Conduct a thorough review of health benefit plans to accommodate potential changes in medication costs.
Conclusion:
GSK Nigeria’s decision to cease operations is a significant event that will impact employees, shareholders, and the healthcare industry as a whole. This marks a pivotal moment for the entire pharma industry, and it calls for unity to ensure access to quality healthcare for all. By exploring alternatives, embracing innovation, and collaborating, we can overcome the implications of this decision and pave the way for a healthier, stronger healthcare ecosystem in Nigeria. Remember, a healthier Nigeria begins with us! Let’s work together to shape a brighter future for healthcare in our country.
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