Nigeria’s Fiscal Policy Unfriendly to Pharma Manufacturers – Verghese


With over 40 years of doing business and living in Nigeria, Chief Varkey Verghese, an Indian of high repute, has come to see himself as a Nigerian and a stakeholder in the nation’s progress. An alumnus of some of the world’s most prestigious business schools, his leadership and management skills have inspired him to establish many successful business enterprises, including the JAWA Group of Companies, one of Nigeria’s leading pharmaceutical manufacturing companies. In this exclusive interview with Pharmanews, he dissects issues bordering on his foray into pharmaceutical manufacturing, the COVID-19 experience and the challenges bedevilling the pharmaceutical industry in Nigeria. Excerpts:

Nigeria’s Fiscal Policy Unfriendly to Pharma Manufacturers – Verghese
Chief Varkey Verghese

Can you please tell us about your leadership motivation and orientation?

My motivation is that I have been in Nigeria for the last 40 years and I had the privilege of working in a group earlier for about 12 years. The chairman of that company was a very young and enterprising man. I was a group director in that company and was relating with him very closely. This gave me the opportunity to learn a lot of things from him which put me in good stead for the future.

After 10 years, I started my own company with the earnings I had saved from my previous work. I started JAWA with some partners and we had two other companies – one was dealing in imports, while the other was in chemicals. After a while, I consolidated my personal business and concentrated on pharmaceutical manufacturing.

My leadership orientation stemmed from my background, first as a graduate of the agricultural sciences; after which I attended quite a number of business schools, including the Administrative Staff College, India; INSEAD Paris; the Lagos Business School, and Harvard, amongst others. The trainings, management programmes and leadership skills that these institutions imparted to me helped to shape my leadership orientation.

What can you say is the JAWA's story regarding the COVID-19 pandemic?

In terms of our COVID-19 experience, we saw the need to go into the production of hand sanitizers and disinfectants. We had started the hand sanitizer production during the Ebola days, and so, it was not difficult for us to reactivate the idea when COVID-19 became an issue.

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Having met production requirements by NAFDAC standards, it was expedient that we produced in large quantities. In fact, it is one of our biggest contributions in the fight against COVID-19. Even NAFDAC patronised us. Many banks and corporate organisations in Nigeria are still buying from us. Our product, WOSAN, comes in different sizes, according to the requirements of our customers.

How would you say the pandemic has affected the pharmaceutical industry generally?

For us in the pharmaceutical industry, when the COVID-19 issue started, there was a lockdown. Many factors slowed down production. There was restriction of movement and transportation was not freely available. Most of us had to operate at about 50 per cent of our normal capacity. The first three months were very tough but those who had stocks were able to sell in the midst of the pandemic because the demand was there. Later months witnessed a gradual improvement due to the partial easing of the lockdown.

Do you think the federal government responded appropriately to the emergency?

To me, it looked like they responded adequately because the Presidential Task Force was set up immediately under the able leadership of the Secretary to the Government of the Federation, Boss Mustapha. Things started moving. At the state level, they mobilised people, particularly in Lagos State, where they did their best.

Apart from the commendable efforts of government at the state level, quite a number of private organisations donated palliatives and other equipment required to manage the situation. GT Bank set up a COVID-19 centre. Also, the Indian Community in Nigeria set up a hospital in Ajao Estate; while the Lagos State Government also moved fast to identify some private hospitals which could complement their efforts.

All those steps led to the creation of so many testing centres. Apart from the testing centre in Yaba, you could go to any of the government-approved private hospitals for testing.

Many had expected that Africa would be the worst hit but against the run of play, more advanced countries like France and the United States suffered more casualties. What do you think was responsible for this?

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Basically, I have discussed with quite a number of Indian doctors in Nigeria about this issue and they all feel that the African continent has better immunity against such diseases. Scientifically, COVID-19 is a weak virus, compared to viruses like Ebola but it can only wreak havoc when one’s immunity is compromised.

The kind of food that Nigerians take – you know, you have a lot of herbs for your soup – like ugwu (pumpkin leaf) and bitter leaf. These are very powerful herbs which can build immunity. It basically boils down to the fact that if your immunity is good, COVID-19 cannot affect you. Even if it does, the effects would be inconsequential. It is a God-given protection that you Africans are enjoying with such immunity.

Do you think there is hope in herbal medical research and development for breakthroughs in the management of infectious diseases such as COVI9-19?

Frankly, there is hope. Going by the different herbal endowments that the continent has. You will agree that most of the basic medicines that we produce in Africa come from herbs. That is why I think the government is supporting NIPRD to carry out more research in the area of herbal medicine.

Despite NAFDAC’s tireless crusades, the distribution of fake and substandard drugs is still an issue. What do you think is really wrong?

Yes, fake and substandard drugs are still in circulation. NAFDAC is trying its best but I feel the federal government should equip them better, in terms of providing more task force, funding and other logistics to enable them function optimally. The task force should be supported by the police and other relevant security agencies so they can take some fast actions because fake drugs don’t fall from heaven but through our land, air and water borders.

People import fake and banned drugs like tramadol and codeine, only to declare them as motor spare parts. Only a well-equipped NAFDAC, in collaboration with other security agencies, can fish out such concealments.  The federal government should provide more funding for NAFDAC to function properly, otherwise, the dangerous trend will continue.

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What would you consider the biggest challenge facing the pharmaceutical industry in Nigeria?

What is most important is that local pharmaceutical manufacturers are not given protection, in terms of the fiscal policy being operated in Nigeria. Manufacturers pay duty on virtually everything. Apart from duty, we also pay Value Added Tax, even on raw materials. This is unheard of in any other country.

In most countries, you enjoy tax and duty holidays on certain types of import but in Nigeria, it is a different ball game. After paying all these bills, the cost of production becomes too high.

The federal government should also prioritise the development of our local capacities in terms of creating the enabling environment for manufacturers to source their raw materials within the country. It is not everything that we should import from overseas. You will agree with me that since the government banned the importation of IV fluids, local manufacturers have risen to the occasion and have been producing. They can even export to other countries in the West African sub-region.

What is your candid advice to indigenous pharmaceutical manufacturers, especially in view of the harsh economic realities, occasioned by COVID-19?

Yes, the situation is harsh but the federal government has done quite a number of things to help the situation. They have given a hundred billion naira long-term loan to the pharmaceutical industries to upgrade their manufacturing capacity and expand local production.

It is a very welcome thing that they have done. Quite a number of pharmaceutical industries are going for it and they will use it to expand and improve their factories, put up some new facilities, amongst other things. This is very encouraging. I have been doing business in Nigeria in the last 40 years and I encourage us not to lose hope but to continue working hard because the future will be brighter than it is today.



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