Pharma Leaders Canvass Collaboration, Contract Manufacturing for Industry Growth

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  • As NAIP holds 2023 CEOs Forum

Discussants during panel discussion at the NAIP 2023 Economic Outlook and CEOs Forum in Lagos on Wednesday April 5, 2023.

Stakeholders in the Nigerian pharmaceutical industry have been charged to collaborate and embrace contract manufacturing, in order to move the industry from import-dependence to self-sufficiency, and ultimately helping to attain national drug security.

This was the major thrust of the plenary session of the 2023 Economic Outlook and CEOs Forum of the Association of Industrial Pharmacists of Nigeria (NAIP), held in Lagos, on 5 April.

Speaking on a sub-theme of the forum, “Contract manufacturing in Nigeria: Collaboration for increased capacity utilisation and drug security”, Chairman of Fidson Healthcare Plc., Dr Fidelis Ayebae, noted that contract manufacturing is the guaranteed way for Nigerian pharmaceutical companies to get to maximise their capacity and outputs.

He explained contract manufacturing as a situation in which a company enters into an agreement with another to produce certain product components or a complete product(s) over a specific time frame.

“It is a business agreement where one company pays another to provide the necessary components to assemble finished goods, or even manufacture the product in its entirety,” he said.

Speaking further, Ayebae, who is also chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), noted that setting up a manufacturing plant is capital intensive, involving nothing less than five million dollars.

He therefore stressed that rather than looking for such a huge amount to build factory, a company can start with contract manufacturing and invest some of the start-up in building its brand, instead.

Ayebae also berated calls for contract manufacturing legislation, saying that is unnecessary for something so “simple”.

According to him, “Contract manufacturing has been in existence in Nigeria for over 50 years. It is a simple contract between two willing people; nobody can force anybody into it. I have heard people talking about legislating on it, whereas, it is a simple thing. We don’t need to legislate on it, but it is the way to go for the industry to grow. Let’s start from there and the earlier we begin the journey, the better for the industry and the country as a whole.”

The Fidson chairman equally explained that there are two types of contract manufacturing – namely, the “100 per cent contract”, in which the manufacturing plant owner carries out all the procurements and processes for the manufacturing of the product; and the “toll manufacturing”, in which the product owner provides all the input, including the active pharmaceutical Ingredients (API), while the manufacturing plant owner uses the supplied input to manufacture the product.

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“The product owner in this second case pays the factory owner what is known as toll price/fee,” Ayebae said, adding that it is the more advisable option, as it allows the product owner to monitor the production process.

Speaking in his capacity, as chairman of PG-MAN, Ayebae said, “We recognise the need to help those who want to manufacture their products. It will not be free but at a reasonable price; we will collect toll price.”

He added: “Capacity to produce what we consume is what will transform our country. Nation-building is about delaying gratification. As a pharma company, when you start making money, don’t start buying big cars. Instead, invest the money first and then the gratification will come later.”

Urging stakeholders not to belabour contract manufacturing beyond necessary, Ayebae said it remains the easiest route to the top for pharmaceutical companies, noting that it was one of the strategies that helped Fidson at inception. He assured that, with as little as N1 million, a product owner can start contract manufacturing.

The lead discussant at the plenary session, Pharm. Ade Popoola, highlighted some of the challenges facing contract manufacturing in the country, saying enforcement of contract term is almost non-existent, adding that conflict of interest usually comes up between the contractor who owns the factory and the product owner.

Popoola, who is the managing director of Reals Pharmaceutical Limited, with over 20 years of contract manufacturing experience, said, “Sometimes, you are at the mercy of the contractor. There is also capacity problem when the factory owner begins to have many customers. There is constant price review. There is also the challenge of raw materials as well as logistics problems.”

While admitting that contract manufacturing is evolving in Nigeria and has not attained full maturity, Ayebae however maintained that every challenge facing contract manufacturing in Nigeria is surmountable, once each party involved keeps to the contract term and abide by it.

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According to him, “Some people are going into contract manufacturing because they want to make money, without knowing that there are responsibilities to fulfil.

“Conflict of interest usually occurs as a result of the greediness of the factory owner. This is why anyone going into contract manufacturing needs to carry out findings before choosing a partner. Examine the pedigree of the person you are dealing with. Endeavour to have detailed information about the factory owner before signing any contract.”

In his remarks at the session, the Chairman, Board of Trustees of NAIP, Prof. Lere Baale, stressed that the most important thing that the Nigeria pharmaceutical industry needs now is collaboration. He charged local companies manufacturing overseas to start patronising local manufacturers, saying that is the only way the sector can grow.

“Cost of production will reduce through contract manufacturing, compared to when you travel abroad to manufacture. There is need for more collaboration. It is what the industry needs now. Product owners should patronise local manufacturers. Collaboration is what will enhance the growth of the industry.

“The manufacturers in Nigeria should also begin to look beyond Nigeria to other African countries. I believe the future is bright for the pharmaceutical industry in Nigeria and the entire African continent,” Baale said.

In her presentation, titled, “Collaboration and engagement of laboratory, investigative and complementary services as a model for growth”, the Managing Director/CEO, Katchey Laboratory, Mrs Kate Isa urged stakeholders in the pharma industry to stop waiting for the government before taking necessary actions towards the advancement of the industry. Noting that one of such actions is going into collaborations, she stated that such arrangements will take the industry to greater heights.

Also speaking, the Executive Director, Emzor Pharmaceutical Industries Limited, Pharm. Uzoma Ezeoke emphasised the importance of contract manufacturing, noting that it is the surest route to developing the Nigerian pharmaceutical industry. She however advised those going into contract manufacturing to choose their partners wisely.

In his address at the event, Chairman of NAIP, Pharm. Ken Onuegbu, stated that the association’s intention is to reverse the narrative of the Nigerian pharma industry from 70 per cent importation and mere 30 per cent local production to 65-70 per cent local production and 35-30 per cent importation.

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In Onuegbo’s words, “We intend to shift the paradigm, and the only way we can do that is to encourage local production of essential pharmaceutical products, either directly or through contract manufacturing, and to also do something about the production of active pharmaceutical ingredients (APIs). The good thing is that we are getting there. The more we talk about it, the more we draw attention to it and the more we get close to the target.”

The NAIP chairman added that, with the state of things in the forex market in the last three years, it is much more advisable to manufacture through contract manufacturing in Nigeria now.

He said, “I must be frank on this issue. Based on our experience in the country in the past two or three years, and with the madness in forex market, if you get a good manufacturer with good quality, it is better to manufacture locally than to import. This is so because before you can import, you have to go through a lot of encumbrances – sourcing for forex and many other processes; but with local contract manufacturing, you are not going through any processes and encumbrances.

“All you need to do is to get a good manufacturer with good quality record and then manufacture your product locally. But, of course, I must also say that there are some products that require higher capacity that cannot be handled locally. Those ones have to be manufactured from abroad.”

Onuegbu also noted that most of the challenges facing local contract manufacturing in Nigeria can be amicably resolved.

According to him, “Life is full of challenges and as a serious minded person, you can’t run away from challenges; you must confront them squarely. What we need to do is to identify the challenges facing contract manufacturing in the country and provide solutions to them.

“There is no challenge without a solution. Some of the challenges have been identified already. What we need to do now is to sit down as stakeholders and look at the challenges, discuss them and find solutions. This is why engagement and collaboration are the key things. I believe it is doable.

 

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