As the Nigerian government begins the implementation of the presidential executive order granting a two-year exemption from import duties and Value Added Tax (VAT) on pharmaceutical raw materials, local manufacturers have reacted with cautious optimism, stating that while the policy is a step in the right direction, it is unlikely to lead to a drastic reduction in the cost of medicines.
The waiver, implemented by the Nigeria Customs Service (NCS), is aimed at boosting local drug production, reducing the cost of medicines and medical supplies, and attracting investment into the healthcare sector. While industry leaders acknowledge the move will help stabilise prices, they insist that other factors—such as foreign exchange volatility, energy costs, and local market demand—are far more influential in determining the cost of pharmaceuticals.
In exclusive interviews with Pharmanews, Dr Fidelis Ayebae, managing director of Fidson Healthcare Plc; Pharm. Patrick Ajah, managing director of May & Baker Nigeria Plc; and Pharm. Olakunle Ekundayo, group managing director of Drugfield Pharmaceuticals Ltd, shared their perspectives on the potential impact of the policy.
Dr Ayebae cautioned that any price reductions would take time to materialise, estimating a three-month lag before consumers might notice even a slight decrease in drug costs.
“You won’t see an immediate drop in drug prices, and I want to be honest about that. Of course, I could tell you, ‘Yes, prices will fall right away,’ and everyone would be pleased—but that wouldn’t be the truth,” he said.
“Manufacturers will proceed with caution before lowering prices. Even though fuel prices have somewhat stabilised, uncertainty remains about whether they will rise again soon. Once we have greater clarity on fuel and forex rates, then this policy could lead to a minimum price reduction of five to ten per cent. But it won’t happen overnight,” he explained.
As the immediate past chairman of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMGMAN), Ayebae elaborated on how the policy might influence local production. He pointed out that while the exemption will provide some relief in working capital, manufacturers need broader financial incentives to expand capacity.
“This will certainly increase production capacity to some extent. With reduced costs, manufacturers can reinvest some of their funds into expansion. However, real growth will require more than just this waiver—we need long-term financial support and stability in forex and energy costs.”
He projected that, if the policy is effectively implemented, local drug manufacturing could account for at least 50 per cent of Nigeria’s total drug consumption within two years.
“If properly executed, this could push local manufacturing input to a minimum of 50 per cent of total drug consumption in Nigeria. Companies like Emzor, SKG Pharma, Mecure, Saga, Jawa, and Fidson are already expanding their production capacities. This collective growth will drive a significant shift towards local pharmaceutical self-sufficiency.”
For Pharm. Ajah, foreign exchange fluctuations remain the dominant factor in pricing pharmaceuticals. He argued that without a stable forex rate, any cost reductions from duty exemptions would be marginal at best.
“This policy will help prevent further price increases, particularly if forex remains stable. However, duties are only one part of overall costs. If the exchange rate fluctuates unpredictably, then any potential savings from the waiver will be wiped out,” Ajah said.
When asked if the policy would lead to increased production, he was sceptical.
“This alone will not significantly impact production capacity. It will certainly help stabilise prices for some products, but the real issue is forex. If we want to truly lower drug prices, we need forex stability.”
Pharm. Olakunle shared similar concerns but emphasised that government support for local manufacturers would be even more critical than tax exemptions.
“This waiver will bring price stability and improve product availability, but Nigerians also need to play their part. They should prioritise locally manufactured pharmaceutical products,” he urged.
“Health institutions and government agencies should also lead by example—prioritising locally made medicines in procurement. Increased patronage would have a much greater long-term impact on production capacity than just a duty exemption.”
