GSK, maker of Ampiclox and Panadol, closes business in Nigeria

GlaxoSmithKline (GSK) Nigeria has announced its intention to cease operations, citing its consideration of transitioning to a third-party distribution model for its pharmaceuticals and consumer healthcare products.

The firm said its parent company GSK UK Group has it of its plan to “commercialization of its prescription medicines and vaccines in Nigeria through the GSK local operating companies.”

It said the Haleon Group also informed its board of its intent to terminate its distribution agreement in the coming months and to appoint a third-party distributor in Nigeria for the supply of its consumer healthcare products.

“For the above reasons, and having, together with GSK UK, evaluated various other options, the Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations,” GSK Nigeria said in a statement.

– Why this matters

The decision may affect the availability of major drug brands in Nigeria. The company produces iconic brands such as Panadol, Beecham Ampiclox to Amoxillin, Augmentin, Sensodyne, Macleans and Lucozade.

GSK’s exit will also affect the prices of its product which will now be imported through a third-party distributor. Jobs will also be lost.

– Challenges

The company has faced increased competition from local companies and imports from India and China and has struggled to access dollars for its business. In June, board chairman Edmund Onuz, said the company was facing major challenges.

“We must mention that it continues to be very challenging with foreign exchange non-availability affecting our ability to settle foreign currency-denominated trade payables with product suppliers. As a result, it remains difficult to maintain consistent supply to the market,” Mr Onuzo said.

GSK UK, which has been in Nigeria since 1971, revealed its decision in 2018 to scale down its activities in Africa. This shift involves transitioning from directly marketing medicines in 29 sub-Saharan African markets to embracing a distributor-led model.

The company said its half-year sales had dropped to N7.75 billion, from 14.8 billion naira in the same period a year ago. Profit for the period fell to N339 million from N341 million.

– Arrangements for shareholders

GSK Nigeria said it is working with advisers to agree next steps and plans to submit a scheme of arrangement to Nigeria’s Securities and Exchange Commission, which if approved will see it return cash to shareholders except its parent GSK.

The parent GSK holds a 46.4% stake in the Nigerian unit. Shares in the company closed at N8.10 naira on Thursday, down from a peak of N42.24 naira in 2014.