GlaxoSmithKline (GSK) Nigeria has announced its plans to cease operations after evaluating the options for shifting to a third-party distribution strategy for its pharmaceuticals and consumer healthcare goods. GSK Nigeria was facing increased competition from local manufacturers as well as imports from India and China when the decision was made. The company disclosed that its revenues for the first half of the year fell to 7.75 billion naira ($9.82 million), down from 14.8 billion naira in the same period last year.
GSK’s British parent company, present in Nigeria since 1971, had indicated in 2018 its intention to reduce operations across Africa and adopt a distributor-centric approach for marketing medicines in 29 sub-Saharan African markets. Currently, GSK Nigeria is collaborating with advisors to chart its next steps. It aims to present a scheme of arrangement to Nigeria’s Securities and Exchange Commission for approval. If greenlit, the scheme will involve returning cash to shareholders, excluding its parent company GSK.
In addition, GSK Nigeria revealed that the Haleon Group has informed them of intentions to terminate a distribution agreement. The Haleon Group plans to appoint a third-party distributor within Nigeria. The country is grappling with challenges such as a cost of living crisis, escalating business expenses, and a contracting consumer base. In light of these factors, GSK Nigeria asserted that after jointly exploring various alternatives with GSK UK, the Board of GlaxoSmithKline Consumer Nigeria Plc has determined that cessation of operations is the only viable option.
Shares in GSK Nigeria, in which British pharmaceutical firm GSK holds a 46.4% stake and Nigerian shareholders hold the remaining 53.6%, concluded trading at 8.10 naira, a notable drop from their peak of 42.24 naira in 2014.
The economy of Africa’s largest nation has been grappling with inflation in the double digits since 2016, with June seeing a surge to 22.79%. This trend is expected to continue following President Bola Tinubu’s decision to eliminate a popular yet expensive petrol subsidy and devalue the currency. Tinubu’s objective is to ignite growth and attract foreign investments, which would in turn bolster the influx of funds into a nation grappling with prolonged shortages of foreign currency, hindering the import of essential raw materials for businesses.
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