THE PUBLIC SPHERE with Chido Nwakanma
The trading post that posed as a Nigerian pharmaceutical and industrial giant closed shop on Thursday, 4 August 2023. At first glance, all it took was a decision in the UK to stop using GlaxoSmithKline Consumer Nigeria Plc as a distribution post, and 51 years of history went down the tube. There was more to it, however.
GSK Nigeria had no products of its own, no processes, and no technology.
Indeed, we must agree with GSK that “if it is not Panadol, it cannot be the same as Panadol”!
The British multinational pharmaceutical and biotechnology firm said it quit based on strategic intent to pursue more favourable business options. GSK UK will now use a third party to distribute its products.
GSK Nigeria stated in a note to the Nigerian Exchange Limited. “In our published Q2 results, we disclosed that the GSK UK Group has informed GlaxoSmithKline Consumer Nigeria PLC of its strategic intent to cease commercialisation of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products.
“The fate of GSK Nigeria is a fitting comeuppance for industrial myopia on a grand scale repeated across the nation…. “[GSK] is a global company that didn’t sufficiently localise its operations and marketing”.
“The Haleon Group has also separately informed the 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.”
GSK marketed many popular brands. They include Ribena, Lucozade, Macleans and Sensodyne toothpaste, Panadol analgesic, and Andrews Liver Salt.
Recent travails only underline decisions and failures over a decade. The travails of the Nigerian economy and its management decisions buffeted GSK recently. Its half-year 2023 result showed that revenue plunged by almost half to N7.8 billion from N14.8 billion in half-year 2022.
The announcement came two days after about seven firms reported losses of N650 billion due to the forex situation in Nigeria. In March, Unilever, another British Fast Moving Consumer Goods firm, ended the Nigerian production of its detergents and homecare brands, Lux, Sunlight and Omo. Unilever stated, “These categories are margin dilutive, and the exit is part of the company’s aim to make its operation in Nigeria competitive and profitable.”
However, GSK’s exit had been in the pipeline for about a decade. It started with the sales of the drinks business (Ribena and Lucozade) globally and locally to Suntory in 2012/2013. It sold its Agbara plant in 2019. Then shut down its facility in 2021.
The separation of the consumer healthcare business from the pharma business followed to form Haleon in 2023. Their Nigerian consumer healthcare business shrunk as they focused mainly on Panadol and Sensodyne. On the pharma side, they became less competitive versus Chinese imports and local brands.
The fate of GSK Nigeria is a fitting comeuppance for industrial myopia on a grand scale repeated across the nation. A marketing director with vast industry knowledge told this columnist, “My high-level take is a global company that didn’t sufficiently localise its operations and marketing”.
That GSK would close shop because of a decision in Brentford, UK means that it had no indigenous products or brands that it could run with outside Glaxo SmithKline’s umbrella. If it did, it could brand and market those products.
GSK Nigeria needed to improve in Nigerianisation and local content. GSK did not feature in the 90s when the buzz in the Nigerian industry was local content through backward integration. Many firms increased the local content of their brands and processes. GSK did only limited import substitution. Their factories are mere shells or repeater stations like the Rediffusion radios in the salad days of Nigerian broadcasting.
During that period, many Nigerian firms developed local capacity. Cadbury Nigeria developed a process technology that gave it the 20000T per annum Cereal Conversion Plant. It converts Nigerian sorghum into sorghum malt and glucose as intermediate products for producing beverages and confectionery.
Nigerian Breweries Plc and Guinness Nigeria similarly brewed beer using sorghum. They stopped those lines inexplicably.
In my Solutions Journalism classes at the School of Media & Communication and Lagos Business School, I often draw attention to the story of Mrs Yemisi Iranloye, CEO of Psaltery International. I discovered her exploit as I spoke of the need to deepen and contextualise our storytelling.
Psaltery International received funding from the Central Bank of Nigeria (CBN) called the Commercial Agriculture Credit Scheme (CACS) at a single-digit interest rate and another from the Agricultural Credit Guarantee Scheme Fund. They did on-lending to farmers who cultivated cassava by providing the required collateral on their behalf. They then built factories to produce cassava glucose they supply to Nestle Plc and Nigerian Breweries.
We live in the age of knowledge capital. The patent process captures it and shows where countries stand in utilising and translating knowledge into goods and services. Patents are intellectual property that grants inventors exclusive rights to make, use, and sell their inventions. Governments grant it and work with the World Intellectual Property Organisation (WIPO) to keep count. Patents encourage innovation and creativity.
According to the World Intellectual Property Organization (WIPO), Nigeria held 400 patents in 2022. This represents a small percentage of the global number of patents, which was 3.5 million in 2022. Nigeria’s share of global patents was 0.11% in 2022.
Our standing with patents speaks to a severe deficit in attention to global competition. We opened our borders to all products and became a consumer-focused nation.
The demise of GSK Nigeria and the increasing exit of foreign trading shops should serve as an alarm bell. The Federal and State governments must define a Nigerian focus for goods and services. The Nigerian Content Development & Monitoring Board has been working on improving local content in the oil and gas industry with admirable results and improvements. The scope should go beyond that admittedly critical sector to all others.
Wake up, Nigeria. Where is the vision of the Federal and state governments? The country needs production based on knowledge capital that taps into our comparative advantage, not palliatives of whatever description.