Leakage of Supply to the Informal Sector Remains a Key Challenge for the Nigerian Pharmaceutical Market, Cautions Frost & Sullivan

The informal sector in Nigeria is one of the chief sources of drugs for retail businesses for resell to end-users. Despite the surge in informal trade in recent years, the formal sector however remains the most important channel of supply. In the past, the lack of appropriate regulations and enforcement has fuelled concerns about the quality and legitimacy of products, thus affecting all drug suppliers including formal distributors and suppliers. This is however poised to change in future with the improving regulatory environment. New analysis from Frost & Sullivan Distributor Analysis in Nigeria, finds that the pharmaceutical market in Nigeria earned revenues of $778.0 million in 2009 and estimates this to reach $2.61 billion in 2016. The following segments are covered in the research: pharmaceuticals and medical devices. "Growth in the pharmaceutical market is expected to be driven by the increasing availability of low cost generic drugs," notes Frost & Sullivan Healthcare Research Analyst Ishe Zingoni. "This positive trend will be further reinforced by an improving regulatory system." An improved regulatory system is anticipated to boost uptake of drugs by inspiring end-user confidence and eliminating competition from illegal imports and sub-standard products. The leakage of supply into the informal sector has been a key challenge for manufacturers, as quality assurance mechanisms cannot be enforced within the sector. These mechanisms include monitoring of storage conditions and product expiration - all factors that affect treatment outcomes. As the informal sector is very significant source of drugs for businesses at the retail level, it has affected customer confidence even in legitimate pharmacies and distributors. "Although it is difficult to regulate the informal sector adequately, the regulatory agency, NAFDAC, has been making considerable progress in reducing the problem of sub-standard and illegal products," remarks Zingoni. "Recent interventions which include the introduction of the Drug Distribution Inspection Committee (DDIC) will improve enforcement through regular inspection of documentation throughout the supply chain." Through vertical integration, manufacturers in Nigeria are now moving into distribution, and gaining greater control of the supply chain. The major manufacturers in the country are setting up their own distribution subsidiaries that distribute directly to retail pharmacies and patent medicine vendors (PMVs).