Nigeria’s drugmakers lift profits 49% as earnings outpace sales

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Read History Go to My Account Log Out Enhanced by Google Companies Nigeria’s drugmakers lift profits 49% as earnings outpace sales Nigeria’s five listed pharmaceutical companies increased their combined nine-month profit after tax by 49.4 percent to N24.08 billion in 2026,

Listen to this article Share Nigeria’s five listed pharmaceutical companies increased their combined nine-month profit after tax by 49.4 percent to N24.08 billion in 2026, as improvements in foreign-exchange losses, production margins and operating performance pushed earnings growth almost three times above revenue expansion.

The companies generated N220.27 billion in revenue in the nine months to September 2026, compared with N187.98 billion in the corresponding period of 2025, representing a 17.2 percent increase. Combined profit before tax rose 52 percent to N35.79 billion from N23.55 billion, while profit after tax increased by N7.97 billion to N24.08 billion.

The improvement was concentrated among Fidson Healthcare, May & Baker Nigeria and MeCure Industries, although the factors supporting their results differed. Fidson benefited substantially from lower foreign-exchange losses, May & Baker recorded a sharp improvement in gross margins, while MeCure expanded operating profit despite rising financing costs.

Fidson and MeCure accounted for N29.76 billion, or 92.2 percent, of the N32.29 billion increase in combined revenue. Fidson’s sales rose 21 percent to N112.61 billion from N93.08 billion, while MeCure’s increased 17 percent to N70.24 billion from N60.01 billion. Together, they generated approximately 83 percent of the five companies’ total revenue.

Fidson also recorded the largest absolute increase in profit. Its profit after tax rose 47.2 percent to N11.74 billion, while profit before tax increased to N17.79 billion from N11.90 billion.

A major contributor was the reduction in its net foreign-exchange loss to approximately N104 million from N4.16 billion a year earlier. The N4.06 billion reduction was equivalent to about 69 percent of the N5.89 billion increase in profit before tax, although this comparison does not mean the reduction alone accounted for that share of earnings growth. Finance costs also declined 27.4 percent to N3.73 billion.

However, Fidson’s operating expenses continued to increase. Administrative expenses rose 65.8 percent to N16.42 billion, while selling and distribution expenses increased 50.2 percent to N11.51 billion. Its earnings improvement therefore came alongside higher operating expenses, rather than a broad reduction in costs.

May & Baker recorded the strongest profit growth among the three larger companies despite having the slowest revenue expansion. Its sales increased 4.9 percent to N30.97 billion, but cost of sales declined to N17.26 billion from N19.41 billion. Gross profit consequently increased 35.6 percent to N13.71 billion, expanding its gross margin to 44.3 percent from 34.2 percent.

Operating profit climbed 66.3 percent to N8.45 billion, while finance costs fell 32 percent to approximately N368.5 million. Higher interest income also supported earnings. Profit before tax increased 81.5 percent to N8.92 billion, while profit after tax rose 76.2 percent to N5.89 billion.

MeCure’s improvement was driven more by operating performance, although higher borrowing costs absorbed part of the gains. Revenue increased 17 percent to N70.24 billion, while gross profit rose 18 percent to N24.13 billion. Operating profit advanced 34 percent to N17.49 billion, supported partly by a 50.9 percent reduction in marketing expenses to N1.30 billion.

However, finance costs increased 33 percent to N8.84 billion, equivalent to just over half of operating profit. Profit before tax consequently rose 35.7 percent to N8.64 billion, while profit after tax increased by the same rate to N6.05 billion.

The financing burden reflects a wider challenge facing pharmaceutical manufacturers that rely on borrowing to fund production and working capital. Patrick Ajah, managing director of May & Baker Nigeria, told BusinessDay in April 2026 that loans carrying interest rates as high as 33 percent made it difficult for manufacturers to break even, particularly in capital-intensive pharmaceutical production.

The smaller companies also recorded higher earnings. Neimeth’s revenue increased 20 percent to N6.01 billion, while profit after tax rose approximately 19 percent to N372.46 million. Morison Industries recorded revenue of N448 million and profit after tax of N23.01 million, compared with N21.26 million a year earlier.

Across the five companies, combined cost of sales increased 12.1 percent to N130.76 billion from N116.62 billion, slower than revenue growth of 17.2 percent. This lifted aggregate gross profit by 25.4 percent to N89.51 billion and improved the combined gross margin from 38 percent to 40.6 percent.

The trend varied by company. Fidson’s cost of sales rose 16 percent to N63.68 billion, MeCure’s increased 16.4 percent to N46.11 billion, while Neimeth recorded an 18.1 percent rise to N2.98 billion. Morison’s cost of sales grew 33 percent, albeit from a smaller base. May & Baker was the exception, reducing its cost of sales by 8.8 percent to N17.71 billion.

Despite the improvement in aggregate margins, manufacturers remain exposed to currency movements through their reliance on imported production inputs. KPMG’s July 2026 report found that more than 90 percent of active pharmaceutical ingredients and excipients used by Nigerian pharmaceutical manufacturers are sourced externally.

This exposure makes exchange-rate movements relevant to production costs and inventory funding. However, a reduction in a company’s reported foreign-exchange loss does not necessarily mean its imported ingredients became cheaper.

The results show that stronger earnings came through different channels for the drug makers in form of lower currency-related losses at Fidson, improved production margins at May & Baker, and higher operating profit at MeCure. Their cost and financing pressures, however, remain uneven across the sector.