The abrupt ban on the sale of codeine-containing cough syrups by the Federal Government last year has hit some pharmaceutical firms hard.
Pharmadeko Plc, in its financial statements for the first quarter ended March 2019, recorded a N110 million loss, compared to N15.7 million profit in Q1 2018.
In the statement, the company indirectly attributed the poor results to the codeine ban.
“THE COMPANY POSTED A LOSS OF N110 MILLION DUE TO WORKING CAPITAL DEFICIENCY AS COMPANY FUNDS ARE TIED DOWN AS A RESULT OF THE TEMPORARY SUSPENSION PLACED ON COUGH SYRUP CONTAINING CODEINE BY THE FEDERAL GOVERNMENT.”
As a result of the ban:
- Finished goods valued at N120 million are tied down in the company’s warehouse.
- Receivable of N72.3 million yet to be collected as the product can not be sold, in addition to finished goods on hold at the distributorship warehouse.
- Materials worth over N60.4 million are tied down in the company’s warehouse.
The company, however, expressed some optimism that compensation from the Federal Government would be paid soon.
“WE ARE HOWEVER CAUTIOUSLY OPTIMISTIC THAT THE FEDERAL GOVERNMENT WOULD FULFIL THE PROPOSED COMPENSATION SOONEST.”
Why was codeine banned? The Federal Government took the step following a documentary by the British Broadcasting Service (BBC), which showed massive abuse of the drugs, and seemingly lax sale policies by some pharmaceutical companies in the country.
Prior to the ban, Pharmadeko Plc had been producing Parklin Cough Syrup, a product which in its FY 2018 results, it stated was its flagship.
The sad tales may continue: Second quarter results by the firm may also take the same pattern, seeing as no concrete plan was stated on how working capital would be raised. Waiting on the Federal Government for compensation is an unrealistic strategy, especially considering the the President yet to assent to the 2019 budget.
About the firm: The company was incorporated in 1967 as Parke-Davis and Co Limited. In 1980, its name was changed to Pharmadeko Limited, and then subsequently Pharmadeko Plc.
The company’s principal activities include the manufacturing, packaging and marketing of high quality pharmaceutical and consumer products. Popular brands produced include Sans Cream Soda and Brett Mouthwash.
Pharmadeko Plc closed at N1.50 in yesterday’s trading session on the Nigerian Stock Exchange (NSE).