Untapped Opportunity In The Pharmaceuticals And Healthcare Sector

BMI View: We see Nigeria as a standout market in West Africa due to prevailing socio-economic factors within the country. We believe there is a considerable commercial opportunity unravelling given the scale of private spending on healthcare and the large, unaddressed disease burden present. However, affordability and pertinent risks will continue to prevent these opportunities from being fully realised.

Within West Africa, we see a large commercial opportunity unravelling for pharmaceutical and healthcare companies in Nigeria, as the country's economy continues to grow at a rapid pace and investor sentiment improves towards the region. We highlight four key factors driving pharmaceutical and healthcare demand over the long term in the country.

  • Considerable infectious disease burden owing to the country's geographic location; the tropical climate of Nigeria makes it a hotbed for infectious diseases such as malaria and tuberculosis. Outbreaks of polio, meningitis, cholera, yellow fever, hepatitis and tetanus are also frequent in the country.

  • Sedentary lifestyles, urban-rural shifts, improving food supply and Western dietary preferences are contributing towards a shift in non-communicable diseases. Nigeria's obesity rate is increasing steadily, with estimates indicating that between 30-40% of adult, urban-dwelling Nigerians are obese. As urban-rural shift continues and disposable incomes rise, this trend is only set to continue.

  • Increasing life expectancy and continued population growth; the number of pensioners in Nigeria is rising and any plans to institute universal healthcare will be supported by a broad base of contributors into an insurance-style system.

  • Large-scale infrastructure spending underway; the country lacks the infrastructure in healthcare to support its citizenry but is undergoing a splurge in spending, directed primarily by the private sector, non-governmental organisations and charities. Notable projects include a 1000-bed hospital to be built in Kano state, funded by billionaire Aliko Dangote.

Access To Healthcare Is A Challenge

Biggest Market For Pharmaceuticals and Healthcare In West Africa
Pharmaceutical and Healthcare Spending, 2010-2023

Untapped Opportunity In The Pharmaceuticals And Healthcare Sector

BMI View: We see Nigeria as a standout market in West Africa due to prevailing socio-economic factors within the country. We believe there is a considerable commercial opportunity unravelling given the scale of private spending on healthcare and the large, unaddressed disease burden present. However, affordability and pertinent risks will continue to prevent these opportunities from being fully realised.

Within West Africa, we see a large commercial opportunity unravelling for pharmaceutical and healthcare companies in Nigeria, as the country's economy continues to grow at a rapid pace and investor sentiment improves towards the region. We highlight four key factors driving pharmaceutical and healthcare demand over the long term in the country.

  • Considerable infectious disease burden owing to the country's geographic location; the tropical climate of Nigeria makes it a hotbed for infectious diseases such as malaria and tuberculosis. Outbreaks of polio, meningitis, cholera, yellow fever, hepatitis and tetanus are also frequent in the country.

  • Sedentary lifestyles, urban-rural shifts, improving food supply and Western dietary preferences are contributing towards a shift in non-communicable diseases. Nigeria's obesity rate is increasing steadily, with estimates indicating that between 30-40% of adult, urban-dwelling Nigerians are obese. As urban-rural shift continues and disposable incomes rise, this trend is only set to continue.

  • Increasing life expectancy and continued population growth; the number of pensioners in Nigeria is rising and any plans to institute universal healthcare will be supported by a broad base of contributors into an insurance-style system.

  • Large-scale infrastructure spending underway; the country lacks the infrastructure in healthcare to support its citizenry but is undergoing a splurge in spending, directed primarily by the private sector, non-governmental organisations and charities. Notable projects include a 1000-bed hospital to be built in Kano state, funded by billionaire Aliko Dangote.

Access To Healthcare Is A Challenge

We note that consumption of healthcare and pharmaceuticals in Nigeria is overwhelmingly driven by private consumption (70% of total), especially through out-of-pocket spending. Although a national insurance system is in place, this offers coverage to only those in large private companies, public sector employment or those on low incomes. Gaining access to this insurance scheme is difficult, with many Nigerians going directly to clinics or hospitals and paying out of pocket for services. While these challenges may provide a considerable hindrance, we see large scope for private-public partnerships, private insurance and employer-employee schemes. We see the private sector more than capable of filling the gap in healthcare access that the Nigerian government has so far failed to deliver.

Affordability will be the primary impediment to unlocking the Nigerian market; with no wide-reaching insurance schemes available and average incomes still relatively low, companies within the pharmaceutical sector will need to utilise tiered pricing to match the local economic realities.

Other Risks To Consider

Over the next two to three years, there are pertinent, non-specific risks to commercial enterprises that mitigate the attractiveness of Nigeria.

Terrorism and political risk; the threat of Boko Haram continues to blight investment into the country. Until the Nigerian government restores complete control over the entirety of the country, we expect the private sector to hold off on any significant investments.

Corruption and fiscal transparency; property rights, contract and commercial disputes are difficult to enforce and settle in Nigerian courts due to pervasive corruption and inefficiency.

Infrastructure and transport issues; Nigeria suffers from poor power infrastructure that leads to frequent blackouts. Similarly, the country has poor road networks and transport infrastructure that present supply chain concerns and accessibility to the interior of the country.

BMI Forecasts For Pharmaceutical & Healthcare Spending

Over a ten year period, we forecast pharmaceutical spending in Nigeria to increase from NGN236bn (USD1.45bn) to NGN626bn (USD3.37bn) in 2023. We see healthcare spending rising from NGN3336bn (USD20.53bn) in 2014 to NGN10640bn (USD57.4bn) in 2023. We see growth coming primarily from out-of-pocket and private sector spending.

Biggest Market For Pharmaceuticals and Healthcare In West Africa
Pharmaceutical and Healthcare Spending, 2010-2023
×

Enter your details to read the full article

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

×

REQUEST A DEMO

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

A member of the team will be in touch shortly to arrange a convenient time for your free demonstration and trial. If your enquiry is urgent, please email our Client Services team here.