On this week’s Nairametrics company focus, we are back to profiling little-known companies whose stocks are listed on the Nigerian Stock Exchange (NSE). As you most likely already know, the purpose of this column is to spotlight some of the smaller securities that are seldom in the news. A typical example of such is Neimeth International Pharmaceutical Plc. Get to know everything about the company’s business model, history, its owners, competitors, financial records, growth prospects and more.
About Neimeth International Pharmaceuticals Plc: what they do
With its headquarters in Lagos, Nigeria, Neimeth International Pharmaceuticals Plc specialises in the manufacturing and merchandising of drugs, both for human and animal consumption. The company’s pharmaceutical products, which come in various forms such as capsules, injectable drugs, ointments, liquids, and tablets, are marketed across Nigeria and much of the ECOWAS region.
A historical background of the company
Originally known as Pfizer Products Plc, this company began operation in Lagos, Nigeria as a drugstore back in 1957. It is one of the foremost pharmacy companies in the country and is said to have built the very first drug manufacturing plant in Nigeria. The plant, which was in Aba South-Eastern Nigeria, was later damaged during the three-year war that ravaged Aba and other cities and villages around it.
Pfizer Products Plc’s parent company was the American drug maker, Pfizer Inc, which in 1997 decided to divest 60% of its shareholdings in the former Nigerian subsidiary, in line with its refocused global business operation. The divestment saw a 60% buy-out of the parent company’s shareholding by the management of Pfizer Products Plc, led by the Mazi Sam I. Ohuabunwa, the company’s former CEO.
Following the change in ownership structure, a name change became necessary. Consequently, Pfizer Products Plc changed to Neimeth International Pharmaceutical Plc in 1997. The company has since then continued to operate in Nigeria, manufacturing and distributing “world-class quality pharmaceutical and healthcare products and services that meet customers’ expectations at all times”. It also engages in contract manufacturing as a means of putting its idle plants into good use. It is currently headquartered in Oregun, Lagos.
A look at the company’s segments
Neimeth’s business is structured into two broad categories: pharmaceutical and veterinary. The pharmaceutical arm is concerned with the production and marketing of the company’s ethical and consumer products, which generate the most revenue. Examples of products manufactured and marketed under the pharmaceutical arm of the company include:
- Normoretic, etc.
Neimeth’s veterinary business does not currently generate as much revenue for the company. However, information on the company’s website indicate that are plans are in place to revitalise and reposition the segment towards becoming a major money spinner.
Some of the products currently manufactured under the veterinary arm include:
- Neimycin Soluble Powder
- Neiva Stress
- Neimeth Piperazine
- Neimycin Chick Formula
According to information contained in the company’s full-year 2017 financial report, substantial shareholding is in the following order:
- Intercedd Health Products Limited: 409,857,176 units of shares which makes up 23.74 percentage.
- Ordrec Investments Limited: 197,910,746 units of share which makes up 11.46%.
- Helko Nigeria Limited: 174,466,757; 10.11%.
- Ohuabunwa S. Iheanyichukwu: 120,681,506 units, making up 6.99%.
The remaining 47.7 share percentage is comprised of indirectly-owned shares by the company’s directors, as well as shares owned by the investing public.
The company’s board of directors
According to information obtained from the company’s website, the board of directors is comprised of ten people, a few of whom are quite prominent including accomplished businessman A.B.C Orjiako, and former INEC Chairman, Professor Maurice Iwu.
Dr Ambrose Bryant Chukwueloka Orjiako is currently the company’s Chairman. The trained medical doctor and oil tycoon joined the company in 2004 and steadily rose through the ranks to his current position.
Dr Orjiako holds major positions in other notable Nigerian companies, including Seplat Petroleum, which is listed on both the Nigerian Stock Exchange and the London Stock Exchange. Nairametrics’ valuation estimates his net worth at over N30 billion.
Another important member of the board is Mr. Christopher U. Umeje, the Acting Managing Director. The trained Accountant and accomplished business professional joined the company in 2008 as an Executive Director. Prior to this time, he had garnered numerous experiences in different industries including banking, manufacturing, and hospitality. He assumed his current position in 2017.
Other notable board members are:
- Mrs. Roseline A. Oputa (Executive Director)
- Mazi Sam I. Ohuabunwa (Non-Executive Director)
- Professor Maurice Iwu (Non-Executive Director)
- Engineer Godwin E. Omene (Non-Executive Director)
- Mr. A.O. Balogun (Non-Executive Director)
- Professor Elijah N. Sokamba (Non-Executive Director)
- Thomas Tunbosun Osuku (Non-Executive Director)
- Sir Ike Onyechi (Non-Executive Director)
The company’s target market
As a drug manufacturer, Neimeth International Pharmaceuticals Plc targets patients, drugstores, hospitals, animal breeders, and pet owners in Nigeria and elsewhere in Africa, precisely Anglophone West Africa. Its wide range of remedial medicine is used in hospitals to cure a wide range of ailments, including malaria.
The company is faced with immense competition
Nigeria has a vibrant and highly-competitive pharmaceutical industry, with major players including the likes of Fidson Healthcare Plc and Glaxo Smith Kline Nigeria Plc. These two companies are perhaps the biggest competitive threats faced by Neimeth. For instance, Fidson Healthcare Plc reported a total revenue of N7.4 billion, with a profit after tax of N521 million. Glaxo Smith Kline Plc also reported a revenue of N8.5 billion, with a loss of N103 million. Neimeth, on the other hand, reported a turnover of N877 million and a loss after tax of N29.5 million for the half year ended March 31st, 2018.
Note that other players in the pharmacy market worth mentioning are Pharma Dekko Plc, May & Baker Plc and Emzor Pharmaceuticals.
A closer look at the company’s financial reports
Neimeth International Pharmaceuticals Plc may run at a loss in 2018 unless some special measures are put in place to mitigate this. This is because so far, the company is already running at a loss. Its 2018 half year result is its worst recorded in the past three years. The company had reported a profit after taxation of N195 million, N100 million, and N181 million for the half-year periods ended March 31st, 2017, 2016, and 2015; respectively.
It is unclear what exactly is responsible for Neimeth’s underwhelming performance in H1 2018. Note that the Board gave no explanations regarding this in the unaudited financial result published on the company website. While we anticipate an explanation, it is unlikely that Neimeth International Pharmaceutical Plc will use economic recession and high exchange rates as excuses for their under-performance during this period.
Recall that the company had cited “restricted access to official foreign exchange” as one of the major challenges that adversely affected its business activities in full-year 2017. More so, a fire outbreak on March 7th, 2017 had destroyed the company’s raw material warehouse. This is yet another mitigating factor that contributed to a huge loss of N404.9 million in 2017.
But there has not been a fire outbreak on any of the company’s facilities this year. Moreover, the Nigerian economy has overcome recession, even as the Naira’s exchange rate against the dollar has remained relatively stable for a while now. Therefore, none of these major constraints could possibly have affected the company during the period under consideration.
Neimeth International Pharmaceuticals Plc should consider tapping into the potentials that abound in its veterinary segment. This potential is currently untapped, despite its existence. Little wonder the segment generated less than 10% of the company’s total revenue for the period under review.
In the meantime, the company needs to improve on its marketing tactics in Nigeria in order to have competitive advantage over the other drug manufacturers. As noted earlier, the competition in this industry is stiff. Hence, marketing must be vigorous.
The company should also strategise and come up with many more workable means of getting ahead. Nigeria has a huge pharmacy market that can be explored further. This is important because the company is vital to the economy and cannot afford to under-perform.