GlaxoSmithKline (GSK) has said it would shut down its operations in Nigeria as it plans to switch to outsourcing the distribution of its medicines and consumer goods.
With increasing competition from local companies and imports from China and India, GSK Nigeria stated that its half-yearly sales fell to N7.75 billion from N14.8 billion naira in the same period.
Its British parent company had in 2018 said it would scale down its operations in Africa and adopt a distributor-led model instead of marketing.
GSK Nigeria said it was working with advisers to agree on the next steps and plans to submit a plan of settlement to the Nigerian Securities and Exchange Commission which, if approved, will return cash to shareholders for scrap.
He also said Haleon Group had informed him of plans to terminate the distribution agreement and appoint an external distributor in Nigeria, which is facing a cost of living crisis, rising business costs, a shrinking consumer base.
“For the above reasons, and after evaluating various other options with GSK UK, the management of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations.”
Shares of GSK Nigeria, in which British drugmaker GSK has a 46.4% stake and Nigerian shareholders the remaining 53.6%, closed at 8.10 naira, falling from a peak of 42.24 naira in 2014.
Inflation in Africa’s largest economy, which has been in double digits since 2016, hit 22.79% in June and is expected to rise further after new president Bola Tinubu scrapped popular but costly gasoline subsidies and devalued the currency.
Tinubu hopes the reforms will spur economic growth and attract foreign investment, which will help increase flows to the country, which suffers from chronic dollar shortages, making it difficult for companies to import raw materials.
The dollar rate as of Thursday is $1 = 788.89 naira.
