GSK: The travails of a mega brand
By Felicia Nwosu
In the life of some brands, age matters. In the life of others, age appears not to matter the most. What matters is brand equity. However, for the GlaxoSmithKline brand, an influential player with a robust equity and promise, its destiny has been challenged by the ill hand of fate and fortune, which has also hall-marked the Nigerian corporate community.
For the past 51 years, the company has intentionally taken care of Nigerians with quality products and unparalleled health research. GSK, as it is popularly known, was established in 1971, as a healthcare multinational that researches, develops, and manufactures pharmaceutical products, vaccines and other consumer healthcare products.
No doubt, it has been a turbulent journey for most companies who operate in the hostile and challenging terrain of the Nigerian economy. And GSK Nigeria is not immune to this business environment, which is more of the survival of the fittest. Hunted by regulatory hurdles, infrastructural gaps, high cost of production, and incessant fluctuation of foreign exchange for both business operators and investors, the negative impact of these has demonstrated that even the fittest find it difficult to survive in Nigeria.
Today, GlaxoSmithKline Consumer Nigeria PLC, a multinational that has become local for most consumers, is exiting Nigeria. This is not the first time a legacy company has left the shores of Nigeria for various economic reasons. According to a newspaper report, in the last five years, two of the biggest manufacturing companies that closed down their manufacturing plants are Procter & Gamble and GlaxoSmithKline.
The report said in 2014, Procter & Gamble, also known as P&G, set up a $300 million diaper plant at Agbara, Ogun State. But three years later, the plant was shut down due to what the company described as “restructuring”. It added that GSK Nigeria closed down its drug manufacturing plant at Agbara as well, in the third quarter of 2021, and moved into a contract manufacturing alliance with Fidson Healthcare,
Recall that Unilever, another British consumer product powerhouse also recently put an end to the production of its pioneer homecare and skin-cleansing products such as Lux, Sunlight and Omo. The Fast-Moving Consumer Goods (FMCG) giant maintained that the affected product categories were margin dilutive and that their exit was part of the company’s aim to make its operation in Nigeria competitive and profitable. Other companies that have left include Shoprite, Michelin Group, Dunlop, Volkswagen and many others.
Confirming the alarming development, the Manufacturers Association of Nigeria (MAN) said over 50 member-companies had shut down operation owing to issues related to FX scarcity and their members’ inability to import raw materials. MAN added that the average interest rate charged on manufacturers in 2020 was 22 percent and over 20 percent in 2021.
Now, as if that’s not enough, GlaxoSmithKline threw its exit bombshell signaling an end to its operations in Nigeria, and cutting more than half a century ties with the nation’s consumers.
In a recent report, GSK Nigeria’s Company Secretary, Fredrick Ichekwai, said the exit would be in the coming months. The development comes two months after the company lamented the difficulty in accessing currency, stating that it affected its supply of products to Nigeria.
“The challenge in accessing currency is affecting our ability to maintain a consistent supply of medicines and vaccines in the market,” the company’s spokesperson, Omongiade Ehighebolo, said.
Recall that GlaxoSmithKline kicked off business in Nigeria with the name Beecham Limited in 1972, when it blazed a trail with grit and gusto as a market leader in the nutritional healthcare and pharmaceuticals segment. The company gained strong market penetration and unparalleled traction across many families. All through the years, GSK’s focus has mainly revolved around two reportable segments, the Consumer Healthcare segment, which consists of oral care, over-the-counter (OTC) medicines, and nutritional healthcare; and the Pharmaceuticals segment consisting of vaccines and prescription drugs.
Reiterating that all necessary legal proceedings would be met as regards employees and shareholders, the company, after 51 years today proudly has over 290 employees in its payroll. It also boasts of numerous brands in its portfolios which include Panadol, Andrews liver salt, Macleans, Ampiclox, Sensodyne, and others which have helped to generate maximum revenue from the Pharmaceuticals segment.
A look at the company’s recently published half-year 2023 financials indicated a drop by almost half in revenue to N7.8 billion from N14.8 billion a year ago.
For more than 50 years in Nigeria, the company has been creating value. Globally, its business model rests on its ambition to positively impact the health of 2.5 billion people by the end of 2030.
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