By Peter Egwuatu

Fidson Healthcare Plc has stated that it will deliver better performance in the second half of the year as well as growth in the near future despite the drop in its revenue for the first half of the year. The company in reaction to its first half results 2016 released on the Nigerian Stock Exchange, NSE  stated that it will focus on its strategies for market expansion and brand building.

Fidson recorded a 35 per cent dip in revenue from N4.03billion in  first half 2015 to N2.61bn in  first half 2016 with Profit-After-Tax (PAT) also declining to N39.5million from N324.2million during the same period. This performance is in spite of the significant drop in the company’s operating cost.

According to the company, the low sales figure recorded is as a result of unavailability of products, a direct consequence of the scarcity of foreign exchange that beleaguered many in the manufacturing sector, which led to it only accessing a fraction of its fx needs in the first 6 months of the year.

The paucity of foreign exchange, for the importation of key products and essential raw materials for manufacturing were disruptive to manufacturers in the pharmaceutical industry including Fidson. Gross margins dropped to 52 per cent  on turnover from 55 per cent  in the same period last year, this is a reflection of the direct impact of significant increase in the exchange rate.

The company’s cost optimisation strategy, which it embarked on a couple of years ago, continued in 2016 in line with its strategy to drive efficiency in the face of a challenging business environment. This strategy saw Fidson reduce its operating cost by over 60 per cent  in the period under review. The company has indicated that it will continue to drive efficiency into its processes, which will continue to result in savings on admin expenses.

Fidson is optimistic that products will be available to sell given the recent CBN reforms in the fx market. Its growth strategies are premised on the recent move to the company’s new World Health Organisation Good Manufacturing Practice (WHO-GMP), where local production recently commenced.

The newly completed state-of-the-art facility will provide several benefits including increased capacity, improved efficiency from economies of scale, increased product offerings as well as job creation with an additional 300 jobs expected to be created.

Aside from increasing production capacity, the new factory would enhance the company’s business prospects by enhancing its ability to tender for WHO sponsored programmes, which Nigerian pharmaceutical manufacturers are unable to access, losing out to foreign companies in these tenders.