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Inside details on drug makers’ efficient use of funds in Q1 2022

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Nigeria’s leading drug makers by market capitalization utilized companies’ funds efficiently with new investments made in property, plant, and equipment (PPE). The new investments in PPE grew by a whopping 438.28 percent to N2.34 billion as at the end of the first quarter of 2022, an increase from N349.21 million recorded in the corresponding quarter of 2021.

Leading the pack is Fidson Healthcare Nigeria plc, which accounted for 81.54 percent of the new PPE investments in the period amounting to N1.66 billion. It was followed by May and Baker which made new PPE investments worth N193.4 million, and Neimeth International Pharmaceuticals that invested N182.64 million in PPE as at the end of the first quarter of 2022.

 

Collectively, the drug makers grew their total PPE by 9.69 percent to N22.67 billion in the first quarter of 2022 from N20.3 billion in the corresponding period of 2021. From total PPE stock, Fidson Healthcare Plc led the pack once again accounting for 73.67 percent of the total PPE recorded by the top drug makers in the country.

PPE reported by Fidson Healthcare Plc amounted to N16.36 billion;May and Baker amounted to N3.85;Neimeth International Pharmaceuticals Plc amounted to N1.54 billion; and Glaxo Smithkline Consumer Nigeria Plc amounted to N518 million in the first quarter of 2022.

Investing activity is an important aspect of growth and capital, and while negative cash flow is often indicative of a company’s poor performance, as a negative cash flow in investing activities connotes that significant amounts of cash are being invested in the long-term health of the company, such as research and development, purchases of physical assets, investments in securities, or the sale of securities or assets.

Cash flow from investing activities (CFI) is one of the sections on the cash flow statement that reports how much cash has been generated or spent from various investment-related activities in a specific period.It provides an account of cash used in the purchase of non-current assets or long-term assets that will deliver value in the future.Cash flow from investing activities is important because it shows how a company is allocating cash for the long term.

For instance, a company may invest in fixed assets such as property, plants, and equipment to grow its business. While this signals a negative cash flow from investing activities in the short term, it may help the company generate cash flow in the longer term. A company may also choose to invest cash in short-term marketable securities to help boost profit.

Drug makers collectively recorded negative net cash flow generated from investing activities amounting to -N1.23 billion in the first quarter of 2022, a 56.57 percent decline from -N2.83 billion recorded in the first quarter of 2021.

May and Baker Nigeria Plc
The drug maker recorded a 103.29 percent increase in net cash flow generated from investing activities to -N151.59 million in the first quarter of 2022 from -N74.57 billion in the corresponding quarter of 2021. This was due to cash outflow from the purchase of PPE during the period which amounted to N193.40 million.

Other sources of inflow for the drug maker from investing activities during the period include proceeds from contract manufacturing which amounted to N1.59 million; rent received, N3 million; sundry income which amounted to N20.52 million, proceeds from the sale of fixed assets N871,000, and interest received which totalled N15.84 million.

May and Baker Nigeria Plc manufacture and distribute pharmaceutical products, such as vaccines, antibiotics, and sera. The Company also sells diagnostics, medical equipment, and bottled water in Nigeria.

Fidson Healthcare Plc
The pharmaceutical company reported a net cash flow used in investing activities totalling -N919.43 million in the first quarter of 2022, a 66.13 percent decline from -N2.17 billion in the corresponding quarter of 2021.

This was because its cash outflow was more than inflow. In the first quarter of 2022, the company purchased property, plant, and equipment which amounted to N1.66 billion. Its cash inflow from investing activities during the period amounted to N9.76 million and N731.64 million from additions to intangible assets and investments on other financial assets, respectively.

Read also: H1 2022: FCMB Group Records 73.2% Profit Growth of N15.4bn and Impressive Food Security Scorecard

Fidson Healthcare Plc is a Nigeria-based pharmaceutical manufacturing company. The principal activities of the company are the manufacture and distribution of pharmaceutical products. The company’s segments include over-the-counter, ethical products, and consumers. The over-the-counter segment represents the products that may be sold directly to the consumer without a prescription.

The ethical products segment represents the drugs, which would be sold to the consumer only on the possession of a valid prescription. The consumer segment represents household items. The Company offers various drug products and formulations across different therapeutic classes and pharmacological segments, which include antacid and ulcer care, anti-diabetic, anti-malaria, cardio-vascular, cough, cold, catarrh, and allergies, multivitamin-hematinics, and neuro-psychiatry/anti-psychotic.

Neimeth International Pharmaceuticals Plc
Neimeth International Pharmaceuticals Plc reported a net cash flow used in investing activities to the tune of -N182.64 million in the first quarter of 2022. According to the first quarter financial statement for 2021, the company did not engage in any investment activity.

Its only investing activity, however, for the first quarter of 2022 was the cash outflow used in purchasing property, plant, and equipment, which amounted to N182.64 million.

Neimeth International Pharmaceuticals Plc is the resultant company from the Mazi Sam Ohuabunwa-led Management-Buy-Out of the 60 percent equity holding of Pfizer Inc. New York, the USA in Pfizer Products Plc.

Before the brand name Neimeth International Pharmaceuticals Plc, the company had operated in Nigeria for 40 years, manufacturing, marketing, and distributing Pfizer brands of pharmaceutical and veterinary products in tablets, capsules, ointment/cream, powder, injectables, and oral liquid forms.

During the 40 years (1957-1997), the company established the first pharmaceutical manufacturing plant in Nigeria at Aba, which was destroyed during the Nigerian civil war.

It then set up and opened the most modern pharmaceutical plant in the West African sub-region in 1976 at Oregun, Lagos. According to the company, these represent great milestones for a company that started as a trading venture in 1957 at a location in Ebute Metta, Lagos.

GlaxoSmithKline Consumer Nigeria Plc
The drug maker reported net cash flow generated from investing activities amounting to N26.73 million in the first quarter of 2022, an increase from -N42.18 million in the corresponding quarter of 2021. No cash outflow during the period, cash inflow during the period, however, amounted to N476 thousand from proceeds of property, plant, and equipment, and N26.32 million from the interest it received in the period.

GlaxoSmithKline Consumer Nigeria Plc is a Nigeria-based research-based pharmaceutical and healthcare company. The principal activities of the Company are manufacturing, marketing, and distribution of consumer healthcare and pharmaceutical products.

The company’s operating segments include pharmaceuticals and consumer healthcare. The consumer healthcare segment includes oral care, over-the-counter (OTC) medicines and nutritional healthcare.

The pharmaceuticals segment consists of anti-bacteria, vaccines, and prescription drugs. The company offers consumer healthcare brands, such as panadol, Andrews liver salt, Macleans, Otrivin, Sensodyne, Voltaren, and a range of pharmaceuticals, including Ampiclox, Amoxil, Augmentin, Zentel, Halfan, and vaccines. Global Manufacturing and Supply (GMS) is the manufacturing unit of the Company located in Agbara, Ogun State.

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