Nigeria Best Stock Performer Sees `Huge’ Growth on Vaccines

LAGOS (Capital Markets in Africa) – May & Baker Nigeria Plc, which is establishing Nigeria’s sole vaccine-production facility in a partnership with the government, said it expects sales to soar when it starts manufacturing them within two years due to a shortage of supply in the region.

“There is a huge potential for May & Baker,” Chief Executive Officer Nnamdi Okafor, 56, said in an interview in Lagos, Nigeria’s commercial capital. Revenue for the nation’s second-biggest pharmaceutical company could more than double in five years from 8.5 billion naira ($27 million) in 2016, he said.

Nigeria’s government last week agreed to set up a joint venture with May & Baker that will establish the facility in a country that relies on imports to meet its vaccine needs. The first phase of manufacturing will include vaccines for yellow fever, tetanus and hepatitis B, and will be the first in the country since an earlier venture collapsed due to a lack of funds in 1991.

The move will eventually enable Nigeria, Africa’s most populous nation with 180 million inhabitants, to reduce the need for foreign exchange when battling diseases such as meningitis C, which has caused more than 1,000 deaths this year. The country needs $1 billion to buy meningitis vaccines, Vanguard newspaper reported in April, and was also affected by the Ebola outbreak three years ago. The reliance on government imports and donations from international bodies such as the World Health Organization is “insufficient,” May & Baker’s Okafor said.

May & Baker will use the expansion into vaccines to help overcome an economic slowdown and dollar shortages in Nigeria, and counter the cost of importing materials for its painkillers, multivitamins and malaria treatments. The stock has soared more than 58 percent since the government joint venture was announced on May 31, extending the year’s gains to 151 percent, making it the best performer on the Nigerian Stock Exchange All Share Index. The shares traded 9.8 percent higher to 2.36 naira by close on Wednesday in Lagos, the highest since February 2014.

May & Baker will look for a technical partner with expertise in vaccine production to enable it to begin the manufacturing of the three initial products, according to Okafor. The company “will evaluate the need of the country” to decide on which vaccines to produce in the future, with treatments for meningitis, polio and whooping cough under consideration as well as the production of toxoid vaccines.

The company may not be able to meet Nigeria’s vaccine requirements for five years, meaning the nation will continue importing while capacity expands, Okafor said. The drugmaker will own a 51 percent stake in the project, and will contribute 1.3 billion naira of equity, Health Minister Isaac Adewole said.

The company plans to export vaccines to other African countries and is considering the setting up of a research and development lab to study some African viruses that don’t already have vaccines, the CEO said.

The agreement between the government and May & Baker will determine the output and funding requirement for the vaccine business, Okafor said. He sees profit growth after “a couple of years,” following investment in plants and research.