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Cablegate: Nigerian: Local Drug Manufacturers Push for Import Ban

VZCZCXRO1322
RR RUEHMA RUEHPA
DE RUEHOS #0378/01 2690756
ZNR UUUUU ZZH
R 250756Z SEP 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0186
INFO RUEHUJA/AMEMBASSY ABUJA 9838
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 02 LAGOS 000378

SENSITIVE
SIPDIS

STATE PASS EXIM FOR JRICHTER
STATE PASS USTR FOR AGAMA
STATE PASS USAID FOR NFREEMAN, GBERTOLIN
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR LFITTS, PMARIN
DOC FOR 3317/ITA/OA/KBURRESS
DOC FOR 3310/USFC/OIO/ANESA/DHARRIS
DOJ FOR MARIE-FLORE KOUAME
TREASURY FOR RHALL, DPETERS

E.O. 12958: N/A
TAGS: ETRD EIND EAID ECON PGOV PREL NI
SUBJECT: NIGERIAN: LOCAL DRUG MANUFACTURERS PUSH FOR IMPORT BAN

REF: ABUJA 1874

1. (SBU) Summary: The Pharmaceutical Manufacturing Group of Nigeria
(PMGMAN) is lobbying the Government of Nigeria (GON) for an import
ban on additional pharmaceutical products, claiming that local
manufacturing capacity is sufficient to meet Nigerian demand.
Should the GON impose an import ban, multinational pharmaceutical
companies fear they will be driven out of the Nigerian market. At
the same time, Yar'Adua's Special Advisor on economic matters told
Ambassador September 15 that Nigeria will likely reduce the existing
number of bans, but these seems mostly on the agriculture side of
the equation as opposed to an overall reduction. End Summary.

Protectionism Behind Drive for Import Ban
-----------------------------------------

2. (SBU) Jude Abonu, Director of Corporate Affairs for Pfizer, told
EconOff on August 22 that PMGMAN, comprised of domestic drug
producers, is pushing the GON to ban additional drugs, potentially
including new patented "blockbuster" products, like hypertension
medications, that are highly popular and profitable for the
industry. (Note: GON banned 17 generic products in 2005. End Note)
In July, the Ministry of Health (MOH) conducted a survey of local
manufacturing capacity. The MOH only consulted PMGMAN members and
did not include other stakeholder groups, including pharmaceutical
importers and pharmacists. Abonu believes that the MOH conducted
the study at the behest of PMGMAN, and the local firms surveyed
grossly inflated their production capacity to convince the
government that local production would be sufficient to meet local
demand. (Note: The MOH has not published the survey's findings. End
Note) Pfizer, along with other multinational companies, offered to
pay for an independent third-party audit on the industry's local
capacity, but the GON has not responded to the offer.

Local Capacity Cannot Meet Quality, Demand
------------------------------------------

3. (SBU) Of the six major multinational pharmaceutical companies
currently in Nigeria, only GlaxoSmithKline (GSK) has a local
manufacturing factory. Other manufacturers import their products
due to costs and concerns over Nigeria's ability to meet
international quality standards in the manufacture of pharmaceutical
products, Abonu explained. Convincing the GON of the detrimental
business and social effects resulting from an import ban has been a
challenge, and Abonu confessed that the industry does not always
speak with one voice, hampering its ability to influence the debate.


4. (SBU) Kunle Okelola, Executive Secretary for PMGMAN, admitted to
EconOff August 28 that local pharmaceutical manufacturers do not
have the capacity to produce at international quality standards and
have been operating around 40 percent utilization capacity in the
past decade. According to Okelola, these same problems, instead of
arguing against an import ban, are the reasons the GON needs to take
steps to support local manufacturers. Okelola claimed that only for
products that require sophisticated technology to make should be
imported.

Import Ban Will Drive Companies Out of Business
--------------------------------------------- --

5. (SBU) Abonu estimated that over 70 percent of the drugs used in
Nigeria are imported. A decision to impose an import ban would
drive many multinational drug companies out of Nigeria, he
predicted. Should the GON be determined to impose a ban on certain
drugs, Abonu proposed a five year grace window within which
multinational companies would be able to set up local production.
(Note: Despite its large population, Nigeria has only a $218 million
pharmaceutical market, one of the smallest in the Middle East and
Africa, according to a survey conducted in 2007 by Business Monitor
International. While low per capita income plays a large role in
the underdeveloped market, the survey predicts market growth will
remain slow due in part to the absence of a coherent and adequate
regulatory regime and protectionist import regulations. End Note)

6. (SBU) Comment: Nigerian industry trade groups are forever
calling for the GON to ban this or that. We have no information on
whether their requests have gained any traction within the GON.

LAGOS 00000378 002 OF 002


Pharmaceuticals are not like other items on Nigeria's ban list.
There are a host of issues, like intellectual property rights and
drug safety, which need to be considered. U.S. Mission works
closely with the relevant GON entities to address these issues and
will continue to do so. Multinational pharmaceutical companies'
voice is an important one, along with ours, to get the GON to take
these issues more seriously.

7. (SBU) That said, on September 15 a very senior GON official told
Ambassador that President Yar'Adua has ordered his ministers, e.g.
for commerce and industry and finance, to reduce the total number of
bans to no more than six (See reftel). Time will tell. End
Comment.

BLAIR

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