How Drop In Revenue, Low Profit Margin Forced GSK Group To Shut Down Factory In Nigeria

Contrary to speculation that GlaxoSmithKline Consumer Nigeria Plc shut down operations in Nigeria due to losses, the multinational earned a total of N268.4bn from the Nigerian market between 2011 to the half year of 2023.

In the last 23 years, the pharmaceutical company has also not declared a loss based on findings by THE WHISTLER.

However, its earnings and profits have been fluctuating for over a decade.

GSK was incorporated in Nigeria on 23rd June 1971 and started operation on 1st July 1972 with the name Beecham Limited.

On August 3, GSK Nigeria affirmed that its parent company, GSK Group, directed it to cease commercialization of its prescription medicines and vaccines in Nigeria through local operating Companies after 51 years.

Nigerians have enjoyed GSK products like Amoxil, Ampliclox, Augmentin, Avamys, Ventolin, Andrews Liver Salts, and Panadol

Other healthcare products are Macleans and Sensodyne.

The company said, “The GSK Group has informed GlaxoSmithKline Consumer Nigeria PLC of its strategic intent to cease commercialization of its prescription medicines and vaccines in Nigeria through local operating Companies and transition to a local third-party direct distribution model for GSK products.

“The Haleon Group has informed GlaxoSmithKline Consumer Nigeria PLC of its intent to cease its distribution agreement with them in the coming months and to appoint a local third-party distributor in Nigeria for the supply of its consumer healthcare products.

“Due to the above reasons, GlaxoSmithKline Consumer Nigeria Plc has no realistic alternative but to cease operations.”

What GSK Revenue Looked Like

The British Pharmaceutical giant, GSK over the past years has made billions of naira selling and producing for the Nigerian market.

Based on an analysis of its accounts over the last 23 years from 2011 to 2023, THE WHISTLER found that the company has generated N268.4bn in sales revenue from its products.

According to their accounts available to THE WHISTLER, GSK Nigeria generated N21,525,803,000 in 2011, and the earnings rose to N25,308,159,000 in 2012.

In 2013, the company posted another surge in earnings, reaching N29,183,675,000. It rose further to N30,521,127,000 in 2014.

But the revenue fell by half to N15,391,585,000 in 2015 and dropped further to N14,384,785,000 in 2016.

The company began recovering in 2017, posting revenue of N16,089,728,000, and it rose further to N18,411,475,000 the next year, 2018.

In 2019, the company’s revenue rose marginally to N20,760,320,000 and N21,295,249,000 in 2020, when the COVID-19 pandemic struck.

GSK saw another slight revenue growth of N22,449,824,000 in 2021 and a leap to N25,382,419,000 in the next year, 2022.

However, the first half of 2023 saw revenue dwindle to N7,750,878,000 from N14,811,269,000.

GSK Was Profitable

The financial accounts of GSK show that although the company never declared a mega profit, it has also not made a loss in the last 23 years.

GSK made a combined profit after tax of N19,941,475,000 from 2011 to the first half of 2023.

The company declared N3.49bn profit in 2011 and N4.17bn in 2012, the highest during the review period.

Profit fell to N2.9bn in 2013, declining further to N1.84bn and N873bn in 2015. The company’s profit began to recover to N2.38bn in 2016 and N486.4m in 2017.

In 2018, GSK posted N617.6m profit, signaling a gradual recovery from the 2017 shock. Profit rose in 2019 to N917.1m but fell to N622m in 2020 despite improved earnings.

In 2021, GSK posted N658.8m profit after tax and N7771.14m in 2022. The company also declared N184.55m in revenue in the first half of 2023.

How Much Of Tax Did GSK Pay FG

The Federal Government received N7,694,079,000 tax from GSK during the 23 years period spanning from 2011 to 2023.

Its tax profile shows that N1.19bn was paid in 2011; in 2012, the company paid N1.35bn and N1.39bn in 2013.

In 2014, N903.37m was paid to the government, while N192.46m was paid to the government in 2015. GSK paid N637.83m, N542.5m, N252.2m and N377.99m in 2017, 2018, 2019 and 2020 respectively.

The company remitted N286.94m tax in 2021, N470.1m in 2022 and N89.2m due in the first six months of 2023.

The company was given a tax credit of N2.19bn in 2016.