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Consistent Growth in Profit Margins Helps Boost Fidson’s Financial Health

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Consistent growth earnings and profit margins even amid a difficult business environment and the coronavirus pandemic crisis has boosted Fidson Healthcare’s financial strength.

Investors see a marked improvement in efficiency ratio to gauge the well-being of an entity; they use such ratios to critically analyze a company before putting their money in it.

Fidson Healthcare effortlessly meets the above criteria as operating profit margins moved to 18 percent in June 2021 17.32 percent in 2020, according to MoneyCentral calculations.

A cursory look at the chart shows the drug maker has been growing operating profit margins since 2016, even all through the economic downturns. It always means the firm is generating profit from core activities.

The drug maker has enough money left to cover other expenses, finance cost and exceptional items as gross profit margin increased to 46.03 percent in the period under review from 43.52 percent the previous year.

Its net income was 21.95 percent to N600.52 million as at June 2021, gross profit has been growing since 2018.

While  Fidson Healthcare was awarded the Best Practice Award for Best Quality of Life in the Large Corporate organization category, local drug manufacturers are operating in a tough and unpredictable macroeconomic environment.

Analysts say the devaluation of the currency caused by the precipitous drop in external reserve has spiraled the cost of healthcare in the country as firms are finding it difficult to pass on such cost to the final consumers.

Electricity is erratic, which means firms are forced to rely on expensive diesel oil to power generators at factories and offices across the country.

Of course, the vast majority of Nigerians who are living below $1.90 a day are bearing the brunt as the mortality rate has risen.

Data from the National Bureau of Statistics shows the composite consumer price index for health surged by 15.8% year-on-year in May 2021 having reached a ten year high in April 2021 at 15.9%. Urban health inflation also skyrocketed to 16.7%, while rural health inflation tallied behind at 15.1% for May 2021.

According to the latest GDP numbers, the economic size of Human Health Care and Social Services is about N487 billion making up about 0.7% of Nigeria’s GDP. The sector also recorded a GDP growth rate of about 4.65% in the first quarter of 2021, ahead of the broader composite growth rate of 0.51%.

Fidelis Ayebae, managing director of Fidson Healthcare, has urged the federal and state governments to create an enabling environment for pharmaceutical companies in the country.

“We need to change how we do business in this country. A private investor will put funds in businesses that will yield good returns and the pharmaceutical manufacturing sector profile does not fit into this definition,” said Ayebae.

“It is, therefore, up to the government to create an enabling environment to boost local pharmaceutical production. It has to be a decisive policy backed up with sound determination to support the manufacturers. The government must patronise the local manufacturers and offer real incentives to pharmaceutical companies,” said Ayebae.

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