Nigeria’s pharmaceutical industry enjoys a rare moment in the spotlight.
In the first half of 2025, Fidson Healthcare and May & Baker dazzled investors with record profits, proving that medicine demand keeps rising despite a sluggish economy.
However, beneath the glow, both companies now face a tougher test: converting profits into cash.
Cash Flow Turns Negative
For shareholders, the results impressed.
May & Baker more than doubled its bottom line, while Fidson lifted profit after tax nearly fourfold.
Both companies expanded sales strongly, held margins firm, and cut foreign exchange losses after last year’s bruising naira depreciation.
On paper, the industry shows momentum.
Yet cash flow tells another story.
Fidson’s operations slipped into negative territory because trade receivables soared and prepayments grew.
Likewise, May & Baker swung from a healthy inflow last year to a ₦1.46 billion outflow.
To fill the gap, both companies turned to debt.
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As a result, Fidson doubled borrowings and May & Baker raised debt by 28%, which pushed up finance costs sharply.
Growth Vs. Discipline
This shift reflects an aggressive strategy.
Both companies extend credit to distributors and hospitals to lock in market share.
Although this approach fuels sales, it also ties up capital and exposes them to delayed payments.
With interest rates high and liquidity scarce, they now risk refinancing pressures.
Meanwhile, structural challenges remain.
Because drugmakers import over 70% of their inputs, they continue to face currency swings and global supply disruptions.
Nevertheless, rising healthcare demand still offers growth opportunities.
Ultimately, Fidson and May & Baker must balance ambition with discipline.
For now, they shine brightly; however, only sharper cash management will sustain that glow.
