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When UK-based GSK sold its drink business in 2013 to Japanese firm, Suntory Beverage & Food, to focus on its healthcare business, its Nigerian unit had not had the final straw of the iconic Ribena and Lucozade drinks.

Only the year before, annual sales of Ribena and Lucozade were around half a billion pounds and GSK Nigeria wanted to continue the business. The Nigerian company then managed to secure the rights from Suntory to continue manufacturing and distributing the products in Nigeria for 10 years until August 2023.

Not even halfway into the 10-year arrangement, GSK Nigeria sold the business back to Suntory Beverage and Food Nigeria in July 2016, citing the need to focus on its healthcare business just as the parent company had said in 2013.

Why it took GSK Nigeria three years to align with the global business signalled its initial resolve to hold on to the drinks business but the ugly impact of a 54 percent naira devaluation in the same year made it difficult for the company to stay the course.

The firm’s revenues dipped 7 percent in 2016 to N14 billion, even though the sale of its drink business helped it on its way to declaring a 172 percent jump in profit after tax to N2.3 billion.

In 2015, before the drink business was sold, the company suffered a 48 percent decline in profit after tax to N965 million.

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An acute foreign exchange shortage sparked by lower oil revenues had badly affected multinationals operating in the country including GSK. For some, there wasn’t enough dollars to import raw materials while others were unable to repatriate profits to their parent companies due to the FX challenge.

Nigeria would suffer its first recession in 25 years in 2016, and company profits would fall to their lowest in more than 10 years.

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The FX challenge may have eased in 2017 following the introduction of the Investors and Exporters FX Window, where the naira traded at a market rate, but it never really went away and got unbearable in 2022.

“It continues to be very challenging with foreign exchange non-availability affecting the group’s ability to settle foreign currency-denominated trade payables with product suppliers,” Edmund Onuzo, GSK Nigeria’s chairman, said in the firm’s 2022 annual financial statement.

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“As a result, it remains difficult to maintain consistent supply to the market,” Onuzo said.

It therefore comes as no surprise when seven years after GSK Nigeria gave up on its Ribena and Lucozade business, the company will draw the curtains on its direct business in Nigeria, bringing an end to a 51-year-old business.

GSK UK said last week that it will stop doing business in Nigeria after deciding a shift to a third-party distribution model for its drugs and consumer healthcare goods.

In the shadows of the company’s latest decision is another big devaluation in the naira, this time by over 40 percent, a development that although vital in fixing Nigeria’s broken FX market has led to huge losses for companies with FX exposure.

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GSK Nigeria, which has faced increased competition from local companies and imports from India and China, said its half-year sales dropped to N7.75 billion from N14.8 billion in the same period a year ago.

In 2022, GSK Nigeria was only able to grow revenues by 13 percent to N25 billion while profit was up 17 percent to N771 million. The growth in both revenues and profit is below the average inflation rate of 20 percent for 2022.

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Shareholders’ funds also only managed a 3 percent growth to N9.5 billion and have dropped by 26 percent compared to N13 billion in 2015.

GSK UK had said in 2018 that it would cut back its operations in Africa and adopt a distributor-led model instead of marketing medicines in 29 sub-Saharan African markets.

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GSK Nigeria said it is working with advisers to agree next steps and plans to submit a scheme of arrangement to Nigeria’s Securities and Exchange Commission, which if approved will see it return cash to shareholders except its parent GSK.

It also said the Haleon Group has informed it of plans to terminate a distribution agreement and to appoint a third-party distributor in Nigeria, which faces a cost of living crisis, rising business costs and a shrinking consumer base.

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“For the above reasons, and having, together with GSK UK, evaluated various other options, the Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations,” GSK Nigeria said in a statement.

Whether it’s Ribena or Panadol, one of the flagship healthcare products of GSK, the healthcare company’s eventual exit from Nigeria has been a long time coming and adds GSK to a list of foreign companies that have dumped Nigeria.

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The list includes South African retailer, Shoprite, Abu-Dhabi-based telecommunication company Etisalat and UK-based Intercontinental Group.

The exit of another multinational makes the job of President Bola Tinubu to lure foreign direct investment even harder.

“The evidence at hand is that Nigeria is extremely harsh to foreign companies and that does Nigeria’s no favours in its bid to lure new investments and create jobs for its teeming youth population,” a senior business leader told BusinessDay.

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