Nigeria’s listed pharmaceutical companies are facing rising borrowing costs as high interest rates continue to increase the cost of doing business, even though many firms are recording stronger sales and expanding their operations.
An analysis of first-quarter 2026 financial results shows that the combined finance costs of MeCure Industries Plc, Neimeth International Pharmaceuticals Plc, and Morison Industries Plc rose by 46.5 per cent, increasing from ₦2.09 billion in the first quarter of 2025 to ₦3.07 billion during the same period this year.
Finance costs refer to the interest and other expenses companies pay on loans and borrowed funds. These expenses reduce profits and often reflect how much a business depends on debt to finance its operations.
Among the companies, MeCure Industries recorded the largest increase in borrowing costs. Its finance expenses climbed from ₦1.75 billion to ₦2.62 billion, representing a 49.5 per cent rise. Despite the increase, the company delivered a strong performance as its operating profit almost doubled, growing from ₦2.57 billion to ₦4.54 billion.
Neimeth International Pharmaceuticals also experienced higher finance costs, which rose from ₦334.1 million to ₦439.5 million. However, its profit after tax improved only slightly, moving from ₦105.5 million to ₦113.4 million.
For Morison Industries, finance costs remained largely unchanged at ₦4.86 million, but the company still reported a quarterly loss of ₦8.16 million. Although it remained in the red, the result was better than the ₦18.55 million loss recorded in the same period of 2025.
Beyond servicing debt, several pharmaceutical companies continued investing in expansion projects. Fidson Healthcare Plc increased its investment in property, plant and equipment by 12.9 per cent, while MeCure Industries expanded its fixed assets by 9.3 per cent. May & Baker Nigeria Plc also recorded a year-on-year increase of 24.1 per cent in fixed assets, showing that companies are still investing in production despite financial pressures.
Economic experts say the rising finance costs are largely driven by Nigeria’s high interest rate environment rather than poor management.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, explained that with the Central Bank of Nigeria’s Monetary Policy Rate (MPR) remaining at 26.5 per cent, borrowing has become expensive for businesses across many sectors.
According to him, companies that rely heavily on loans naturally face higher finance costs, while others may have reduced borrowing by reinvesting profits or raising funds through shareholders instead of taking on new debt.
The Manufacturers Association of Nigeria (MAN) had earlier predicted that interest rates would fall in 2026 to encourage lending and industrial growth. However, the Central Bank maintained the benchmark rate at 26.5 per cent during its July Monetary Policy Committee meeting, leaving borrowing costs high.
Yusuf also noted that government incentives, including import duty concessions on pharmaceutical raw materials, have helped reduce production costs and improve profitability for some drug manufacturers.
He added that the relative stability of the naira, combined with the high cost of imported medicines, has encouraged more Nigerians to buy locally produced drugs, creating fresh opportunities for domestic pharmaceutical companies.
Meanwhile, Professor Akpan Ekpo, an economist at the University of Uyo, said manufacturers continue to face additional challenges beyond interest rates. He explained that unstable electricity supply forces many companies to depend on generators, significantly increasing production costs.
Ekpo also pointed to the high cost of foreign exchange for importing raw materials as another factor affecting profitability.
Industry analysts believe the increase in borrowing is not necessarily negative. If companies use loans to expand production and generate stronger profits, the debt can support long-term growth. However, firms that borrow heavily without corresponding growth in earnings could face financial pressure in the future.
