Nigeria’s listed pharmaceutical companies recorded a sharp increase in borrowing costs in the first quarter of 2026, as high interest rates continued to weigh on the sector despite improved revenues and expanding operations.
An analysis of the unaudited financial results of MeCure Industries Plc, Neimeth International Pharmaceuticals Plc and Morison Industries Plc showed that their combined finance costs rose by 46.5 per cent to ₦3.07 billion in the first quarter of 2026, up from ₦2.09 billion in the corresponding period of 2025.
The increase came as manufacturers grappled with the impact of elevated borrowing costs following the Central Bank of Nigeria’s decision to retain the Monetary Policy Rate at 26.5 per cent.
MeCure Industries recorded the highest finance expenses among the three firms, with borrowing costs rising by 49.5 per cent from ₦1.75 billion to ₦2.62 billion. However, the company also posted strong operational growth, with operating profit increasing from ₦2.57 billion to ₦4.54 billion.
Neimeth International Pharmaceuticals saw its finance costs climb by 31.6 per cent to ₦439.5 million from ₦334.1 million, while its profit after tax rose slightly from ₦105.5 million to ₦113.4 million.
Morison Industries maintained finance costs at ₦4.86 million but still recorded a quarterly loss of ₦8.16 million, an improvement from the ₦18.55 million loss posted in the same period last year.
Despite rising borrowing costs, pharmaceutical firms continued investing in expansion. Fidson Healthcare increased its property, plant and equipment by 12.9 per cent to ₦34.93 billion, while MeCure’s fixed assets grew by 9.3 per cent to ₦44.41 billion. May & Baker Nigeria also reported a 24.1 per cent year-on-year increase in fixed assets.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, attributed the rise in finance costs largely to Nigeria’s high-interest-rate environment rather than poor operational performance.
He said companies relying on debt financing would inevitably face higher borrowing costs with the Monetary Policy Rate remaining at 26.5 per cent, while firms with lower finance costs were likely relying more on equity financing or retained earnings.
Yusuf also linked the improved performance of pharmaceutical companies to government incentives, including import duty concessions on raw materials, as well as increased demand for locally produced medicines driven by higher prices of imported drugs.
Professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, said manufacturers were also burdened by structural challenges such as unreliable electricity supply and high foreign exchange costs.
According to him, dependence on self-generated power and the high cost of sourcing foreign exchange continue to increase operating expenses for manufacturers.
Analysts noted that while increased borrowing can support business expansion, its long-term impact depends on whether companies generate sufficient operating profits to comfortably service their debt obligations.