A central bank intervention fund of N1 billion for pharmaceutical companies came in handy for Pharmaceutical company, May and Baker having spent its 2019 N1.8 billion Rights Issue servicing debt and paying dividends.
According to information contained in the annual report of the company, it received an intervention fund of N1 billion from the CBN in the first quarter of 2020. The amount came in timely as it was just before the COVID-19 pandemic broke across the country causing an economic shut down that has negatively impacted industries across the country. The fund increased the company’s net loans from N482.5 million in December 2019 to N1.7 billion in the first quarter of this year.
This is not the first time the company had received intervention funds; it had also received a CBN fund for manufacturers to the tune of N920 million in October 2010.
The intervention fund was particularly important as just last year, the Nigerian Stock Exchange (NSE) had listed an additional 745,234,886 ordinary shares for the company issued by way of a Rights Issue taking the total issued and fully paid up shares of the company from 980,000,000 to 1,725,234,886. The ordinary shares were of 50 kobo each at N2.50 per share and offered on the basis of one new ordinary share for every one ordinary share held as of September 4, 2018. The company had, however, used the capital raised from the Rights Issue to repay previous debts.
During the quarter it reported a 68% drop in earnings per share going from N7.74 per share in the same period last year to N2.48 per share in the first quarter of 2020. The fall in earnings was a result of an increase in direct cost and overheads in the first quarter of the year. May & Baker earns 99% of its revenue from its Phamaceutical division. Its beverage division remains a small portion of its business.
May & Baker is well-positioned to take advantage of the expected resurgence of the health care sector, particularly since the 2020 COVID-19 pandemic broke. For example, it recently reported that during the year it signed a Joint Venture Agreement to produce a nutritional supplement with FIIRO through the Ministry of Health.
The Company also has three subsidiaries, Osworth Nigeria Limited, Tydipacks Nigeria Limited, and Service Nigeria Limited, and has the majority shareholding in Biovaccines Nigeria Limited, all based on a collaboration with the Federal Government for production and sale of vaccines.
The central bank also announced an N50 billion Covid-19 health care fund for the healthcare sector giving the company another unique opportunity to increase its financial muscle. The company’s share price is up 44% year to date, and is one of the best-performing stocks on the exchange this year.
In December 2019, it was reported that the company signed a partnership agreement with the French pharmaceutical giant, Sanofi to produce four brands of the latter. The four Sanofi products, which would be manufactured by May & Baker Nigeria, will be sold in Nigeria and West African markets.