Naira's Looming Plunge: Medical Devices Market Braces for Impact

Naira's Looming Plunge: Medical Devices Market Braces for Impact

The Nigerian naira is forecasted to depreciate to N1,993 against the United States dollar by 2028, posing significant challenges to Nigeria's pharmaceutical industry, particularly in importing essential medical devices. This decline will increase medical device import costs and erode consumer purchasing power, affecting high-cost devices like diagnostics, orthopaedics, and dental products.

Nigeria relies heavily on imports for over 95% of its medical devices, making it vulnerable to fluctuations in exchange rates. The country's medical devices market is projected to reach N171.1bn (£344.7m) by 2028, driven by a large population, increasing focus on universal health coverage, and the double burden of chronic and communicable diseases.

To address these challenges, President Bola Tinubu's administration has implemented measures aimed at easing pressures on the medical devices market. An executive order was issued in June 2024 to reduce medical service costs by eliminating tariffs, excise duties, and Value Added Tax on specific machinery, equipment, and raw materials.

Despite these efforts, the market faces significant challenges. A weaker naira will enhance the competitiveness of locally manufactured medical devices but persistent barriers hinder local production growth. These include scarcity of skilled labor, limited access to modern technology, and inadequate infrastructure.

The medical devices market is expected to experience growing demand due to the increasing prevalence of serious illnesses. Advances in technology, such as minimally invasive or non-invasive medical solutions, will also drive growth by reducing medical expenses and accelerating healing times. Additionally, the expansion of markets for drug-eluting stents and telemedicine signals a growing trend towards utilizing cutting-edge technology to improve therapeutic outcomes.

Nigeria's economy is expected to recover in 2025, with a growth rate of 3.0% predicted for 2024, compared to 2.9% recorded in 2023. However, persistent issues such as high inflation, tighter monetary policies, and weak foreign direct investment could weigh on the growth of the medical devices sector.

The naira's value continues to fluctuate, reaching N1,681.42 per dollar on November 11, 2024, reflecting a marginal decline of 0.15% from Friday's closing rate of N1,678.87. The medical devices market remains cautious, awaiting the outcome of these economic pressures.