Market Structure, Conduct and Performance of the Pharmaceutical Industry in Nigeria.
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Date
2006
Authors
Ugoji, N. I.
Journal Title
Journal ISSN
Volume Title
Publisher
University of Lagos Postgraduate School
Abstract
The development of the health sector in every nation is critical in promoting the
development of other sector and general socio-economic development of the nation.
Unfortunately, many of the problems bedeviling the Nigerian health sector and the
pharmaceutical industry in particular over the past three decades still persist to date in spite
of decades of development planing and policy reforms. There is thus a need for an in-depth
study of the pharmaceutical industry in respect of its market structure, conduct,
performance and prospects in order to chart the way forward for the industry to play its
proper role in national development.
The scope of the study covers 1930 to 2002 in respect of historical analysis and evolution of
the industry, while time-series empirical analysis had to be restricted to the period after the
80s on account of data availability and gaps and the instability and volatility of the industry.
For the cross-section analysis, the study covered all the pharmaceutical manufacturing firms
quoted in the Nigerian Stock Exchange and other major non-quoted firms belonging to the
Pharmaceutical Manufacturers Group (PMG) of Manufacturers Association of Nigeria
(MAN).
Our findings, based upon concentration ratios and empirical test of firm behaviour under
various models of market structures, show that the pharmaceutical industry in Nigeria is
oligopoly; being a multi-product industry, it is characterized by a combination of Stackelberg
equilibrium (Leadership/Followership), Cornot (classical) model, quasi-competitive model,
for various groups of products, and generally by market-price stability of the kinked demand
curve model, ruling out collusion model and Stackelberg disequilibrium. Concerning the
investigation of the prospects of the industry to contribute to national development in
terms of contribution to growth as a leading sector and promotion of self-reliance through
net export earnings, the findings show that the sector’s prospects are poor in this respect as
it is not above average for the economy.
In respect of the investigation of the desired basic conditions and favourable
macroeconomic environment, based on structure-conduct-performance paradigm, the
survey of the firms reveal that the desirable policy strategies required for efficient conduct
and performance of the industry include better government funding of research and
development through the National Institute for Pharmaceutical Research and Development
in collaboration with the universities, support for the establishment of professional
distribution network, completion of the third phase of petrochemical project, and the need
for the Raw Material Research and Development Council (RMRDC) to also focus on active
pharmaceutical ingredients.
Description
Keywords
Research Subject Categories::SOCIAL SCIENCES::Business and economics::Economics , Market structure , Pharmaceutical Industry
Citation
Ugoji, N. I. (2006), Market Structure, Conduct and Performance of the Pharmaceutical Industry in Nigeria. University of Lagos School of Postgraduate Studies Phd Thesis and Dissertation Fulltext.135p.