As investor appetite for Nigerian equities builds in 2026, Fidson Healthcare Plc is emerging as one of the clearest sector-specific stories on the Nigerian Exchange, supported by rapid earnings growth, improving cash flow, and policy tailwinds reshaping the pharmaceutical industry.
The drugmaker posted a record profit after tax of N7.97 billion in the first nine months of 2025, up 131.75 percent from N3.44 billion a year earlier, driven by strong revenue growth and easing pressure from foreign-exchange volatility.
Revenue climbed 55.85 percent year-on-year to N93.08 billion from N59.73 billion, reflecting a sharp rebound in demand and Fidson’s ability to pass higher costs to consumers.
That earnings acceleration translated into stronger profitability metrics. Net margin widened to 8.57 percent from 5.75 percent, while return on equity and return on assets improved to about 30 percent and nearly 10 percent, respectively, from the mid-teens and low single digits in the comparable period of 2024.
Analysts see the combination of top-line momentum and margin expansion as evidence that the company is moving into a more stable earnings phase after years of operating in a volatile macroeconomic environment.
Cash flow dynamics have also shifted decisively. Cash generated from operations rose to N8.82 billion in the nine months, compared with a negative N12.55 billion a year earlier, reflecting stronger cash receipts from customers.
Earnings quality strengthened to about 1.11 times, indicating that reported profits are increasingly backed by actual cash generation rather than accounting adjustments.
Improving cash flows has translated into stronger coverage ratios. Fidson’s cash-flow-to-current-debt ratio rose to 0.72 times, while capital expenditure coverage jumped to 174 times, highlighting the company’s ability to meet short-term obligations and fund investment needs internally. For equity investors, the shift from cash burn to cash generation reduces balance-sheet risk and enhances the sustainability of recent profit gains.
Meristem analysts expect those trends to persist. They project that Fidson will sustain strong revenue growth, driven by product expansion and resilient consumer demand, supported by improving macroeconomic conditions. Moderating inflation and exchange-rate stability are expected to ease pricing pressures and lift disposable income, while a lower interest-rate environment could reduce borrowing costs and support earnings.
Beyond the numbers, Fidson’s operating strategy has positioned it as a bellwether for Nigeria’s pharmaceutical manufacturing sector. The company has pursued what industry observers describe as an “inventory gamble,” maintaining large stockpiles of raw materials to hedge against inflation, supply disruptions and foreign-exchange shortages.
While capital-intensive, the strategy has allowed Fidson to maintain product availability when competitors run short, strengthening pricing power and market relevance.
Read also: Fidson plans N21bn capital raise to expand drug production, pan-Africa reach
Regulatory tailwinds boost Fidson’s “bull case”
That approach has been reinforced by regulatory developments that favour local manufacturers. Nigeria’s drug regulator, NAFDAC, has implemented a “5-plus-5” policy requiring importers of products that can be manufactured locally to submit plans for domestic production when renewing five-year registrations. The policy effectively raises barriers for pure importers and channels demand toward established manufacturers such as Fidson.
In parallel, a presidential executive order signed in mid-2024 and implemented in 2025 removed tariffs and value-added tax on pharmaceutical machinery and critical raw materials. The Minister of State for Health said in August 2025 that the policy had already reduced production costs for local manufacturers by about 12%. For companies like Fidson, the exemptions act as a direct gross-margin boost, further differentiating them from trading-focused peers that do not benefit from the incentives.
Capital structure is another differentiator. In an environment where effective interest rates have exceeded 30 percent, funding large inventories can erode margins and strain cash flows. This dynamic has created what analysts describe as a “capital moat,” favouring companies with access to cheaper, longer-term funding or equity capital. Fidson’s ability to tap the equity market stands in contrast to smaller rivals that rely on costly bank overdrafts or commercial paper.
Fidson’s expansion moves support growth momentum
In December, Fidson announced a N21 billion rights issue to strengthen its balance sheet and fund expansion. The offer comprises 600 million ordinary shares priced at N35 each, on the basis of one new share for every four held as of Nov. 12, 2025. The subscription window opened on Dec. 19 and closes on Jan. 30, 2026.
The offer price represents a 10.26 percent discount to the qualification-date market price of N39 and a steeper discount to the current trading level of N43.90 at the time of announcement, allowing existing shareholders to increase exposure at a lower valuation. Proceeds are earmarked for capital expenditure of N7.5 billion, debt repayment of N9.5 billion, and working-capital needs of N3.51 billion.
Management says the primary objective is to strengthen the balance sheet while supporting capacity expansion. Borrowings rose 23.75 percent year-on-year to N19.8 billion in the nine months to September 2025, reflecting ongoing investment. By reducing debt through the rights issue, Fidson expects to lower interest expenses, improve cash flow and enhance financial flexibility over the medium term.
For investors, the transaction underscores the company’s willingness to use equity capital to manage leverage in a high-rate environment, rather than relying solely on debt. Successful execution could further reinforce Fidson’s competitive position as the industry consolidates around better-capitalised players.
Shares up 46% YtD
The market has responded positively. Fidson is the second most capitalised drugmaker on the Nigerian Exchange after MeCure Industries, with a valuation of about N168 billion as of Jan. 14, 2026. Shares closed at N73.10 on Jan. 13, up 45.9 percent year-to-date from N50.10 at the start of the year, ranking the stock 10th on the exchange by year-to-date performance.
Momentum has been particularly strong in recent weeks. Fidson shares have gained about 83 percent over the past four weeks alone, placing them among the top performers on the exchange. Trading activity has picked up, with 57.5 million shares changing hands over the past three months in nearly 22,000 deals, valued at N2.77 billion. Average daily volume stood at about 912,000 shares, with a high of 8.59 million on Dec. 30.
Peer performance highlights growing investor interest in pharmaceutical stocks. May & Baker Nigeria, another listed manufacturer, closed at N31.65 on Jan. 13 after starting the year at N19, a 66.6 percent gain that ranks it fifth on the exchange year-to-date. The stock has risen about 92 percent over the past four weeks, reflecting a broader re-rating of the sector amid regulatory support and earnings recovery.
For Fidson, the investment case entering 2026 rests on the convergence of earnings momentum, improving cash generation, regulatory tailwinds, and proactive balance-sheet management. While costs of sales edged higher to 58.95 percent of revenue from 58.76 percent, reflecting rising production costs, overall profitability still improved sharply, suggesting that pricing power and scale benefits are offsetting input pressures.
With revenue nearing N100 billion for the nine months, cash flow turning decisively positive, and capital being raised to fund expansion and deleveraging, Fidson has moved beyond survival mode into a phase of consolidation and growth.
For investors with patient capital, the company’s trajectory in 2026 will offer a real-time test of whether Nigeria’s pharmaceutical manufacturing renaissance can translate into durable shareholder returns.