What Are the Opportunities in the Pharmaceutical Market in Egypt?
Apr 12, 2022
Straddling Asia and Africa, Egypt has obvious geopolitical advantages and can radiate the Middle East, North Africa and even Europe. Its population has exceeded 100 million, making it the most populous country in the MENA region, and it has a wide influence in the region.
According to Aikunwei (IQVIA), the total pharmaceutical market in Egypt was USD 2.72 billion in 2017 and is expected to reach USD 6.04 billion by 2022, with an average annual growth rate of 17.3%, making it one of the largest pharmaceutical consumption markets in the MENA region.
Vigorous Promotion of Universal Health Insurance, Medical Investment in the Future Can Be Expected
Limited by economic development and payment capacity, Egypt's financial allocation for healthcare in previous years was less than 2% of GDP, which is far below the global average (WHO: the average ratio of global health expenditure to GDP in 2016 was 7%). As a result of the epidemic, Egypt's FY2020/21 budget, has increased public health spending to about 3% of GDP.
The Egyptian health service system is mainly composed of central hospitals under the Ministry of Health, university hospitals under the Ministry of Higher Education, military hospitals under the Ministry of Defense, police hospitals under the Ministry of Interior, and private hospitals and clinics. There are 1,798 hospitals with about 130,000 beds in the country. Among them, there are 691 public hospitals, accounting for 38%, but the bed share is as high as 77% (about 100,000 beds in public hospitals and about 30,000 beds in private hospitals). The lower quality of services in public hospitals has resulted in "serious diversion" from private hospitals. Although the supply of medical services is currently dominated by public institutions, private medical institutions are growing rapidly, including hospitals, imaging centers, and out-of-hospital laboratories, which are expanding rapidly.
In line with Egypt Vision 2030, the Egyptian government is committed to promoting a comprehensive health care system.
A new Universal Health Insurance Authority (UHA) was established in 2019, and health insurance will be financed mainly from participant contributions, with individuals able to pay 5% of their gross salaries to become insured, as well as through financing from international organizations such as the IMF. The new universal health care system is proposed to be implemented in six phases. the first phase in 2020 starts with a pilot in six governorates and is planned to complete full coverage by 2032. Egypt's current President Sisi is expected to rule until 2030 after the constitutional amendment, so that the promotion of universal health care has a political guarantee, the future health care investment is expected to continue to increase.
Pharmaceutical Regulation Follows the West, Public Collection of Strong Price Pressure
The Egyptian government has vigorously promoted the reform of medical supplies management institutions, with the new Egyptian Drug Authority (EDA) and the Egyptian Authority for Unified Procurement, Medical Supplies and Technology (AUPP) established in 2019.
The Egyptian Drug Authority (EDA) is the sole entity responsible for drug control, registration, trade and supervision, licensing pharmaceutical and medical device entities, regulating drug and device registration and pricing processes, etc. All pharmaceutical products (including APIs) manufactured, imported, and sold in Egypt need to be registered with the EDA, but the registration cycle is sometimes as long as 2-3 years. Among them, Egypt has very strict restrictions on the import of finished drugs, and only one foreign company is granted an export license to Egypt for drugs that can be produced locally, while other drugs can be relaxed to five.
The Egyptian Unified Authority for Procurement, Medical Supplies and Technology (AUPP) is the only official Egyptian government procurement authority for medical supplies, headed by the military, and is responsible for coordinating government procurement planning and annual budgeting, charging a fee of no more than 7% of the value of the products purchased, and managing the transportation, distribution, storage and maintenance systems for products and equipment. After public hospitals put forward their procurement needs, the AUPP organizes a unified tender for procurement. the AUPP procurement pressure is very strong, and some companies say the winning bid price is a new global low.
Fierce Competition for Generic Drugs and High Dependence on Imported APIs
The Egyptian pharmaceutical industry began in the 1930s and has the longest history in the MENA region.
After years of development, the Egyptian pharmaceutical industry has taken shape, and there are currently about 150 drug manufacturers. 90% of its drug consumption can be supplied by domestic, of which 50% are produced by large multinational pharmaceutical companies in Egypt factories, 40% are produced by local pharmaceutical companies in Egypt, the remaining 10% imported products mainly include antineoplastic drugs, biological agents, etc..
At present, there are more than 10 multinational companies have set up production bases in Egypt, the largest being GlaxoSmithKline, Novartis, Pfizer, Merck Serono, AstraZeneca and others. The local representative companies mainly include Pharco Pharmaceuticals, EIPICO, Amoun Pharma, Evapharma and so on.
Egypt has a long-standing policy of limiting the price of drugs and has a strict price control and reference system for drugs. At the same time, Egypt has implemented the separation of pharmaceuticals, except for emergency drugs, the rest of the drugs are mainly sold through the sales outlets of pharmaceutical distribution companies.
Due to the lack of a complete chemical system, the Egyptian pharmaceutical industry relies heavily on the import of raw materials. At present, 90% of the raw materials for the production of drugs in Egypt depend on imports. According to UNAIDs, Egypt imports about $1.8 billion of APIs annually. China as the world's largest producer of APIs, Egypt is also an important market for my API exports, and my API exports to Egypt in 2019 amounted to $255 million, ranking first in Africa.
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