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Huge potential for pharmaceuticals
Published in Ahram Online on 20 - 04 - 2021

Sales of Egyptian pharmaceuticals rose by 11 per cent in 2019, and on a global scale the pharmaceuticals sector grew by three per cent in 2020 aided by the Covid-19 pandemic, even if most pharmaceuticals markets saw a retreat in sales, said Ahmed Al-Ezaby, chair of the Pharmaceuticals Chamber at the Federation of Egyptian Industries.
Al-Ezaby was speaking about Egypt's being an extremely attractive market for investment in pharmaceuticals and the country's enormous potential for exports. He expects sales to bounce back to rates similar to those of 2019 and to grow by between 10 and 15 per cent.
In 2020, sales of Egyptian pharmaceuticals recorded LE125 billion. Some LE90 billion of this was chalked up to the private sector, while the rest, some LE35 billion, was earned by state-owned companies, according to figures released by the cabinet.
President Abdel-Fattah Al-Sisi also inaugurated the first city dedicated to manufacturing medicines in Egypt and the Middle East on 180,000 square metres of land earlier this month, underlining Egypt's goal of acquiring further industrial and technological capacity in the pharmaceuticals industry and to attract further international investment.
The new pharmaceuticals city will work according to the highest quality standards in order to guarantee the acquisition of the quality certificates that will make it easier for Egyptian products to access foreign markets.
In his comments to Al-Ahram Weekly, Al-Ezaby stressed there was a difference between manufacturing finished pharmaceuticals and producing raw ingredients known as active pharmaceutical ingredients (APIs). The latter can require more meticulous work and larger investments, he said. Egypt has begun producing APIs at the Nasr Company for Pharmaceutical Chemicals.
However, the country faces formidable competition from the mass production policies of India and China, diminishing the Nasr Company's ability to compete internationally, Al-Ezaby said.
Even so, the coronavirus pandemic has underlined the need for at least a portion of APIs to be locally manufactured, with the wisdom of depending solely on importing APIs, with the possibility of disruption in supplies, being questioned. Al-Ezaby said that factories manufacturing APIs should be set up in Egypt, as global developments and currency fluctuations could affect imports of raw materials.
"Egypt's pharmaceutical sector is conducting serious studies on the establishment of factories to produce APIs. A group of investors is studying market needs, the number of factories that could be built, and the investments expected to be pumped in," he said, expecting that the studies would be concluded by the end of the year and the factories constructed within two-and-a-half years.
He said that this did not mean that the country would necessarily be able to produce a full range of pharmaceutical products or all the APIs it needs. However, it would mean that it would be able to become self-sufficient in necessary drugs, such as those used to treat diabetes and hypertension and certain antibiotics, Al-Ezaby said.
Investment in Egypt's pharmaceutical sector has reached LE300 billion, he added, saying that 90 per cent of this has been in the private sector and the rest in state-owned facilities. Foreign investment has comprised 20 per cent of the total, with the remaining 80 per cent being Egyptian.
"These indicators render the Egyptian pharmaceutical sector extremely attractive to investment. The country's population is huge, crossing the 100 million mark, and every year more than two million more babies are born," Al-Ezaby said.
There are 152 pharmaceutical factories operating in Egypt, of which eight are state-owned and five are owned by foreign companies, he added. "In the next three years, 40 factories — all currently being built — will access the Egyptian market."
The Egyptian pharmaceutical sector is trying to shift from manufacturing traditional drugs to more complex and more profitable ones including ones that use advanced biotechnology to access foreign markets, Al-Ezaby said.
Large pharmaceutical companies have begun to set up smaller concerns to produce traditional medicines so that they can devote themselves to the manufacture of higher-priced and more profitable drugs.
Egypt currently produces 88 per cent of its needs for pharmaceuticals and imports 12 per cent. It is entering a new phase after the cabinet approved a new law regulating medical research at the end of 2020.
"The sector is targeting the medical industries, which require mega-investments in biotechnology production lines," Al-Ezaby stated.
Drug prices in Egypt have been almost stagnant over the past two decades, he said, but over the last few years prices have been increased by the Egyptian Drugs Authority to maintain a balance between the costs of production and the final prices of products.
Increasing the prices of medicines is one of the factors that could increase the value of pharmaceutical exports, today estimated at less than $350 million, Al-Ezaby said. But "Egypt has the potential to export drugs worth more $5 billion annually to East Africa, the Arab world, Eastern Europe, and the Central Asian countries."
He said that Egypt's Universal Health Insurance System would increase investment in the sector since the state supports private-sector hospitals and pharmacies in the scheme. Citizens currently shoulder 80 per cent of the cost of medicines, while the state pays 20 per cent. Under the new system, the government will pay 80 per cent and the citizen 20 per cent, Al-Ezaby said.
The Universal Health Insurance system is scheduled to cover the whole country by 2030.
Egypt first began to export medicines as a result of steps taken by economist and industrialist Talaat Harb in 1939. Until the late 1970s, many medicines available in pharmacies were composed by the pharmacist according to standard recipes that explained the way to manufacture a drug and its side effects, Al-Ezaby said.
Until the 1960s, Egypt also had high-calibre technical facilities, but these lost their competitive edge when they were absorbed by the Ministry of Health. Things have been looking brighter over the past five years, Al-Ezaby commented.
The sector began to improve in the late 1990s when private-sector companies pumped in new investments, in addition to those poured in by state-owned companies EIPICO and Pharco, he explained.
Al-Ezaby said he was hopeful about procedures adopted over the past three years, including measures to eliminate counterfeit drugs, estimated at less than one per cent of the market.

*A version of this article appears in print in the 22 April, 2021 edition of Al-Ahram Weekly


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