The depreciation of the value of the pound against the dollar because of the liberalisation of the exchange rate is posing a serious problem for the pharmaceuticals industry in Egypt, raising fears that it will not be able to absorb the sharp rises in costs. Some 905 pharmaceutical products available in the marketplace are also entirely imported by Egypt. “The medicine being sold on the market now was manufactured when the exchange rate to the dollar was LE9, so how will the pharmaceuticals companies price their medicines after the exchange rate jumped to LE16,” asked Wagdi Mounir, manager of Marcyrl Pharmaceuticals, an Egyptian firm. Mounir said that 90 per cent of the ingredients of medicines were imported, and therefore medication was the commodity that would be most impacted by changes in the foreign exchange rate. Over the past few days, many medications have disappeared from the Egyptian market, including insulin and some drugs used in dialysis. Mounir wants the government to pay a percentage of the hike in the dollar rate or officially allow an increase of the price of medicines. He said that recently the value of the local currency in Jordan had also dropped, and the government there had allowed companies to raise pharmaceuticals prices by 50 per cent of the increase in the foreign exchange rates. He said the Egyptian government, represented by the minister of industry, did not understand the problems facing the pharmaceuticals companies. There are 153 pharmaceuticals companies in Egypt, including nine public-sector companies and nine multinationals. The remainder are private-sector companies or foreign firms. There have been discussions between the pharmaceuticals companies and the government in an attempt to resolve the problems. Ahmed Al-Ezabi, chairman of the Pharmaceuticals Chamber of Commerce (PCC), said on television recently that the prices of pharmaceuticals would have to be revised after the Central Bank of Egypt's (CBE) decision to liberalise the exchange rate. “We will strike a balance between the medication needs of patients and the cost of production and manufacturing,” Al-Ezabi said. When the pound was floated on 3 November, the pharmaceuticals companies held a meeting of the PCC. They expressed their concern at statements made by minister of health Ahmed Emad that the prices of pharmaceuticals would not increase. In May, the cabinet issued a decree raising the prices of all medications under LE30 by 20 per cent to a maximum of LE6 per package. Mounir said the PCC asked for an urgent meeting with the minister of industry and the prime minister in order to discuss rising costs. Osama Rostom, deputy chairman of the PCC, said the jump of the dollar rate to its current value meant an increase in the cost of medications by 50 to 60 per cent. He added that the current pricing of medicines on the market meant that the prices of many products were less than the cost of manufacturing them. The PCC would present a proposal to resolve the problem of high costs without the government paying a percentage of the increases, he said. Raising the prices of pharmaceuticals would be one of the options, but not the only one, he added. The government issues a price list for medications that prevents pharmaceuticals companies from freely deciding their prices. Mohie Hafez, a member of the Pharmaceuticals Division at the Federation of Egyptian Industries, said the decision to raise the prices of medications taken in the summer did not benefit the pharmaceuticals companies. He said that pharmacists had collected LE1 of the increase, distribution companies had collected LE0.10, and only the remaining LE0.90 had gone to the manufacturers. Companies were suffering from rises in the costs of production compared to sale prices which had not been adjusted since the dollar stood at LE5.25, he said, urging the government to give the pharmaceuticals companies access to dollars at the lower exchange rate before the 3 November decision, at least for six months until rate stabilises and companies are able to factor in the rise in their manufacturing costs. The last increase of LE0.90 had not compensated the companies for the rise in the dollar rate, he said, noting that it had only allowed the companies to make sure they could provide 4,000 types of medication that were scarce on the market. Hafez expects the companies to cut back their production of costly medications and to manufacture cheaper medicines to compensate for their losses. This means that Egypt could see serious shortages of many more expensive medications. The writer is a freelance journalist.
