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EIPICO postpones development plans due to US dollar shortage The delayed development plans include recently announced new activities due to directing the dollar's resources to the import of raw materials, says head of financial division
The Egyptian International Pharmaceutical Industries Company (EIPICO) decided to postpone the implementation of expansions related to production line development or the addition of feed activity to its factories, as a result of the US dollar shortage in the domestic market. Ali Ragheb, head of the EIPICO finance division, said that the company's administration tended to allocate its available dollar proceeds for purchasing raw pharmaceutical materials, rather than towards the import of production machines during the current stage. The administration aims to maintain the production capacity as much as possible to cover exports and the demands of the domestic market. EIPICO plans to finalise the financial and technical feasibility studies to add the feed manufacturing activity during the second half of 2016. According to Ragheb, the company counts on the dollar proceeds of exports to cover the import of the raw materials and the production packaging requirements. He pointed out that the company imports raw materials worth $50m annually. The company secures $32m through its exports to the African and Asian markets, and provides the remaining amount through the banks. According to a report by Export Council of Medical Industries (ECMI), EIPICO is one of the five largest Egyptian pharmaceutical companies that export its products abroad. EIPICO accounts for 23% of Egyptian pharmaceutical exports. The Central Bank of Egypt (CBE) announced last week that the foreign exchange reserves declined by 11.45% as of the end of July to reach $15.5bn, as a result of the repayment of debt to Qatar, Libya, and Paris Club. In furtherance of dollar resources, Egypt agreed with the International Monetary Fund (IMF) to discuss obtaining a loan worth $12bn. The agreement will be presented to the IMF's executive board and the Egyptian parliament for discussion. EIPICO did not obtain any financing from banks during the past two months due to its inability to manage US dollar finances, according to Ragheb. Pharmaceutical companies operating in the Egyptian market suffer from several problems that are mostly related to the lack of US dollars in the banks. The majority of manufacturers are importing more than 95% of the raw materials to manufacture the medicine, as well as importing the packaging materials. This situation impacted some companies and forced them to reduce the production of certain types of drugs. There are more than 1,500 types of medicine are unavailable in the market, according to data from the chamber of pharmaceutical industry in the Federation of Egyptian Industries (FEI). Two months ago, the government increased some medicine prices in the domestic market in order to support companies and to call for the re-production of some drugs. The dollar problem led several companies operating in various sectors to delay their expansion plans. The National Company for Maize Products (NCMP) decided to suspend its expansion worth EGP 1.2bn, which included establishing a new production line for producing fructose. Ragheb noted that his company is still waiting to obtain the approvals from the Ministry of Health to start producing Hepatitis C medicine—an alternative to ‘Suvaldy' used by the state for the treatment of patients. Years ago, the company tried to obtain approval to manufacture Suvaldy that is used to treat Hepatitis C; the price per package is more than EGP 1, 200. However, the attempt failed, and the company recently resorted to addressing the Ministry of Health to gain the right to register a new drug similar to Suvaldy. EIPICO's net profit during the first quarter of 2016 increased to EGP 123m, a growth rate of 38% compared to EGP 89.4m year-on-year. There were several reasons as to the increase such as the increase in domestic sales and the reduction of costs. EIPICO's capital is roughly EGP 793.3m, divided into 79.3m shares, with a nominal value of EGP 10 per share. The Arab Company for Drug Industries & Medical Appliances (ACDIMA) comes on top of EIPICO's shareholders with 43%, followed by Medical Professions Investment Company with 5.7%.
