CAIRO - Egypt's Supreme Administrative Court has ratified a ministerial decree of former Minister of Health Hatem el-Gabaly, pegging the prices of local pharmaceutical products to world markets. While officials say the ruling would slash prices by up to 40 per cent, producers and experts doubt its feasibility. Egypt consumed medicines worth LE18 billion ($3 billion) in 2010, according to the Ministry of Health. Around 40 per cent of the country's population lives on less than $2 a day, according to the World Bank. Therefore, a fair pricing scheme is "of great importance", experts say. "Pharmaceutical products are cheap in Egypt compared to other countries. But prices here are high compared to average incomes. People with chronic ailments like hypertension, cardiac problems or diabetes cannot afford them, particularly since most of them are pensioners," Manal Labib, a 28-year-old pharmacist, told the Egyptian Mail in an interview. Pharmaceutical sales in Egypt jumped by 15 per cent last year, and the sector may grow at the same pace in 2011, according to official reports. Ashraf Bayoumi, the head of the Pharmaceutical Sector at the Ministry of Health, said last week that the ruling would reduce prices by 40 per cent, which is a boon for consumers. "I have serious doubts. The former minister [el-Gabaly] wanted to wash the Ministry's hands of pricing medicines and leave it to the market," Labib argued. "Under the present pricing system, the Health Ministry sets product prices, giving producers a fair profit margin. It is fair enough for producers and consumers and no one has complained," Labib said. "As a pharmacist, I don't have a problem with the ruling. But producers have a problem with costs and revenues. They also have a problem because most of the active ingredients get imported. The ruling, I think, is not feasible. Some companies may stop producing certain medicines," she explained. This North African country of 80 million people imports 80 per cent of the materials used in medicines, according to the Ministry of Health. Although investments in the pharmaceutical sector hit LE20 billion in Egypt, the country's exports stand at the trivial figure of around LE300 million annually. "Before and after the January 25 revolution, people suffered from price hikes, including medicines," Labib added. Pharmacies nationwide sold medicines worth LE15 billion in 2010, while LE3 billion of pharmaceutical products were consumed in State-owned and private hospitals, according to official data. Egypt imports 12 per cent of its pharmaceutical needs annually, according to the Ministry of Health. The country's major imports include cancer drugs, infant formula, insulin and albumin. Globally, the pharmaceutical market is expected to add 5–7 per cent by the end of the year to hit $880 billion, according to IMS Health, a US-based pharmaceutical intelligence agency. IMS forecasts Germany, France, Italy, Spain and the UK, which are Europe's top markets, to collectively grow by one to three per cent this year. The US is expected to remain the world's largest pharmaceutical market and expand by three to five per cent this year. Pharmaceutical sales in the US will reach $320–$330 billion, up from $310 billion in 2010, according to IMS. "It's a strategic industry that affects people's health. But local producers must make a profit to continue and develop their products. If they make no profit, why produce then?" wondered Karam Mehanna, Deputy Chairman of the Pharmaceutical Chamber of the Federation of Egyptian Industries. "The Higher Council of Medicine, which comprises representatives of producers and State-run supervisory agencies, should do the pricing. The ruling may cause problems rather than solve them," Mehanna said.
