CAIRO: One of the most staggering features of Cairo s retail landscape is its multitude of pharmacies. Pick any random street corner and there s a good chance that you re a five minute walk away from two or three drug stores.
This is a reflection of the nation s substantial consumption of medication. Expenditure on drugs amounted to LE 11.5 billion last year, according to HC Brokerage, making Egypt the largest market for pharmaceuticals in the Middle East and North Africa region.
Meanwhile, domestic and multinational producers have been battling for their share of the market. The latter control 65 percent of the market but have particularly suffered from an increase in costs.
Pharmaceutical companies are incurring extra costs which are increasing on a regular basis on one hand, says Mohamed El Saiid, an analyst at HC Brokerage, and on the other hand, there are price controls from the government that prevent prices of drugs to increase accordingly so that they can maintain their margins.
The government sets the prices of pharmaceutical products as part of its strategy of universal access to healthcare.
We have to provide a safety-net for low-income people; there s no way out of this, Minister of Health Hatem El-Gabali told an audience of businessmen on Monday. Medicines are becoming more expensive and we cannot deny the underprivileged access to this medication.
However, the price of the raw materials used in manufacturing drugs have increased substantially in recent years without a matching increase in the prices set by the government.
The margins are shrinking on a regular basis to the extent that some multinational companies in the Egyptian market produce and sell some of their products at a loss so that they can remain in the market, says El Saiid.
Domestic producers are also suffering, but to a lesser degree, because their costs are generally lower than their foreign counterparts.
The benefit is that when the product is generic, produced without a license or manufactured locally, the cost … will be relatively cheaper so they (local manufacturers) are able to have more control over their budget, says El Saiid.
The government is nevertheless under pressure from drug companies to revisit the pricing system, but there has been little progress to date on this front.
I think pricing still has to be controlled until we find an alternative method to ensure that the poor … are ensured access to all medication, says El-Gabali.
El-Gabali emphasizes instead the need to streamline the process of approving new drugs.
We are simplifying the procedures of drug administration, says El-Gabali. We ve started with cosmetics about a month ago and the ministerial decree will be issued by the end of this week so that the registration of any beauty products will take no more than four working weeks; it used to take 36 months.
A similar process may follow for pharmaceutical products. With regard to the rest of the medications, we will try to simplify the procedures of registration, but always bearing in mind patient safety before licensing any drugs, says El-Galabli.
While price controls are a major challenge for multinationals, domestic producers have witnessed a significant shift in the regulatory environment with the implementation of the Trade-Related Intellectual Property Rights (TRIPS) agreement of the World Trade Organization last year.
As a consequence, local pharmaceutical companies that have historically profited from producing cheap generic versions of patented drugs must begin to invest in their own research and development.
The government, through the state-owned Holding Company for Pharmaceuticals, has tried to facilitate this by creating a pooled fund to finance research and development, and the holding company requested that all domestic manufacturers contribute 1 percent of their sales to the fund.