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SEDICO looks to permeate European markets through Italy: chairperson

Company 2017 sales reached EGP 1bn for first time

Awad Gabr, chairperson and managing director of SEDICO Pharmaceutical Company, revealed that his company witnessed a notable increase in sales, as they reached EGP 1bn for the first time in its history, leading the profits to amount about EGP 150m. He said the reason behind the strong performance was a surge in drug prices, in addition to producing new product types.

Moreover, Gabr asserted that the company has an ambitious investment plan, as it aims at pumping investments in 2018 worth EGP 250m. Furthermore, he illustrated that the company targets adding five new product types in 2018.

According to Gabr, SEDICO established a commercial company under the name SEDICO Italy, which has registered three product types there. Furthermore, he assured that the company targets marketing them in Italy during 2018, after getting a technical approbation from Italy for the factory located in Egypt to export the company’s products there.

In this regard, he revealed that this can be achieved in about a year. In addition to this, he noted that the company has a potential to increase its exports’ value in 2018 to EGP 150m.

How were the company’s financials in 2017?
SEDICO witnessed a great increase in terms of value of sales, which reached about EGP 1bn for the first time in the company’s history. This pushed the company’s profits to about EGP 150m by the end of 2017. In this respect, sales inched up 39% over the previous year.

What are the reasons for the surge in sales?
A hike in drug prices led to the increase in sales, in addition to us producing new product types. Moreover, the company’s large market share, in terms of producing insulin, supported the profitability. To illustrate, some competitive companies could not import insulin. Consequently, SEDICO’s market share was increased.

What is the company’s market share?
SEDICO’s market share is 2.7% of the local market.

How did the floatation decision affect your financials?

Floatation had a negative effect on the company’s financials during the first quarter of 2017. However, the government’s decision to raise the prices of some product types created a balance in the company’s financials during the rest of the year. Furthermore, about 85% of product types’ prices were not raised.

Does the company intend to stop producing some products?
Never. This trend is out of question. The pharmaceutical sector is a vital one. As long as the company achieves profitability, there will never be a direction to stop producing any product. I think that the newly launched factories will face a dilemma because of a changeable currency price, which may lead them to stop producing some product types. In contrast, older, stable companies will not face this problem.

Do you believe drug prices will increase in the coming period?
Raising drugs prices is a sovereignty decision. However, pharmaceutical companies call on the decision makers to raise the prices of products. This is because drugs are the only commodity subject to compulsory quotation. In spite of that, it is not subsidised.

What about SEDICO’s 2018 investment plan?
The company has an ambitious investment plan. In this respect, we aim at updating some existing production areas to cope with the new manufacturing requirements. Moreover, the company will launch new production areas. For instance, a penicillin production area will be launched in the coming period, in addition to adding some new equipment and machines for new storages we are building. Furthermore, we are building a new management building beside the company’s factory.

How much is the investment plan’s value?
The company will pump investments in 2018 worth EGP 250m.

In this respect, how much profit does SEDICO target in 2018?
The board has pointed out the company’s potential of profits, but it has not approved the balance sheet yet. Thus, I am still not authorised to announce the company’s profitability potential.

How many product types does SEDICO produce?
The company produces about 200 product type, which represent about 2.7% from the total market. However, we targets to add new 5 product types to our products in 2018. In this respect, every year we add some new products.

To which markets abroad does the company export?
SEDICO exports to Africa and the Gulf area, however, we aim at exporting to European markets during the coming years. We have already launched a new project in Italy. To illustrate, we established a commercial company under the name SEDICO Italy, which has been registered there for two years. Moreover, SEDICO Italy has registered three product types there. The company is looking to market them in Italy during 2018. To achieve this, we seek to get a technical approbation from Italy for the factory located in Egypt to export the company’s products there. I think this will be achieved in about a year.

How much were SEDICO’s 2017 exports worth?
The company’s exports values came to about EGP 130m. Moreover, we target increasing our exports value to reach about EGP 150m in 2018.

Is there an inclination to increase the company’s capital?
The board has already approved increasing the company’s capital up to EGP 450m, from EGP 375m, to be supplied by the main shareholders. They are Academia (31%), Egypt for Insurance and Egypt Life Insurance (20%), HoldiPharma (7%), and a Saudi partner (15%). However, it has not been recorded at the Commercial Registry Authority.

Is listing SEDICO on the Egyptian Exchange a likely matter?

Yes, of course. However, this can take place in the long term.

How do you evaluate Egypt’s drug exports?
They are very low. I think $250m is a lean number in comparison to the region’s market shares. For instance, Jordan’s drug exports excel ours seven-fold.

How can Egypt push its drug exports to growth?
The government has to reach a settlement regarding pricing the drugs abroad. To illustrate, local drug prices are so low in comparison to international pricing. After floatation, this problem was aggravated. In this regard, exported drugs will not be sold abroad, because they will be met with scepticism due to their low prices. For a period of time, Egypt signed agreements with Saudi Arabia and Jordan to export some drugs after changing their prices, as they are subsidised in Egypt. This happened against registering their products in Egypt. In this regard, we can open new markets abroad. I think neighbouring countries whose exports are large had built a strategy to export when they launched their drug manufacturing.

Can Egypt locally manufacture drugs?
I think the government tends to apply an ambitious plan to support manufacturing imported drugs, which represent only about 7% of the total market, but they are crucial. It is worth mentioning that there is no country all over the world that manufactures all raw materials used in drug production, for it is a pollutant industry. India and China are the only two countries that manufacture most of the raw materials used in producing drugs, as environmental laws do not have the upper hand in these countries. Thus, we can develop and increase the manufacturing of some raw materials, on the condition that we place a strategy to target markets abroad to achieve profitability. In fact, relying on the local market will lead to losses.

How many drug factories are there in the country?
They are about 150 factories.

Has the drug market been affected by the surge in prices?
Never. Clients are obliged to buy drugs. It is better for them to accept the increase in prices. This is because the alternative choice is worse.

Do you think the drug market is a promising one in terms of investment?
Absolutely. The Egyptian drug market is the top market in the MENA region in terms of volume and the second market in terms of value. Moreover, an increasing population supports the sector’s growth chances.

Finally, what are the main problems that face the local drug sector?
Low prices of sold units and bureaucracy companies face in the process of drug registry.

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