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Egypt Pharmaceuticals and Healthcare Report Q2 2010
Business Monitor International, Feb 2010, Pages: 89
Business Monitor International's Egypt Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt's pharmaceuticals and healthcare industry.
Egypt’s total pharmaceutical spending has been on a steady rise, reaching a calculated US$2.47bn by the end of 2009 and forecast to be at US$4.25bn by 2014, increasing at a respectable compound annual growth rate (CAGR) of 11.5%. Growth in the next five years will be driven by the drug pricing reform which should make all drugs more affordable, as well as making generics a more attractive option for substitution.
Egypt is improving its attractiveness for foreign direct investment (FDI) in the pharmaceutical sector with a rejuvenation of political interest in the healthcare industry. Drugmakers operating in Egypt are expanding their operations with new manufacturing sites and increasing exports. Crucially, higher production capacity and regulation compliance such as current Good Manufacturing Practice (cGMP) certification and other international accreditation standards will allow for higher prices to be charged for medicines marketed in Egypt (within purchasing power) and for a wider range of export destinations. Ultimately, domestic drugmakers can only lower prices significantly if production meets economies of scale – and exports to more lucrative markets will be the only way to achieve this – particularly in Egypt’s case where high unemployment and low incomes present a relatively small market for pharmaceutical firms.
Generally, BMI's global view is that patented drug spending as a proportion of total pharmaceutical expenditure will fall. The 2011 patent cliff provides the largest impetus for this shift, while governments in emerging markets are looking at ways of cost saving through generic substitution. Although population growth and epidemiological factors will contribute to a rise in patented drug spending, BMI nonetheless see generic drugs gradually taking up a higher portion of the market share by value in Egypt. Furthermore, domestic drugmakers in the country are focused mainly on generic and generic OTC medicines and therefore contribute very little to the patented product list. As a result, patented products from abroad are more expensive owing to import costs and their patented protection status. Innovation and research and development (R&D) are limited in Egypt. While the gradual preference for generic drugs will promote efficient drug spending, developing new medicines that can be patented and branded will raise revenues and promote exports.
Even so, the purchasing power for drugs in the country is low – US$31.77 per capita in 2009 – further limiting the drive for innovation and lowering its attractiveness as an export destination for patented drugs. Recent pricing reforms for patented drugs in September 2009 were designed to keep prices low, but we believe they will remain beyond what many people can afford. Despite concerns from the patented pharmaceutical industry, no recent developments related to this issue have been forthcoming, suggesting that despite the reform, political discussion is still a possibility.
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