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Egypt Pharmaceuticals and Healthcare Report Q3 2010
Business Monitor International, May 2010, Pages: 90
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$2.48bn by the end of 2009 and forecast to rise to US$4.24bn by 2014 at an 11.4% compound annual growth rate (CAGR). Growth in the next five years will be driven by the drug pricing reform, which should make all drugs more affordable, but in general will make generics a more attractive option for substitution. Our long-term outlook to 2019 is for drug spending to reach US$5.99bn, with a slower CAGR of 9.2% from 2014 onwards.
We assert that Egypt’s pharmaceutical sector has more potential in terms of growth and expansion prospects over the next five years than its regional peers Algeria and Morocco. Our view is based largely on the high market value of drug sales in Egypt, as well as the strengthening domestic drug manufacturing sector, which should help alleviate the pharmaceutical trade deficit.
In particular, the government is keen to encourage foreign direct investment (FDI), although its target of US$10bn by June 2010 is looking overly optimistic given that only US$2.6bn had been invested by April. In our view, the pharmaceutical sector has much potential: numerous drugmakers already have manufacturing sites in the country, and although the regulatory environment is challenging, the prospect of selling in such a populous market will continue to be attractive. Other sectors are receiving increased international interest, giving more impetus in general for foreign-led projects.
In terms of US dollar year-on-year (y-o-y) growth in the pharmaceutical market, we believe Egypt will outperform its neighbours, with growth of 16% between 2010 and 2011. Egypt has several strengths: domestic manufacturing is developed and expanding; drug exports are exceeding market expectations; per capita spending will remain low, and therefore the need for affordable generics should drive domestic manufacturing and generic imports; the healthcare system is still undergoing a review and will likely be reformed within the next five years; the epidemiological profile is in line with regional trends; the demand for niche therapeutic areas is rising as more diverse drugs reach the market; and we expect massive consolidation within the local drug manufacturing industry as smaller players in specific treatment areas will need investment for expanding capacities.
The Egyptian pharmaceutical sector will also benefit from the presence of locally based active pharmaceutical ingredient (API) manufacturers, which will cut imports and reduce costs for existing drugmakers. FDI in this area is also likely to be warmly received by the government and will help to create a strong base in North Africa for drug manufacture.
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