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Egypt Pharmaceuticals and Healthcare Report Q4 2010
Business Monitor International, Sep 2010, Pages: 96
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, which reached EGP13.75bn (US$2.48bn) in 2009, is expected to continue growing steadily over BMI’s five- and ten-year forecast periods. We expect the market value, as measured at consumer prices, will reach EGP20.57bn (US$4.47bn) by 2014, posting a respectable 8.39% compound annual growth rate (CAGR) in local currency terms. Although the rate of growth will slow to 7.96% in the 2009-2019 period under pressure from higher generics usage, pricing reforms, lower inflation and patent expirations, Egypt will continue to be viewed as a promising pharmaceutical market as well as a foreign direct investment (FDI) destination.
Several features have solidified our positive view on the pharmaceuticals sector in Egypt. Chiefly, domestic demand will form the driver for sales growth. Although per-capita spending on medicines is low – forecast to be US$32 in 2010 as a result of high unemployment – we believe the large and rising population – approximately 84.5mn people by the end of 2010 – will nonetheless support growing demand for generic medicines. While Egypt features as part of the Middle Eastern epidemiological trend for hypertension, diabetes, thalassaemia and cardiovascular diseases, the large proportion of young people should provide an ample market for over-the-counter (OTC) and essential medicines. Overall, in BMI’s Q410 Business Environment Ratings (BER) table for the 19 countries in the Middle East and Africa, Egypt is found in an improved eighth position in the matrix.
Our forecast for the Egyptian pharmaceutical market will have to be revised in the coming months, given that the government has recently bowed to pressure and suspended the planned price reform, Patented drugmakers were originally required to report to the authorities the prices of given drugs in 36 reference countries, including Sweden and Switzerland – with considerably higher purchasing powers – which was a major cause of friction. The Ministry of Health and Population (MOHP) has also been criticised as lacking the resources and competency to enforce better regulatory standards for medicines. Although the new law promotes international accreditation for export purposes, it removes incentives for the ministry to increase its regulatory intelligence.
In the meantime, our view that Egyptian real GDP growth would accelerate in 2010 is playing out, confirmed by the latest data for Q309/10 released by the Central Bank of Egypt (CBE). Egypt's economy is expected to grow by 4.9% in real terms in the fiscal year ending in June 2010, which will also bode well for the availability of healthcare financing. However, our forecast for both 2009/10 and 2010/11 are below consensus, as the recovery in consumption has tailed off and much of the growth has been driven by collapsing imports. In the meantime, the one area of consistent improvement throughout the year, exports – including those of medicines – is under threat from a renewed global economic slowdown.
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