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Egypt Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Nov 2011, Pages: 103
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.
BMI View: Egypt's pharmaceutical and healthcare market has not been fundamentally changed by the political upheaval. The country still has a large population, an emerging middle class and should continue to grow rapidly economically, provided it does not become too destabilised by political infighting and fiscal overspending by the next government. That said, risks remain high and the country's drug pricing and regulatory regime is in need of overhaul.
Headline Expenditure Projections
- Pharmaceuticals: EGP16.69bn (US$2.96bn) in 2010 to EGP17.37bn (US$2.92bn) in 2011; +4.1% in local currency terms and -1.4% in US dollar terms. Forecast up slightly from Q411 due to new data. Growth forecast down slightly because of medicine shortages.
- Healthcare: EGP60.39bn (US$10.72bn) in 2010 to EGP65.43bn (US$10.99bn) in 2011; +8.3% in local currency terms and +2.8% in US dollar terms. Forecast down significantly from Q411 due to new historic data.
- Medical devices: EGP2.78bn (US$493mn) in 2010 to EGP3.02bn (US$508mn) in 2011; +8.7% in local currency terms and +2.9% in US dollar terms. Forecast down slightly from Q411 due to macroeconomic factors.
Business Environment Rating: Egypt's score of 45.7 is down from its Q411 score of 46.5. The country's pharmaceutical market is 13th in BMI's proprietary Business Environment Ratings (BERs) for the region. An additional 11 Sub-Saharan African (SSA) countries have been added to the scores matrix this quarter.
Key Trends And Developments
- A report by the Egyptian Ministry of Finance said the government will try to encourage investment in the healthcare sector and it has assigned EGP10bn (US$1.67bn) for healthcare investment in its FY2011/12 budget.
- Egypt is experiencing a drastic shortage in affordable medicines according to the UN's Office for the Coordination of Humanitarian Affairs. This shortage has been brought about by a large number of domestic pharmaceutical companies being unable to cope with the increase in raw material prices and the effects of the weak Egyptian pound on production costs. Makram Mahana, chairman of the pharmaceutical industry section of the Federation of Egyptian Industries (FEI), said that 80 of Egypt's 120 domestic drugmakers have had to stop producing medicines as they are no longer profitable and he expected more factories to follow. He estimated that the closures have resulted in a 50% fall in local medicine production, leading to medicine shortages at pharmacies.
BMI Economic View: Renewed violence in Cairo on October 9 2011, when 25 people were killed and which led to the sudden resignation of finance minister Hazem el-Beblawi two days later (he has since returned to the job), highlighted the fragile political environment in Egypt. The clashes were sparked during a protest march by Coptic Christians, who were demonstrating outside the state television building after a church was burned in the southern city of Aswan. Although the clashes on October 9 were the worst outbreak of violence since February 2011, it is important to keep in mind that they were the latest in a string of events underlining the weakened security environment throughout the country.
BMI Political View: The decision by ratings agency Standard & Poor's (S&P) to downgrade Egypt's long-term foreign currency debt rating to BB- from BB on October 18 2011 was by no means unexpected and it supports many of the core views on the economy BMI has been outlining for several months. According to S&P, the downgrade was because ‘risks to macroeconomic stability have risen during the transition period for Egyptian political reform, which BMI expects to evolve over the next two years'. Given the lack of policy clarity, further sovereign debt downgrades cannot be ruled out.
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