It has become increasingly common for local pharmacists to tell walk-in customers a medicine is not in stock, recommending a near-identical alternative, one with a lower active ingredient concentration and upping the dosage, or searching for a pharmacy that may have the prescribed item.
A July memo from the Pharmaceuticals Division at the Federation of Egyptian Industries said more than 800 types of medicines were in short supply. National news platform Ahram Online reported a “severe shortage [in] many chronic and non-chronic disease medications.”
Another memo, issued around the same time by the Chamber of Industry of Cosmetics & Medical Supplies (CICMS), estimated 20% to 40% of “drugs trade names” suffer shortages, noting that generic versions are more available. It added, “shortages of active ingredients range between 15% and 20%” of demand.
The government acknowledges this brewing shortage. Since the second half of 2023, Prime Minister Mostafa Madbouly has announced several immediate, short-term and long-term solutions and coordination with pharmaceutical companies to “double production” to improve the situation. “The government [is] ready to step in to support any measures needed,” he said in August.
Vital sector
Egypt’s pharmaceutical sector is critical to the economy. According to media reports, local production from the country’s 160 pharma factories meets 91% to 94% of domestic demand. (There is no official figure from the health ministry.) Imported medicines are either too advanced to be produced locally or patented by a company not operating in Egypt.
There is even uncertainty over the size of Egypt’s pharma sector. In September 2023, Al Arabiya said the pharma market was EGP 300 billion, citing “official data.” In July, Ahram Online reported the industry “grew to over EGP 215 billion in 2023” compared to EGP 40 billion in 2014. Central Bank data only stretches to fiscal year 2020/2021.
Al Arabiya said the government accounts for a quarter of Egypt’s medicine demand, which it sends to state-owned medical facilities, state universities, and medical institutions the state must support. “That costs the government nearly EGP 40 billion a year,” Health Minister Khalid Abdel Ghaffar told Al Arabiya. Meanwhile, another 25% of annual medicine production is not accounted for “due to lack of regulation,” Al Arabiya reported.
Despite high government consumption and unreported losses, supply outstrips demand, allowing local pharma companies to “export to 80 nations, making it a vital national industry,” the CICMS memo said. The Egyptian Medicine Authority (EMA) noted, “Total exports of human pharmaceuticals and medical supplies during the first quarter of 2024 amounted to about $432.2 million.”
High-risk sector
Despite its inherent resilience, given people will always need medicine, the industry is risky for local manufacturers, especially in the past few years.
“About 95% of … materials, including active … and inactive ingredients are imported, as well as packaging materials,” noted the CICMA paper. That makes the local pharma sector vulnerable to exchange rate fluctuations, dollar availability and import restrictions. A memo from the Pharmaceutical Division in the Federation of Egyptian Industries estimated that since the start of 2023, manufacturing costs of over 2,000 medicines have increased owing to government decisions to combat the country’s persistent shortage of dollars.
Making matters worse is that Egypt-based pharmaceutical producers must get government permission to raise their prices. “Manufacturers face potential losses if they produce without any adjustments,” CICMS memo said. “Consequently, many factories have halted production until price adjustments are approved.”
Price fixing
The government has accommodated some requests to raise prices. In July, Ahram Online reported that EDA told producers they could raise the prices of 20% of the medicines they produce between 15% and 40% over three months, with the “lowest increases for chronic disease medications.”
Ali Ouf, head of the Pharmaceuticals Division in the Federation of Chambers of Commerce, told Sky News Arabia in July, “The average increase in medicine price was 25%.”
Aligning prices with production costs will take time. Madbouly stressed, “The market will need about two months to recover from the medication shortage once factories start producing drugs at the new prices.”
In early August, Cabinet spokesperson Mohamed al-Homosany told the media the government gave EGP 7 billion to the Egyptian Authority for Unified Procurement (UPA) to “quickly address the shortage of medicines and medical supplies required by hospitals and pharmacies.”
By the end of August, Madbouly announced an additional EGP 10 billion for the UPA. He added that “between 80 and 100” producers requested price hikes in August, noting that “pharmaceutical prices are expected to rise 25% to 30% in the coming months due to ongoing requests.”
New investments
Ultimately, the government wants to reduce its dependence on imported medicine and raw materials. “This file is considered among the priorities of national security,” Madbouly said in 2021 when announcing a national pharmaceutical manufacturing strategy.
Later that year, the government founded GYPTO Pharma Medicine City, a specialized hub north of Cairo with facilities for manufacturing medicines and vaccines. During the press event, Amr Mamdouh, company chairperson and CEO, said its “mission is to cooperate with the private sector and … international companies to manufacture [medicines] in Egypt.”
Their latest agreement was in June with Abbott, a US pharma producer, to manufacture palliative and antibiotic medicines. Mamdouh said the project is the eighth inside GYPTO Pharma Medicine City, which produced 26 million drug packages in 2023 and targets 60 million for this year.
In August, UPA announced plans for 24 mobile (ambulance) pharmacies to serve areas with limited access to medical care. The project should start in 2025.
The second investment is an EGP 8 billion project to construct “large capacity warehouses,” reported state-owned Daily News Egypt in August. The six facilities will be in Cairo, Alexandria, Dakahila, Qena, Minya and Ismailia “to optimize distribution [and] delivery of pharmaceuticals and medical equipment … improving overall healthcare accessibility,” the WAYA news platform reported in May. Daily News Egypt said the project “is expected to be operational in the first half of 2026.”
In August, Parliamentarian Ihab Wahba said during a session the government should prioritize producing medicines it imports. “The cost of those medicines is 35% of Egypt’s spending on medicines,” despite accounting for less than 10% of medicine consumption, he said.
International recognition
The government is reaching out to advanced nations to “boost investments in pharmaceuticals,” said Al-Ghamarawy, the EDA head, during an April meeting with UK trade officials at the British Embassy in Cairo.
The British side agreed to provide technical support and “improve human resources efficiency, raising the capabilities of EDA employees and sharing experiences … related to supervisory work.”
In May, Wael al-Naggar, Egypt’s ambassador to Portugal, met with the Portuguese Health Minister Manuel Pizzaro to highlight Egypt’s potential to “produce drugs, vaccines, and medical devices [as well as] medical research,” the State Information Service reported. Abdel-Ghaffar plans to visit Portugal early next year to continue negotiations.
The EDA also is working on securing accreditation from the World Health Organization. “It confirms that we adhere to the highest international standards in regulating medical products [and] signifies the robustness of the Egyptian pharmaceutical regulatory authority,” Al-Ghamarawy told the media in March. It “would enable us to participate in setting international policies for the pharmaceutical sector.”
This article first appeared in October’s print edition of Business Monthly.