The state of play in Egypts pharma market
A recently released report from IMS, Pharmerging Shake-up: New Imperatives in a Redefined World, has formally inaugurated Egypt as a tier 3 pharmerging country.
Pharmerging countries17 in allwill, on aggregate, expand by $90 billion in the next three years, and contribute nearly 50% of annual market growth by 2013, a 37% increase from 2009.
The report comments that: Egypt, too, while long overdue for increased healthcare investment and tighter IP regulations, offers rising potential with a fast-growing population, widespread access to healthcare, significant growth in the dominant retail market, and a relatively quick drug approval process.
Even with the global economic downturn, the Egyptian pharma market is posting astonishing double-digit growth15% YTD as of June 2010.
So far things look promising, yet
In October 2009, the MOH issued a new pricing decree in Egypt.
In essence, this allows the tariff pricing of new products in reference to their prices in 36 countries (lowest minus 10%).
In spite of the obvious drawback of this decree, this step was seen by the industry as a positive development.
Tariff pricing of pharmaceutical products in Egypt was considered an opaque process that had no rules.
Consequently, pricing is a major entry barrier for new products in Egypt. (See Egypt: Emerging pharma market, part 2.)
Meanwhile, the MOH has surprised everybody with an obligatory decrease of prices for almost 100 key products!
This decrease is fully effective in July 2010, and is expected to slow the market in the second half of 2010.
The Minister of Health is also saying that more cuts are coming!
Egypt as a pharma market is becoming more visible within the corporate world as having growth potential, and thus the expectations have risen. (For more on the Egyptian market and the Middle Eastern market as a whole, see The Middle East: A pharma market in the making.)
Forecasting becomes critical and numbers, as they are getting significant, have to be delivered.
On the negative side, the environmentespecially dealing with government and regulatory bodiesis not getting better, at least for the time being.
This can impose painful setbacksdelays in the introduction of new products, unexpected price cuts.
For instance, continuous analysis of current prices and provisions for future price cuts must be assessed, calculated, and incorporated into forecasts.
Forecasts for new product entries must lean towards the more conservative scenarios.
Certainly for many multinationals, organic growth will not be enough and business development into areas such as introduction of branded generics is becoming a necessity.
Striking the balance is certainly a skill that pharma executives must posses to survive in Egypt!