Egypt- Emerging Pharma Market? Part 1
Egypt?! I bet your first thought will not be the pharmaceutical market.
By on Dec 17, 2008Egypt?! I bet your first thought will not be the pharmaceutical market.
But it is a time of high interest in emerging markets. And although the Egyptian pharmaceutical market is not one of the CRIB (China, Russia India and Brazil), it is demonstrating the typical trend of emerging markets - posting a record CAGR of 19.4% in the 5-year time period between 2003 and 2008. However, there is no way to do meaningful business in Egypt, let alone do reasonable forecasting, without understanding the dynamics of this market. This is the objective of a series of articles that were beginning here.
Currently, 92% of the market relies on locally produced goods and 8% comes from imported products. Of the local manufacturing segment, distribution is split into production under license, international companies manufacturing locally (e.g. GSK, Pfizer, AZ, Novartis), or local copies.
At the current volume of roughly $2.3B, the contribution of the Egyptian pharmaceutical market to the global one is still small (0.2%), however there is evidence of continuous interest in this market. Some of the recent major developments:
AstraZeneca completed its US$40M manufacturing facility in Egypt.
Hikma, the International Jordanian company, acquired Alkan - a local generic company
A US investment partnership, led by Citigroup, has purchased Amoun Pharmaceutical (one of the largest local generic companies)
GSK paid US$210M to acquire a BMS factory and cash-cow products (one of the few instances where the Egyptian pharmaceutical market gets first-rate international attention, see for example- The Economist, Nov 13th). This move will make GSK the market leader, capturing almost 10% of the market).
In terms of products, the Egyptian market is quite fragmented. Over 4,300 products are actively sold by more than 600 companies in Egypt. The top 10 products have a combined 8% market share and the top 100 capture almost 30% of the market. On the other hand, the top 10 corporations easily capture 45% of the market, and the top 50 have a combined market share of almost 80%.
In contrast to western countries where companies strive to have a CV/GI product as a blockbuster, in Egypt, to be in the top 10 list, you must have a NSAID, an antibiotic or an anti-diabetic!
For example, the top selling product in the market is local copy of flucloxacillin. This product is achieving annual sales of US$29M and is capturing 1.3% of the total market (!). The unique health care dynamics in Egypt, to be covered in later articles, are the major cause of this anomaly.