Egypt- emerging pharma market? Part 3
In our previous two articles, we examined some basics about Egypts emerging pharmaceutical market and its unique health care dynamics. In this article, we explore the pharma regulatory and pricing environment in Egypt.
To set the scene, the SWOT analysis of the Egyptian affiliate of any global R&D pharma company will most likely include statements such as:
- - Stringent drug registration policies and procedures
- - Opaque government drug pricing policy biased towards local producers
- - Government resistance to align domestic patent law with internationally accepted standards
And these assessments are, unfortunately, true
Registration, pricing and the protection of Intellectual Property Rights (IPR) are the major entry barriers in the Egyptian pharma market.
The Ministry of Health (MOH) is the regulatory body for Egypts health sector. The drug regulatory system is complicated, with overlapping responsibilities and a general lack of transparency. And up until now, IPR is not enforced in Egypt and MOH registers copies of the original patent products. The Egyptian law gives an advantage for domestic and foreign firms to register generics/ copies by using data of the originator companies. This is not in compliance with new TRIPS laws. Sometimes those copies are even registered and priced before the original brand. Consequently, Egypt has been in the watch list of the Special 301 report since 2006.
The pharmaceutical sector is becoming almost the only sector under tight governmental price control. MOH decides upon the final price of any new product by negotiating each case based on a cost-plus method. Often, the introduction of new products is delayed for years over debate of pricing between MOH and the concerned company. Once the product is priced, it is extremely difficult to increase its price, unless the company provides evidence (based on cost-plus) that necessitates the increase.
In some cases, limited sales of unique life-saving drugs are allowed prior to registration and pricing. However, MOH has recently required that all those products be formally registered and priced, as they wish to stop this practice.
In a nutshell, registration and pricing is a real entry barrier for international originator companies in Egypt. Promises of reform in the process have been made for some time, yet most experts agree that nothing of real substance has occurred so far.
How does this impact the marketing for pharmaceutical products in Egypt?
Egypt can be considered as a laggard market in terms of introducing new products. This is the downside. However, on the upside, original brands if supported by good marketing can do extremely well for very long periods of time. Among the top 20 brands in the market, Voltaren, Diamicron, Zantac, Augmentin and others are still market leaders. This demonstrates an extended life cycle of marketed brands that can offset the delay in introduction. Recent developments by major players, such as acquiring successful generic brands international and domestic or refocusing promotion on mature brands clearly are moves in this direction.
As weve pointed out in Parts 1 and 2 of this article series, the Egyptian pharma market is very promising and it is demonstrating unsurpassed growth rates. And clearly, once reform occurs in the registration and pricing processes, there will be even greater opportunities.