Pharmaceutical Market Evolution After Egypts Revolution

By: Mohamed S. Morsy

Business Environment SWOT Analysis (1)

Strengths

The countrys geographical location is good for trade as Egypt has access to both the Mediterranean and the Red Sea, not to mention the key Suez canal route, which connects Europe and Asia.
The legal system has issued adjudications in favor of foreign firms, although there are frequent procedural delays.

(1) Egypt Business Forecast Report, Business Monitor International, Q2/2012, Chapter 4, P. 27, 2012

Business Environment SWOT Analysis

Weaknesses

Egypt ranks 112th out of 180 states surveyed in Transparency Internationals Corruption Perceptions Index 2011, comparing unfavorably with regional peers.
The labor market is relatively inflexible, with Egypt performing markedly worse than the Organization for Economic Co-operation and Development average, and also inferior to the regional average on the World Banks Hiring and Firing Workers index.

Business Environment SWOT Analysis

Opportunities

Efforts towards banking-sector consolidation should bring down the cost of private-sector credit and fuel small business growth over the long term.

Business Environment SWOT Analysis

Threats

Patronage networks impede attempts at fighting corruption and cutting bureaucracy.

Although levels of education are relatively high, there is a considerable mismatch between the skills taught in schools and those required by most employers.

Business Environment Rank

(1)

(1) Adapted from: Egypt Business Forecast Report, Business Monitor International, Q2/2012, Chapter 4, P. 27, 2012

Affected Operations* at Q1/2011

* A slowdown in a companys business activities, scarcity and/or price appreciation of raw materials, logistical difficulties affecting the distribution of products and/or obtaining raw materials, logistical difficulties that led to employees being unable to reach the workplace, etc.

Revenue Changes, PPG% - Q1/2011

Direct Damages On Assets at Q1/2011

Section Conclusion

After the low probability, high impact event at Q1/2011, the general business environment is still not significantly affected except for certain industries. The business risk rate is still within the average global and regional rate and much more higher than the emerging markets rates. Pharmaceutical industry did not show any major damage in term of affected operations, industry revenue or direct damage of assets.

Health Care and Pharmaceutical Expenditure

Egypt is the second largest healthcare market in the MENA region. Healthcare expenditure in the country in 2010 was estimated to be EGP 50 bn., or 5.0% of the GDP. Its total health spending on a per capita basis stood at EGP 650 during the year = EGP 54 / M. (1)

EGP 390 / Y EGP 32 .5 / M

EGP 260 / Y EGP 21.6 / M

(1) Adapted from: MENA Healthcare Sector Report, Al Masah Capital Management Limited, P. 28, 2011

Healthcare Expenditure Forecast

8 4 7 0 6 0 48 3 6 2 4 1 2

Bn. EGP

CAGR% = 8.25 by 2014

f = forecast. Source: World Health Organization (WHO), CIA World Fact Book, BMI research

Pharmaceutical Market Structure (Value in bn. EGP)

(1)

Total Value = 18.7 bn. EGP

(1) EGYPT PHARMACEUTICALS & HEALTHCARE REPORT, BMI, P. 15, 2010 (2) IMS Data: MAT/10/2011

Pharmaceutical Market Forecast

4 2 3 6 3 0 24 1 8 1 2 6

Bn. EGP

The slowdown is a response to changes in the market caused by the 2011 patent cliff, pricing, higher domestic drug production output and a diversification of drugs available with competitive prices in the generic drug sector. (CAGR% = 8.4 by 2014)
f = forecast. Source: Ministry of Health in Egypt, BMI.

21

Prescription Drug Market Forecast

3 6 3 0 24 1 8 1 2 6

Bn. EGP

18

CAGR% = 7.61 by 2014 The pricing reform for patented and generic medicines will largely affect prescription drugs.
f = forecast. Source: American Chamber of Commerce in Egypt, IMS Health, BMI.

Patented Product Market Forecast

2 1 1 Bn. EGP 8 1 5 12 9 6 3

13. 5

CAGR% = 6.57 by 2014 Cost saving through generic substitution

f = forecast. Source: Local news sources, domestic companies, BMI.

Generic Drug Market Forecast

9. 6 8. 4 7. 2 6 4. 8 3. 6 2. 4 1.2

Bn. EGP

CAGR% = 14.1 by 2014 Generics will gradually become popular through public education about medicines. Prescribing practices also largely determine the size of the generic market
f = forecast. Source: Local news sources, domestic companies, BMI.

OTC Medicine Market Forecast

12
Bn. EGP 9 6
4

CAGR% = 11.95 by 2014 Generics will gradually become popular through public education about medicines. Prescribing practices also largely determine the size of the generic market
f = forecast. Source: Local news sources, domestic companies, BMI.

CAGR% by 2014 summary

Vision and Opinion

Based on Egyptian population individual income during democratic transformation, the personal health care budget will be placed when necessary. Total pharmaceutical market will continue to grow within its normal growth rate (near to 14%). There will a significant shift to generics (GP and Specialty products) and OTC products to reduce the cost as possible. There is an expected strategic growth from multinationals by acquisition of local firms.

Thank You
Mohamed S. Morsy