Invest in EgyptInvest In Egypt Pharmaceuticals Pharmaceuticals Invest in Egypt Contents Pharmaceuticals: Sector Overview Competitive Strengths and Capabilities Sector Drivers Leading Opportunities in a Dynamic Market Pharmaceutical Outlook opportunities Strong Policy support Success Stories Pharmaceuticals . Invest in Egypt Pharmaceuticals . Sanofi-Aventis and Novartis are among the top manufacturers of pharmaceuticals in the domestic market. with the industry employing a total of 39. founded in 1939 with the establishment of the Misr Company for Pharmaceutical Industries.500 professional staff and production workers. There is a strong domestic production sector and. Large multinationals.Invest in Egypt Pharmaceuticals Overview The pharmaceutical sector in Egypt is one of the oldest strategic sectors in the country. Public production. Servier. AstraZeneca and Otsuka. Foreign participation in the local production of under-license pharmaceuticals is of major importance to both the Egyptian economy and local consumers. accounts for around one-tenth of sales by value and nearly two-tenths by volume. Egypt has emerged as a leading exporter of pharmaceuticals to Arab. while the majority is destined for the domestic market and imports play an important role. Locally owned Egyptian companies producing generic products also play a key role in the domestic market with the Egyptian International Pharmaceutical Industries Company (EIPICO) being ranked as the leading manufacturer in the domestic market and the largest Arab . Other leading multinational companies active here include Pfizer. Asian and Eastern European markets. Investments in Egypt's pharmaceutical industry currently stand at EGP 26 billion. represented by the state-owned holding company HOLDIPHARMA. including GlaxoSmithKline (GSK). Bristol-Myers Squibb. The Egyptian pharmaceuticals and cosmetics sector is considered the largest in the region with regards to growth capacity and expansion during the coming five years compared to similar sectors in neighboring countries The industry has enjoyed a period of considerable development in recent years. supplying a significant portion of domestic demand at a fraction of the import cost. Eli Lilly. Pharmaceutical prices in Egypt are based on a cost-plus formula. 25% on non-essential drugs and 40% or more on overthe-counter products. And went from EGP 18.4 2 31 61 2013 6.8 69 2014 7 2 31. guarantees positive returns for all companies operating in Egypt. Projected Pharmaceutical Market.5% in local currency terms.33 billion in 2012. EIPICO is also one of Egypt's 100 largest exporters. Pharmaceuticals & Healthcare and Therapeutics across global markets. allowing for a profit margin of 15% on essential drugs.2 1. The formula. Providing the political situation stabilizes and the economy continues to perform well.23 billion in 2011 to EGP 20.9 30. a +11. 2011-2015 Value USD billion % GDP % Health Expenditure Per capita (USD) 2011 4. A top company on the Cairo and Alexandria Stock Exchange (CASE).Invest in Egypt Pharmaceuticals pharmaceutical company overall. Espicom1 estimates that the market increased by nearly five times between 1995 and 2010. the Egyptian pharmaceutical market at retail prices is expected to rise by a double-digit CAGR in US dollar terms between 2011 and 2016.7 2 31 54 2012 5.6 77 2015 8 2 32.3 86 Source: ESPICOM 1 Espicom Business Intelligence is a UK-based company with a 30-year pedigree providing business intelligence on Medical Devices. . The country’s pharmaceuticals market is ranked 13th in BMI’s proprietary Risk/Reward Ratings (RRRs) for the region. managed by the Ministry of Health and Population. The industry currently employs a total of 39. Pharmaceutical production increased in 2009.Invest in Egypt Pharmaceuticals Competitive Strengths and Capabilities Highly effective Workforce. Egypt’s workforce is the largest in the Arab world and the second largest in the MENA region.500 professional staff and production workers. Investments in Egypt's pharmaceutical industry currently stand at EGP 26 billion. reaching EGP3. in order to help meet its target of USD1billion in exports by 2015. . With a 75% market share. while research-based multi-national companies account for the balance. Egypt’s pharmaceutical workforce offers the highest quality of performance standards and simultaneously promotes cost efficiency in the form of low labor costs and a large pool of highly trained professionals. Increase in Investment Appeal.5 billion. Egypt has the largest drugmanufacturing base in the Middle East and North Africa (MENA). Egypt produces more doctors and pharmacists than any other country in the Middle East. bringing the national total to 180. either through "under licensing"' local manufacturing or direct imports. Largest drug-manufacturing base in the MENA. Local manufacturers of generic drugs supply 52% of the market. after Iran. The total value of the Egyptian pharmaceutical market is USD 1 billion annually. Egypt is looking to further solidify its stronghold by increasing investment in the sector and expanding production capacity. accounting for 30% of the regional market. the private sector dominates pharmaceutical production. The Ministry of Investment announced plans to build 76 new pharmaceutical plants. Insurance covers only 56% of total population. medical equipment and to enter the market. with most insurance covered by public-sector companies and a few private firms.8 billion Presents market compared to EGP 20. Diversity of Opportunities Egypt offers significant opportunities for investment in primary. secondary and tertiary care centers.3 billion in opportunities for 2010/2011. government expenditure on health reached EGP 23. and pharmaceuticals distribution. clinics Provides a wide range of catering to the growing global medical options for players looking tourism sector. Low Insurance Penetration Rates There are few providers of health insurance in Egypt. Strong need for additional providers. supplies distribution. and penetration rates remain very low by comparison to Brazil and Turkey. The average wage in the pharmaceutical sector is comparatively low at a minimum wage of LE 1500 per month. investment at all levels of This increase in public healthcare the value chain. This presents a significant market opportunity. expenditure will also increase total healthcare expenditure in Egypt. Unique opportunities to minimize costs while offering high-quality services. Egypt provides a large pool of skilled labor to draw from. . Large potential talent supply with the skill sets necessary for a healthcare business to succeed. Labor Costs Wages in Egypt are considered the lowest in the MENA region.Invest in Egypt Pharmaceuticals Sector Drivers Egypt’s Value Proposition Investor Benefits Labor Force With an average of 11 000 annual graduates from pharmacy schools. High Healthcare Expenditures In 2011/2012. Today. Public production. the private sector dominates pharmaceutical production. the sector was dominated by state-owned companies but this has changed with the introduction of privatization program that has allowed the private sector to take the highest share of the production in the domestic market. accounts for around one-tenth of sales by value and nearly two-tenths by volume. accounting for 30% of the regional market. As of Dec. for example. which are strengthening their capabilities.65 million. and 9 companies operating in free zones areas with total investments of USD 144. the Pharmaceutical industry consisted of 680 companies with total investments of USD 3. Pharmaceutical companies operating in Egypt fall into three categories: public sector companies (12 companies are affiliates of Holdipharma previously known as Drug Holding Company D. acquired 95.73 billion. Asian and Eastern European markets. Before the 1990s. There are a number of leading local private producers. Egypt has emerged as a leading exporter of pharmaceuticals to Arab. 671 companies operating inland with total investments of USD 3. Egypt has the largest drug-manufacturing base in the Middle East and North Africa (MENA).87 billion. private sector Egyptian companies and multinational companies. according to GAFI DB. 2012.H. There is a strong domestic production sector and.0% of the share capital of the German ProBioGen in June 2010.C). . including AstraZen. while the majority is destined for the domestic market and imports play an important role. Some leading multinational producers also manufacture in Egypt. represented by the state-owned holding company HOLDIPHARMA. with 64% Egyptian shares and 36% foreign shares. some of them involved in biotechnology. With a 75% market share. Minapharm Pharmaceuticals.Invest in Egypt Pharmaceuticals Leading Opportunities in a Dynamic Market The Egyptian pharmaceutical industry has enjoyed a period of considerable development in recent years. although Egypt's pharmaceutical expenditure per capita is still one of the lowest in the region. the Egyptian pharmaceutical industry is very positive: Rapid population growth and expansion in healthcare coverage and expenditures are key growth drivers. In 2010. Egypt has the largest drug –manufacturing base in the MENA region accounting for around 30% of the regional market. and experts forecast to continue rising to reach about USD 4.1 billion at retail prices or USD 48 per capita which represents 1. In April 2008. by the end of 2009. Annual production is recorded to be EGP 15 billion in 2009.Invest in Egypt Pharmaceuticals Outlook Experts agree that. while the remaining ratio represents generic medicines produced by local companies.6% of health expenditure. Egypt is the largest consumer of pharmaceuticals in the MENA region with an annual increasing pharmaceutical spending reaching about USD 2. Novartis Egypt will now supply the company's global operations with treatments for ocular and hormonal conditions. Novartis became the first multinational drug producer operating in Egypt to add its local facility to its global supply chain.24 billion by 2014 at a compound annual growth rate (CAGR) of 11. topping USD 270 million in FY 2011/2012 compared to USD 238 million in FY 2006/2007. Egypt's exports of pharmaceuticals have grown steadily in recent years. . as are an increasing awareness of health issues and the modernization of the healthcare industry.4%. Local production covers around 93% of the market with 7% made up of highly specialized pharmaceuticals not produced locally. the market size has reached USD 4. and about 35% through licensing agreements.9% of GDP and 30.48 billion. Multinational corporations account for about 30% of local sales through domestic manufacturing. In addition to making 123 products for local consumption. with LE 1.9 . - The growing health and pharmaceutical expenditure.3 billion as new investments every three years.5 bn.This increase is accompanied with the increase in health expenditure to form 32. per capita share is anticipated to increase to be USD 86 in the same year. Sanofi-Aventis and Novartis are also among the top multinational manufacturers in the market. Furthermore. Moreover.Invest in Egypt Pharmaceuticals This industry has a good potential for the future with investments keep increasing.3% of the market value in 2015. with a cumulative growth rate over the last five years 50%. the state owned producer. It's expected that the industry will witness an increase in its value through the coming three years to reach USD 8 billion in 2015 with an average CAGR of 14. it will keep a consistent percentage of the GDP ranging from 1.1% of them are sold in cheap prices.0 %. - The ability to open new markets in Africa through bi or multi-lateral agreements like the COMESA for Egyptian medicine.Myers are active players in the pharmaceutical industry in Egypt. However. The total capital of Holdipharma and its affiliates is about LE 2 billion. stimulated by many factors like the increasing size of the market and the entrance of new investors to the market. Servier. and Bristol. The Pharmaceutical industry in Egypt is rising. The . annual losses because of its low prices. Holdipharma.2. 42.3%. The number of pharmaceutical factories has increased from 90 factories in 2006 to 120 factories in 2010 with other 70 plants that are under construction. Large multinationals as GlaxoSmithKline (GSK) is the leading company in the Egyptian market with 9% of the market share. multinationals like Pfizer. contributes with 1700 types of medicine. bearing LE 0. Opportunities - The government's plans to introduce a basic health insurance that will extend its benefits to more Egyptians. regulation & legislation of pharmacy practice. These laws make the reporting of adverse drug effects compulsory for firms and are part of a wider increase in focus on regulatory activity in the field of PV in Africa. availability of high quality medicines at affordable prices. In January 2012 the Egyptian Ministry of Health and EDA announced the launch of new Pharmaco vigilance (PV) guidelines for Marketing Authorization Holders (MHAs). This industry faces many challenges like the rising competition with international producers and poor healthcare system in Egypt. many specialists have positive expectations that Egypt would become one of the leading countries in that field.Invest in Egypt Pharmaceuticals government seeks more liberalization for the industry with less control over prices and more privatization for the sector. which help combating soaring rates of drug counterfeiting. cooperation with relevant international organizations (such as the WHO) in order to improve standards of pharmaceutical products and practices. setting standards of pharmaceutical services for both hospital & community. Strong policy support The Egyptian Drug Authority (EDA) is the pharmaceutical regulatory body of the Egyptian Ministry of Health (MOH) and it is committed to supporting initiatives which help promote its goals of protecting people's health by regulating safety and quality of pharmaceutical products. However. . strategic planning & policy making for the sector. and manufactures blood and biotech treatments as well as being the sole local producer of a variety of vaccines. The company mostly produces medicines in a powder. comprising five subsidiaries. with animal health representing the remainder. Misr posted EGP155. Misr is engaged in production and wholesale trade in pharmaceuticals. as well as some research and development of new drugs. as well as in Africa and Romania in Europe. ampoule and tablet forms. although some of its output is generated as creams and vials. BMI estimates its annual revenue to be in the region of USD 45-65 million. with five branches in the country manufacturing human and veterinary pharmaceuticals products and nutritional supplements. The company employs around 1.750 individuals. The company also has a solid R&D infrastructure. Most sales are in the human medicines segment. Amoun was the first Egyptian drug firm to gain ISO 9001 certification. Misr exports to a number of countries in the region.9 million in net revenue. Amoun Pharmaceutical Company (APC) APC is one of the leading domestic drug makers in Egypt. Misr Pharmaceutical Industries is one of the government-owned pharmaceutical firms in Egypt. and part of Holdipharma. In FY08/09. and .Invest in Egypt Pharmaceuticals Success Stories VACSERA VACSERA (Holding Company for Biological Products & Vaccines) is a vaccine producer. syrup. Misr Pharmaceuticals Originally established in 1939 as the first pharmaceuticals company in Egypt. Following the sale of two factories to GSK Egypt in the 1990s. which produce cardiovascular drugs. This centre is considered as separate to the operations of the main body of EIPICO. which are included under its ‘Quality Sector’ category of activities. extract useful compounds from natural sources. Europe and the Middle East. Amoun works as a contract manufacturer for German Merck and Rowa. with a 10-12% total drug market share by volume and nine manufacturing plants in the country. The company also owns majority shares in Egyptian International Ampoules Company (EIACO). as well as for Sanofi-Aventis (for some veterinary products).Invest in Egypt Pharmaceuticals now operates a large modern plant in El-Obour City. EIPICO holds a 30% share in the Saudi Arabia-based ‘Universal for Pharmaceutical Production’. which adds respectability to the company’s standing as an exporter to the EU.7 million. Romania. gastrointestinal drugs and antipyretics. antirheumatics. EIPICO has its own R&D laboratories. as well as food supplements. and has its own budget and staff. and to conduct preclinical and clinical trials for drug efficacy and bioequivalence as well as other detailed research using pharmacology. This category also includes its chemical control and Biotechnology Centre. antihistamines. having invested EGP27. analgesics. The Biotechnology Centre was inaugurated in 2001 to produce raw materials. Additionally. accounting for 20% of Egypt’s total pharmaceuticals exports. APC was established as a drug import and distribution firm in 1976 and currently operates three facilities. . vitamins. which produces some 800mn units annually. and has sister companies in the US. It exports medicines around the world. It was also the first private drug company founded in the country to import and distribute drugs. APC exports to 19 countries in Africa. Egyptian International Pharmaceutical Industries Co (EIPICO) EIPICO started production in 1985 and now claims to be the largest domestic drug manufacturer in Egypt. The drug production facilities are GMP certified. and French Leurquin. Russia and Kenya. the company posted EGP345. Exports were worth EGP15. Products launched in the first quarter of 2007 include magnabiotic injections (amoxicillin and clavulanic). EIPICO’s share price slumped to EGP33. though it has since recovered to EGP37. After the re-opening of the Egyptian stock market in March 2011. The company predominantly produces generic and licensed drugs with its most important partners listed as Schering Plough and Kline Smith Beecham. but also has three patented medicines – all skin treatments containing Jojoba oil as the active ingredient. although .7million. sprays and effervescent tablets.2 million.1 million. lyophilized products.21.1bn (USD195 million) in 2010. SEDICO is engaged in the production of some biotechnology products. In 2009. The company focuses on generics. South Egyptian Drug Industries (SEDICO) SEDICO started production in 1990 and its facilities are GMP certified.24. Medical Union Pharmaceuticals (MUP) First established in 1984 through the cooperation of the medical professionals syndicates union data. in partnership with foreign players. The company manufactures a variety of insulins.4% of the domestic market in value terms in 2010. gels.0 billion (USD 180 million) in 2009 to EGP1. It is believed to produce 60 million units of drugs in various pharmaceuticals forms. The 24% share of SEDICO is owned by Akzo-Nobel’s Organon. in addition to the non-traditional dosage forms such as the soft gelatin capsules.7 million in sales.Invest in Egypt Pharmaceuticals EIPICO’s 2010 financial results show revenue increasing from EGP1. bromurex and ultracillin vials. Income before tax came in at EGP65. one of the companies for which SEDICO provides contract manufacturing services. with income after tax reaching EGP51. as a result of higher production levels (which reached a record EGP398.8mn). In 2010 net income rose 14% to EGP326 million (USD 55 million). MUP was listed on the Egyptian stock exchange in April 1997 and has since gone on to become one of the largest domestic drug makers in the country with a market share of 4. marketing. The company has more than USD 100 million of investments in Egypt. GSK Egypt manufactures a range of products under license from other pharmaceuticals manufacturers. down 10% on the previous year. established in 1990. selling and distributing GSK products. GlaxoSmithKline (GSK) GSK operates in Egypt through its 91%-owned subsidiary GSK Egypt. However. with an 8.Invest in Egypt Pharmaceuticals both of these two companies have since merged and no longer exist under these names.55 billion (USD 266. which employs around 1. The subsidiary. MUP’s sales grew from EGP456.500 staff.2 million (USD 14.4 million) in 2005 to EGP780.7% value share of the market. According to IMS Health data for September 2009 MAT. In the same time period. The next biggest shareholder is the Industrial Investment Company which holds around 10% of the company’s equity.5 million) in 2010 at a CAGR of 11.1 million).45 million). but also markets and distributes other pharmaceuticals products and toiletries.9 million (USD 131. According to its 2010 annual report the company’s biggest shareholder is the Arab Company for Drug Industries and Medical Devices (ACDIMA) which holds 40% of the company’s shares. GSK’s main activities in Egypt are manufacturing. The Egyptian financial year runs from July 1 to June 30 so the latter half of FY 2011 is also likely to have been impacted by the effects of the revolution.3 million) to EGP167. In addition. GSK Egypt also imports and distributes a range of its parent company’s products that are not manufactured in Egypt. the company issued a sales guidance note in September 2010 that forecast sales of EGP700 million for 2011. net profit doubled from EGP84.3% in local currency terms. packaging.5 million (USD 77. GSK was listed in Egypt in 1985 and has a market capitalization of EGP1. GSK ranked first in Egypt. principally manufactures ethical drugs. .1 million (USD 28. and Taxotere (docetaxel). The company markets the following medicines in Egypt: Plavix. Actonel (risedronate). resulting from turbulent market conditions. In 2009. Cairo. During Q4 2008. It operates in Egypt through its affiliate. giving it a 9% market share in the country. relating to currency devaluation and tight price controls. The company’s manufacturing capacity is 50 million boxes and 20 million packs per annum. despite profit slides suffered by the firm. Sanofi-Aventis Egypt. Lantus. as the company aims to diversify its presence. This indicates the retention of a significant share of the local Egyptian market. Nasr City. Tanta. the acquisition of a high-value portfolio from BMS will boost future sales. GSK acquired BMS’s mature products business in Egypt for USD 210 million. In 2009. Alexandria. Sanofi-Aventis Sanofi-Aventis is among the five largest pharmaceuticals companies in Egypt. the company posted . The factory. Emerging markets represented GBP 66 million. Depakine (sodium valproate). employing more than 800 people. With GSK reporting revenue for its emerging markets division of US$4. the proportion of its ‘white pill/Western markets’ sales to total sales fell from 36% to 30%. Sanofi. with the remaining 10% being exported to other MENA markets. among a number of other products.Invest in Egypt Pharmaceuticals GSK’s production capacity in Egypt equates to approximately 107 million medicine units per year. which operates a plant and four offices in the country. Amaryl (glimepiride). Mansoura and Souhag. Tritace (ramipril).2bn in 2008. GSK Egypt also has scientific and sales offices in Mohandessin. Eloxatin (oxaliplatin). warehouse and head office are in El-Salam City.Aventis has also provided the vaccines used in mass polio immunization programmes in the country. Company officials claim that about 90% of the subsidiary’s production is sold in Egypt. laboratories. The strategic move consolidated GSK’s ambitions to increase its portfolio and presence in emerging markets such as Egypt. Aprovel (irbesartan). or some 14% of the company’s total sales in 2009. generics and animal healthcare products. operates in Egypt through its 100% owned subsidiary Pfizer Egypt. the world's largest pharmaceuticals company. Pfizer Pfizer. .3 billion in global net sales.Invest in Egypt Pharmaceuticals EUR 29. Pfizer recently acquired compatriot Wyeth.5 billion achieved in the previous year. antiallergy treatments and anti-infectives. The company deals in prescription and consumer health products. In 2009. driven by solid performance in emerging markets. Sales of Voltaren (excluding OTC sales) reached USD 797 million. OTCs. cardiovascular preparations. nose and throat preparations. It is based in Cairo and manufactures. up from 17% in the previous year (or USD 7. cardiovascular treatments and ear. The company specializes in manufacturing and distributing chemicals. In 2009. Leading product areas are analgesics.31 billion in global sales. Markets other than those in Europe and the US accounted for around 26. Novartis employs approximately 1. up from USD 41. established in 1962.3% y-o-y. Its main pharmaceuticals product areas are antibiotics.120 individuals. markets and sells patented pharmaceuticals. which also has operations in Egypt. thus representing 18% of the total. Novartis posted USD 44. up by 1% y-o-y in local currency. Novartis Novartis operates in Egypt through its subsidiary Novartis Pharma.14 billion).7% of the company’s total sales. It now employs around 800 people.09 billion. pharmaceuticals and animal health products. The company was established in 1961 and was one of the first foreign-owned companies to commence operations in Egypt. including those in Africa. net sales in Asia/Africa/Australasia rose to USD 8. up by 6.