The gov’t overhauls drugs pricing with FX band, smaller reference basket, and local production advantage

The government is preparing to launch a new drug pricing system in the coming days that keeps mandatory pricing but makes it more responsive to exchange-rate and cost swings — while handing locally manufactured products a structural price advantage over imports, a government official tells EnterpriseAM. The framework will be finalized after meetings with local and foreign manufacturers. The Egyptian Drug Authority (EDA) remains the sole authority setting and reviewing prices, now based on a detailed review of actual cost elements, including active and inactive ingredients, packaging, manufacturing, electricity, fuel, wages, and ins.

The FX rule is the headline mechanic: No price moves while the USD moves within a 10% band; larger, sustained FX swings lasting up to six months can trigger reviews, with any increase based on the product’s actual cost rather than the currency move alone. The system also includes a mechanism to lower prices when sustained falls in input costs or the exchange rate warrant them, and periodic cost reviews will allow reassessment as raw material costs and production volumes change, the official says.

Reference pricing gets a regional tilt: The basket of countries used for external price comparisons will be cut from 35 to 15, while adding regional markets such as the UAE. Foreign products would be priced at the lowest suitable reference price minus a further 10% reduction for the Egyptian market, tying local prices to actual prices in comparator markets while keeping a margin in consumers’ favor. Locally manufactured products would be priced at 50-60% of the equivalent imported product — replacing complex invoice-based verification with set rules and percentages — and would enjoy a simplified pricing process, the official adds. Companies will also be able to get an advance estimate of a product’s expected price before completing registration, letting them factor pricing into feasibility studies, with applications and tracking to move online.

The framework could drive some drug prices down 30-40% as global raw material costs ease and production volumes rise, Federation of Egyptian Chambers of Commerce Pharma Division head Ali Ouf tells EnterpriseAM. The current system — which verifies raw material invoices against officially announced global prices, often burdening companies with complex paperwork — would be replaced by cost-element pricing plus an investment income margin, he says. While operating costs have climbed on fuel, electricity, shipping, Iran-war fallout, and supply chain disruptions, prices have remained stable, according to Ouf. He estimates company income fell around 20% even as market sales grew 13% in the January-August 2026 period, after exceptional 25% and 40% growth in 2023 and 2024, driven by repricing.

IN CONTEXT- The reform lands as the government pushes to localize strategic drugs — biosimilars, insulin, blood derivatives, and vaccines — with active pharma-ingredient and excipient-localization investment set to exceed USD 500 mn, Ouf says. It follows the state’s incentives package for pharma unveiled last year, the industry’s renewed push for 10% hikes, and the government’s settlement of 90% of its arrears to pharma companies earlier this year. Prices were last moved in October 2024.