New drug pricing formula faces its first test as drugmakers reportedly push for 20% hike

The new dynamic drug pricing formula is facing its first test after the EGP’s October slide. Drugmakers are pushing for price increases of 20% to offset the weaker EGP and pricier raw materials, Al Borsa reports. But any repricing will go through the new formula alone and must be backed by documents proving higher costs, the Egyptian Drug Authority (EDA) and the pharma division of the Federation of Egyptian Chambers of Commerce tell EnterpriseAM.

The regulator, for its part, says it hasn’t seen any such push: The EDA hasn’t received any exceptional requests for 20% increases tied to higher costs or the exchange rate, EDA spokesperson Yassin Ragaey tells EnterpriseAM, adding that companies file pricing and review requests throughout the year as a matter of routine. “The new formula works as a strict governance tool and makes pricing a predictable process. We won’t open the door to price moves outside this framework,” Ragaey says.

The industry’s own representatives agree: Any company that wants to raise its prices has to submit invoices and accurate financial documents, Ali Ouf, head of the pharma division at the federation, tells EnterpriseAM. Claims for increases without formal proof won’t be considered, he adds.

REMEMBER- That framework is the EDA’s new pricing system, which took effect on 24 September. Its formula gives exchange rate moves a 60% weighting, against 30% for urban inflation and 10% for changes in the Central Bank of Egypt’s (CBE) overnight deposit rate. The formula is recalculated every six months, or sooner in exceptional circumstances. An increase is only on the table if the formula produces a change of at least 10% that holds for at least 45 days, and even then the product’s registration holder has to request it. The same thresholds apply to price cuts, which the EDA can initiate itself.

This is where the current push runs into trouble. The EDA hasn’t published the base it measures that 10% change against, but Ouf put the practical line at around EGP 55 to the USD when the framework launched, telling us in September that currently traded medicines wouldn’t see increases as long as the USD stayed below that level. The greenback crossed EGP 55 in late October and passed EGP 56 on 26 October, before easing to about EGP 53.9 by 5 November, according to the CBE’s average market rate. That means it never held above the line for the 45 days the formula requires, Ouf says.

And CI Capital’s math suggests the bar may not have been cleared even at the peak. CI measures from EGP 51, the rate at the last repricing, and assumes inflation of around 15%. On that basis, the formula implies an increase of about 9.8% at EGP 55.5 and about 10% at EGP 56, according to research notes seen by EnterpriseAM. FX carries only 60% of the weighting, so even a near-10% move in the exchange rate adds only about six points to the result. CI says that’s roughly half the 20% companies say they need to cover pricier imported active ingredients and packaging.

CI draws its practical line close to Ouf’s, seeing room for selective, product-level increases at around EGP 55, while a recovery to EGP 50-51 would likely rule out any increase. By our math, CI’s assumptions put the implied increase closer to 8% at the 5 November rate.

So what happens to products that are already losing money? The EDA won’t let companies simply stop making them, Ouf says, since the authority can cancel a product’s registration and withdraw its license entirely if production stops. Instead, some companies may register their products as dietary supplements with the National Food Safety Authority, he adds, which would let them price freely according to their costs, outside the mandatory pricing system.

Whatever route companies take, consumers won’t see new prices anytime soon. There’s no shortage right now, and stocks will last at least six months, Ouf says. Even if the USD rose today, the 45-day condition was met, and new prices were approved, packs with the new prices wouldn’t reach pharmacies before late 2Q or 2H 2027, he adds. CI Capital’s estimates support that timeline: it expects approval to take two to three months, and new prices to need another six to nine months to fully reach the market as existing inventory runs down. CI says that inventory typically covers 9-12 months of demand, so it doesn’t expect the delay to hurt margins much.