Egypt’s pharma sector is experiencing a growth phase fueled by recent price adjustments and structural shifts that are allowing both EGX-listed and non-listed companies to expand margins and scale up investment. In the meantime, the government continues to fine-tune pricing policies to balance industry support and consumer protection.

The pharma sector surged last year on the back of price hikes: The pharma market grew 41% y-o-y in value in 2024 — despite a 1% dip in volume — primarily thanks to a near 48% rise in drug prices during the year, according to an EFG Hermes report seen by EnterpriseAM. This came after the Egyptian Drug Authority approved gradual price increases starting May 2024 in response to the EGP float, according to the report. By the end of the year, the EDA had approved price hikes for more than 2.2k pharma products, representing 38% of all registered products and accounting for roughly 54% of the market’s total value.

REMEMBER- Some med prices rose by as much as 25% in July following requests from localpharma producers in response to the EGP float.

And further hikes are slated for this year: The EDA plans to extend the hikes to all meds by 2H 2025. We heard back in August that some 1.6k pharma products will be subject to price hikes between September 2024 and the end of 2025.

Further short-term market growth is also in the cards: EFG Hermes expects the market to grow by 25% in 2025, driven by a 22% increase in prices and a modest 3% rise in volumes. Market value is projected to reach EGP 353 bn in 2025, up from EGP 307 bn last year, EDA Chairman Ali El Ghamrawy told Asharq Business (watch, runtime: 4:04).

Further down the line: EFG Hermes sees the market growing at a compound annual growth rate (CAGR) of around 13% over the next four years, with prices rising by 7% annually and volumes by 6%.

The adjusted prices have given pharma stocks a boost: Pharma companies listed on the EGX have seen improved margins following the price hikes, prompting EFG Hermes to issue buy calls on Ibn Sina Pharma, Rameda, and Epico, with target prices of EGP 12, 6.5, and 80, respectively. Ibn Sina led the overall market with a 64% jump in revenues and a market share of 30.8% in 2024. Rameda reported a 54% rise in recurring earnings, with EFG Hermes penciling in a further 103% rise in 2025. Eipico posted 21% top-line growth last year, with expectations of 29% this year.

KEY DRIVERS TRANSFORMING THE INDUSTRY-

Pricing reforms are on the horizon: The EDA is revising its pricing framework to introduce more flexibility and transparency while retaining the state’s role in mandatory pricing, EDA Assistant Chairman Yasin Ragaey told EnterpriseAM. The authority is in talks with manufacturers, distributors, and pharmacists to refine the current pricing mechanism, Ragaey said.

ICYMI- The Egyptian Drug Authority (EDA) in April of last year was said to be studying a number of requests and proposals for new med pricing schemes in lieu of the government’s mandatory pricing scheme, under which prices are set for a five-year period.

Fully liberalizing the pharma market is not part of the plan, Ragaey said, adding that the reformed system is designed to make local drug prices clearer and more predictable for industry players and consumers. Last month, reports suggested the authority was weighing alternatives to the mandatory pricing scheme.

The government is working to expand local manufacturing: The government proposed an EGP 80 mn regional hub for pharmaceutical raw materials back in July. It also reportedly plans to invest EGP 8 bn in six strategic warehouses for pharma and medical supplies across six governorates including Cairo and Alexandria.

State firms are drawing interest from Gulf investors: State-owned pharma firms Chemical Industries Development Company (CID) and Misr Pharma are on the list of 35 companies slated for stake sales to strategic investors, EGX listings, or a combination of both. While formal offers have been made, the government has held negotiations with foreign investors and pre-IPO stakes of around 30% in each company could be offered up.

The investment climate is going strong: “Egypt’s pharma market is attractive to any investor,” Rameda CEO Amr Morsy told us, noting that the sector has maintained a CAGR of around 20% over the past decade — outpacing growth in any other African or Middle Eastern market despite local headwinds. Between 2011 and 2023, Rameda grew its sales volume nearly 34x, EBITDA around 47x, and net income 40x, he added.

By the numbers: The local pharma market is home to over 170 manufacturing facilities, 11 of which are internationally certified by bodies including the World Health Organization and European Medicines Agency, according to a statement by the EDA. The facilities house 2.3k production lines — 986 of which produce pharmaceuticals. The sector has achieved a 91.3% self-sufficiency rate, according to the statement.

ICYMI- We broke down the pharma sector’s outlook through 2023 in a previous Inside Industry unpacking Fitch Solutions’ 4Q 2024 Egypt Pharma Report.