🏭 A new era for Egyptian meds? The local pharma sector is currently undergoing a period of drastic restructuring driven by localization, pricing framework changes, and international firms’ expansions in the local market — alongside some interesting financial performances from listed companies. Despite cost-related pressures, official data indicate a sector well on its way to more efficient operations, with an increase in complex local manufacturing, expansion in sales channels, and a slew of new players entering the market.

While the Egyptian Drug Authority (EDA) is working to amp up self-sufficiency rates and offer a variety of manufacturing incentives, producers are left wanting flexible pricing frameworks to keep up with a rapid change in costs. This follows rising expectations pertaining to the size of the local pharma market — which is anticipated to exceed EGP 400 bn by year’s end. Concurrently, company results uncover a major operational shift that highlights the sector’s ability to grow despite challenges.

The EDA is working with flexible targets that vary from one med group to another. As things stand, the pharma self-sufficiency rate has reached 91.3%, with plans for that number to jump to 94% over the coming years, EDA Chairman Ali El Ghamrawy told EnterpriseAM, further noting that the production of international companies currently operating in factories within Egypt is included in the local percentages.

This follows the localization of some 208 drugs in recent years, the import bill of which is estimated to have cost over USD 732 mn annually. Right now, the sector includes 179 drug factories, 187 med supplies factories, four biological drug factories, and nine veterinary med factories — at a total of 2.7k production lines, El Ghamrawy told us.

Most global pharma players already operate in the local market, and are expanding their trade from Egypt to elsewhere in Africa, according to El Ghamrawy. Certain areas within the sector, however, such as oncology, require substantial investment and a “long-game strategy,” limiting the entry of new players, he further added.

Investors want in: A Chinese company is in talks with the government to establish a factory for the local production of raw pharma materials, El Ghamrawy said. This comes as Health Ministry spokesperson Hossam Abdel Ghaffar alluded to the government receiving requests from seven international companies — US, Chinese, Indian, and European — to expand locally in 2026, either through manufacturing in Egypt’s med city complex Gypto Pharma, or through partnerships with local investors.

Localized complex manufacturing: Eva Pharma’s announcement earlier this month pertaining to the launch of seven specialized cancer drugs — following the development of 18 — marks a starting point for the localization of cancer treatments in parallel with the localization of 30 other treatments by other companies. It’s a gradual expansion, taking into consideration the high investment costs, El Ghamrawy told us.

What has been achieved since 2024 is an “unprecedented leap,” so says Federation of Egyptian Industries’ pharma division head Ali Ouf. Ouf anticipates significant cost cuts for both the state and individual patients from expanding local manufacturing. He further believes that localization’s success lies within factories’ ability to export some 70% of their production to ensure economic viability.

Pricing framework changes don’t necessarily mean a price increase: An improvement in economic indicators — such as a weakening USD, a slowing inflation rate, and interest rate cuts — opens the door for price framework changes that could lead to price cuts for certain meds “if there are no tangible increases in costs,” El Ghamrawy noted. The EDA is currently studying new amendments to the existing price framework, following reports indicating the re-pricing of some 1.6k additional meds by year’s end. EFG Holding research anticipates that price changes will encompass the entire market by 2Q 2026.

The EDA, however, has put the repricing efforts on hold following the last wave in October 2024, according to Ouf. The last price increases were based on an exchange rate of EGP 50-51 per USD, thus the continued rise of the EGP through 2026 could boost profitability, according to a CI Capital research note seen by EnterpriseAM.

Producers are pushing for a price increase amid rising costs. Fuel prices have directly raised both production and distribution costs by 2%, with a larger indirect effect on supply chains, according to Ouf, who further noted that some manufacturers are calling for a 10% increase to offset the jump in costs. Ouf also criticized the EDA’s service fees, which rose from EGP 1 mn pre-2018 to EGP 5 mn for registration, arguing that this price tag doesn’t necessarily reflect the actual service level provided.

Pricing mechanisms are getting an anticipated face lift: The EDA is working to update mandatory pricing mechanisms to adopt flexibility in moving prices when costs or exchange rates fluctuate without long delays, thus amending Decision 499 in mandatory drug pricing. The pharma division believes mandatory pricing is necessary to protect chronic illness patients, yet argues that the current system is somewhat unfair, making it unattractive to both local and foreign investments, he explained.

The division isn’t opposed to mandatory pricing, but believes it should be more reflective of actual cost, rather than being selectively applied. This comes as several foreign companies began reducing the supply of several vital products that lack local alternatives as current prices aren’t keeping up with updated costs, hence the wave of shortages in recent months. “Exporting companies are no longer willing to bear the difference between cost and price,” Ouf told us.

Mandatory pricing is unattractive to investors, seeing as the practice of fixing drug prices for periods of up to five years ignores a wide range of variables — wages, ins., electricity, and fuels fees — by focusing solely on the exchange rate. Ouf further added that foreign investors entering the market build their plans on long-term data, which is currently unavailable.

What’s the fix? The division’s primary goal is a shift to a flexible pricing mechanism based on actual production cost with an added net income margin of 15-20%. It’s a “simple and clear equation,” Ouf believes, that ensures companies can get the gears turning without financial pressures.

Pharma companies’ demands still revolve around four main issues: re-pricing to keep up with costs, facilitating access to raw materials through both public and private sector partnerships that facilitate large investments and technologies, reducing high fees and taxes on licenses to attract additional investments, and simplifying the registration process.

Despite the fact that these demands have been raised for years, the pharma division has noted greater government responsiveness over the past two years, with extensive meetings aimed at price reforms and addressing licensing issues, as the EDA works to offer more incentives to the private sector and support localization plans.

The EDA expects market sales growth to exceed 30% by year’s end, reaching EGP 400 bn, supported by expanded local production and increased demand. Egypt also aims to raise exports to USD 1.3 bn this year, with some 180 factories expanding and the state moving to attract new production lines, El Ghamrawy had told us, noting that Egypt is a regional leader in terms of units sold, with annual production ranging between 3.7-4 bn dosage units.

A difficult year ahead for smaller companies: Ouf expects 2026 to be not-so-smooth sailing for small- and medium-sized factories on account of rising costs, which may lead to some exiting the market. Ouf further warned that the exit of small- and medium-sized distributors could withdraw over EGP 50 bn in liquidity from the drug circulation cycle, putting pressure on a sector already suffering from funding gaps. Ouf pointed to major losses incurred by financiers in the sector, such as United Company, which alone bore some EGP 12 bn.

Company results show clear operational shift:

  • Ibnsina Pharma proved itself a major player in non-pharma distribution, with a 32.4% market share and higher margins than drugs (11.5%), and a faster collection cycle. These activities are expected to account for 25-30% of its net income by 2030;
  • Macro Group recorded considerable revenue growth of 113%, driven by an increase in sales volume and price adjustments, with growing avenues in exports and multichannel distribution;
  • Rameda achieved 66% growth, supported by tender sales and a private sector growth of 53% following a wave of price increases.

These results also unveiled companies’ ability to hedge against market volatility: Macro’s gross income jumped 140% with an improved conversion cycle, whereas Rameda recorded growth in operating profitability despite funding pressures. Glaxo’s NP fell to EGP 30.2 mn, reflecting the variance between companies that managed to control costs and those affected by market conditions.

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