A look into BMI’s crystal ball on our pharma sector: Despite current turbulence in the local pharma sector, it is expected to see positive growth in local currency terms through to 2033 on the back of government support for domestic production, population growth, and increasing healthcare coverage, according to the 4Q 2024 Egypt Pharma Report by Fitch Solutions’ research unit BMI.

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This year’s sales will fare well in EGP terms but see a dip in USD terms: Pharma sales are projected to grow 10.6% y-o-y to EGP 152.8 bn in 2024 as the government moves towards raising pharma prices to support local producers. In USD terms, however, sales will see a 24.7% y-o-y drop to USD 3.4 bn amid the effects of the weaker EGP post-float and high levels of inflation.

ICYMI- Drug price hikes are slated through the end of next year: Some 1.6k pharma products will reportedly be subject to price hikes between September and the end of 2025. Some med prices were hiked an average of 25% in July as per requests from local pharma companies in response to a weakened EGP. The Egyptian Drug Authority (EDA) in April 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.

Sales will continue to climb in the medium- and long-term: The market’s value will jump to EGP 218.1 bn (USD 4.3 bn) by 2028, growing at a compound annual growth rate (CAGR) of 9.6% in EGP terms and -1% in USD terms. By 2033, the market will be worth EGP 325.9 bn (USD 5.8 bn) after growing at a CAGR of 9% (2.5% in USD terms).

So will expenditures: Pharma spending per capita will move from USD 40.1 in 2023 to USD 35.2 in 2028 and USD 44.4 in 2033, driven primarily by population growth and the implementation of universal health coverage. However, pharma spending as a percentage of total healthcare spending is expected to drop to 34.6% in 2033 from 36.1% in 2023 due downward pressure on drug prices and a faster expansion of medical services.

Egypt has the largest pharma market in North Africa, ranking ninth in the region and 72nd out of 109 markets globally. While the overall market is poised to expand, there are risks to pharma companies operating in the market, including a weakened currency and trade disruptions in the Red Sea.

The local market is relatively conducive to innovation: Egypt’s risk score stands at 58.1 out of 100, according to BMI’s Innovative Pharmaceuticals Risk/Reward Index (RRI), which measures the attractiveness of a country's pharma market for launching innovative meds. The score, which is higher than the regional average of 56.0, reflects “a matured pharma market, with an extensive domestic manufacturing capacity and an ever-expanding universal health coverage,” the report reads.

Expanding local drug production tops the state’s agenda: “Efforts to bolster the local pharma sector to reduce reliance on drug imports has risen to the top of Egypt's government’s agenda,” the report reads, citing a partnership between the Public Enterprises Ministry, state-owned pharma manufacturer HoldiPharma, and Indian drug producer SysChem as an example. The partners in 2022 kicked off a study on the country’s preparedness for the local production of key drug ingredients. The study focused on infrastructure, GMP compliance, and expanding production at El Nasr Pharma Chemicals Company for essential drugs like metformin, paracetamol, colchicine, and acetylsalicylic acid.

And so is increasing exports: The government expects pharma and cosmeceutical exports to reach USD 1.5 bn during the current fiscal year, up from 1 bn the previous fiscal year, and aims to push the number to USD 2 bn within two years and USD 3 bn before 2030, according to Prime Minister Moustafa Madbouly. Exports are set to expand over the medium term, according to the report. “Most exports will continue to target other Middle East and North Africa markets, with a focus on Saudi Arabia, the UAE, Iraq, Yemen, Sudan and Jordan,” the report said.

The market is largely import-reliant: Despite the government’s efforts to achieve self-sufficiency in manufacturing, the market relies on imports — particularly for advanced meds — due to technological constraints and the limited capacity of local producers. Growing domestic production is expected to somewhat dampen this reliance, but raw materials will continue to be imported. Pharma imports are forecasted to grow to EGP 77.1 bn in 2024 from EGP 69.7 bn in 2023 before reaching EGP 118.9 bn in 2028. Roughly a third of our imports currently come from the EU.

MARKET SEGMENTS-

The local pharma market is expected to see growth across all segments, with generics and prescription drugs showing the strongest performance. Patented drugs and over-the-counter (OTC) drugs are projected to grow but lose market share over time.

Prescription drugs will remain to hold the lion’s share of the market in the medium-term, accounting for 87.2% of all pharma spending by 2028, up from 85.7% in 2023. Spending is forecasted to grow 5.8% y-o-y to EGP 125.3 bn in 2024 from EGP 118.4 bn in 2023 before hitting EGP 190.1 bn in 2028, delivering a five-year CAGR of 9.9%. This growth will be driven by a growing population, rising chronic disease burden, and the rollout of the country's health ins. system.

Generic drugs are next in line, projected to account for 66.9% of total drug spending and 76.7% of prescription spending by 2028. In the meantime, patented drugs will lose market share, declining to 19% of total pharma spending by 2033 from 20.7% in 2023 despite growth. Similarly, the market share of OTC drugs is forecasted to decline to 12.8% of total spending in 2028 from 14.3% in 2023.

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