Egypt Pharmaceuticals and Healthcare Report Q2 2009

For this Q209 Pharmaceutical and Healthcare Report for Egypt, BMI forecasts that drug spending will increase from US$2.34bn in 2008 to US$4.10bn by 2013, representing a compound annual growth rate (CAGR) of 11.8% over the five year period. We believe the main drivers for growth will be the expected health reform that will take place in July 2009, with per capita expenditure on medicines expected to reach US$49.40 by 2013. We note that public sector health spending will only increase marginally from 40.3% to 45.6% of the total government expenditure. The healthcare sector in Egypt is moving toward a total overhaul as the Ministry of Health steers its involvement into a more regulatory role. However we maintain a positive outlook for the proposed national healthcare insurance scheme as free care will still be offered to the lowest income groups. Meanwhile the lack of birth control and resulting rising population are increasing demand for services, and BMI would encourage the state to address reproductive health awareness as a means of lowering the burden on health facilities.

During January 2009, the Ministry of Health confirmed that pharmaceutical firms will have higher fees when registering products to be imported, including all medicines and medical devices. The Ministry added that only private drug manufacturers will be affected by the fees, with consumer prices remaining largely unaffected. BMI notes that the increase fees have not been fully clarified by the Ministry, and would urge it to do so in the current climate of price anxiety by the population.

The higher fees are designed to reduce the number of applications sent to the ministry for medical equipment and drugs; however BMI cautions that this may negatively affect the healthcare system by restricting choice. As a result, private firms may selectively opt for more expensive products to maximise profits, reducing affordability for consumers in the longer term.

The Egyptian government will pass legislation by the end of July 2009 to enforce universal health insurance for the population. BMI welcomes this reform; however, we note the government has been discussing policies to ensure equitable access to medical services with fervour since 2006. Without any significant progress, it remains uncertain whether implementation will take place before the end of the year.

The population currently has access to free basic healthcare; however, the quality of services is often relatively poor as state-owned hospitals are insufficiently funded. To offset this, the Ministry of Health has resorted to charging the 48% of people who are uninsured for using medical equipment, including catheters, syringes and bed linen. According to the World Health Organization (WHO), 95% of private healthcare spending was on upfront fees during 2006. In addition, private health coverage spending decreased from US$12.7mn in 2000 to US$9.2mn by 2006. This approach has been harshly criticised as a means of phasing in private care. Absolute free insurance is only offered to newborns, children and widowers.