Egypt: Potentially the best place to invest in the Middle East
His Excellency, Professor Dr. Hatem El Gabaly, the minister of health and population of Egypt, shows no doubt that the strong and necessary reform his government is currently undertaking will prove to be fruitful. Although the country is considered one of the most advanced and mature pharmaceutical industries in the region, it is still mainly a domestically oriented industry focused on drug formulation with very limited research capabilities.
The country also faces its regulatory framework, an arguable and controversial pricing policy, as well as its limited export capacity. On the other hand, its long tradition in medicine, as well as the dynamism and goodwill of its businessmen, will certainly help the country get back on the right track. Dr. Osama El-Saady, at the head of the Federation of Pharmaceuticals, Cosmetics and Medical Appliances Industries, as well as chairman and managing director of Sanofi-Aventis, is quite optimistic about the ability of the Minister to find a balance between economic urges and social dimension. “I invite the foreign community to keep an eye on Egypt since it is the best place to invest in the Middle East. You can trust Egyptian manufacturers because all has been put in place to manufacture high-quality medicines in the country,” he promised. According to Dr. El-Saady, the sector’s situation will definitely improve within two to five years’ time.
The second market in the area
It would be an understatement to say the country’s potential is great. With over 74 million inhabitants, and growing at a rate of 2%, Egypt has become the most dynamic and attractive market in the MENA region. The country also has the second largest pharmaceutical market in the area after Turkey. There are currently 74 pharmaceutical factories producing over 7,600 different types of drugs for domestic sale and export. Today, the Egyptian drug manufacturers can be lumped into three basic categories: the public sector represented by the Holding Company for Pharmaceuticals, Chemicals and Medical Appliances whose 12 subsidiaries control a total of 23% of the market share; the Egyptian private sector companies; and finally a group of eight multinationals. All are fighting for market share, changing their positions and alliances.
Of the 8,000 drugs registered with the Ministry of Health and Population, almost 7,600 are manufactured locally, enough to cover 93% of domestic demand. Drug makers say one of their biggest challenges is that the government’s pricing policy has failed to keep up with the rising costs of imported raw materials. Unable to raise the price of their products, pharmaceutical firms have been forced to absorb skyrocketing input costs.
Providing affordable medicine
Although there is no doubt that modernization of the sector is underway, the tight regulatory environment still represents a hurdle for foreign companies. Many of the policies that govern the pharmaceuticals sector date back to the 1960s, when the government established public companies in order to manufacture cheap substitutes for imported drugs as part of the country’s policy of self-sufficiency. By the 1980s, the focus had shifted to a free market on the back of Sadat’s “open-door” economic policy, in which international companies were permitted to export their products to Egypt or establish their own factories domestically. “There is definitely an urge of modifying the pricing system,” says Dr. El- Saady. “A more transparent system should also be implemented in order to attract more FDI.” The chamber has, thus, addressed the government to base its pricing system on one of the successful neighbors.
Therefore, the major changes going on at the head of the country are thoroughly followed by the differing actors of the sector. The new healthcare program was designed in alignment with President Mubarak’s political agenda, which is focussed on providing healthcare insurance to every Egyptian by 2010. “Today, around 35 to 37 million of the 70 million people are covered by healthcare insurance, but by 2010 we are expecting to cover 100% of the population,” said Dr. El Gabaly.
“Pricing is the hottest issue and this is a social constraint,” added Dr. Zakaria Gad, chairman of the Egyptian Pharmacist Syndicate. “We are always trying to get the price of medicines to come down. The national policy is to provide affordable medicines to all of the people in this country. Most of our people have a very low income. This is a continuous headache for everyone.”
The 100% governmental Drug Holding Company has also been a pivotal topic for the Egyptian economy as it manages to keep the pricing down and provides affordable medicines while remaining very profitable. “There is a need for governmental companies in Egypt and we will be very active since the government wants to cover all Egyptians by 2010,” ensured Dr. Magdi Hassan, chairman of Drug Holding Company.
A company like Vacsera has been in the country for more than 105 years and is still a key actor in the nation, providing vaccines to the people, such as for polio, which has since been eradicated. The company, however, is at a critical point in trying to regain its credibility. It was wrongly said to have sold spoiled vaccines and resulting in the deaths of several children. It is also overcoming a corruption scandal involving the previous CEO. Vacsera’s chairman, Dr Mohamed Rabie, prefers to stress the importance today in having successful governmental companies and showing how his expertise in the private sector could help build a more transparent and less bureaucratic system.
The government’s firm grip on pricing policies helps keep the price of medicine in Egypt among the lowest in the region. This moderation is also the result of a robust local pharmaceutical industry, which is able to produce generic drugs at a fraction of the cost of imported brands.
The necessity of reform
“I am less pessimistic today than during the last ten years,” noted Dr. Wafik El- Bardissi, executive vice-president of Minapharm Pharmaceuticals. “During the past ten years, health policies have led to a chaotic environment.”
As a result of a lenient compliance system, the compliance cost was significantly reduced and the very professional complex industry became attractive for non-professional entrepreneurs with absolutely no expertise or knowledge of the industry. According to Dr. El-Bardissi, the new cabinet is focusing on health reforms and the pharmaceutical industry is dealing with this as part of the reform.
“This is liable to align the future of the industry with the health reform plans. This is in contrast to the past ten years, where health policies have dealt with neither independently. Spontaneous resolution of chronic problems like pricing could be a consequence of this approach,” he summed up.
However, two major challenges are facing the new cabinet, warranting specific attention. First, there is a need to control the chaotic environment of the industry primarily through toughening up compliance standards. Second, there needs to be serious reconsideration of emerging obstacles. On one, hand health authorities are getting more flexible with medicine importation, thereby repelling global players from granting manufacturing rights for new products and technologies in favor of importation; and on the other hand, restrictions imposed by the implementation of the TRIPS agreement as of 2005, means generic manufacturers are suffering a significant shortage of pipeline products.
“If not seriously addressed, both challenges are liable to put the future of the Egyptian pharmaceutical industry in jeopardy,” Dr. El- Bardissi warned.
Breaking Through out of the Export Desert
Unfortunately, the pricing issue has kept many companies out of the export market. If Egyptian pharmaceutical firms currently export to 45 countries, mostly in the Middle East and Africa, the total value of exports of all 74 pharmaceutical factories in Egypt is estimated at just $41 million – a drop in the bucket even by regional standards. Jordan, for instance, exports $226 million in drugs per year, with only 16 pharmaceutical factories. These figures are not surprising though, for the Jordan market is very small and its industry was originally thought of for the export market.
The influence of Egyptian medicine
The AstraZeneca experience is very relevant to the export issue. Sweden‘s AstraAB and Britain’s Zeneca Group had a presence in Egypt for decades, but the limited range of products did not justify the expense of setting up factories there. Following the merger in 1999, to form AstraZeneca, the group began to survey the market. In 2002, the company announced it would invest $40 million to build a factory in Sixth of October City to produce its specialty line of ethical drugs.
“We studied the market and the project was finally given the greenlight in 2002,” explained Dr. Ahmed Zaghloul, marketing company president of AstraZeneca Egypt. “The plans were then put on hold during 2003 because of the pricing problems that were causing turbulence in the market.”
Dr. Zaghloul said he found it intriguing that during AstraZeneca‘s negotiations to open the new factory, the government requested that it considered exporting its medicine. The company would like to export, but as many countries set prices on imported medicine based on its price in the country of origin, exporting could be a loss-making venture. “How can I export if there are products here losing money?” he argued. “If I try to export them, the local price will make me lose even more money.”
Despite this prominently local focus, to Dr. Zaghloul, Egypt is meant to reinforce its position in the sector. “We are 70 million and growing at a fast rate, and nearly one-third of all Arabs are Egyptians. The influence of Egypt on the pharmaceutical sector in the region is very clear. One must not forget that the Egyptian school of medicine has been a big influence on the entire continent,” he said.
Being ahead of others
Dr. Sarwat Bassily, chairman and CEO of Amoun Pharmaceuticals, one of Egypt’s oldest private drugmakers, shares the same vision. To him, the major obstacle the country faces regarding exports is that Egypt is a big country and it is growing very fast. “The population here is increasing by 1.4 million per year, which is a very challenging figure to satisfy with new drugs every year. The amount of pharmaceuticals which I could sell here in a week’s time can take us a year to sell in the export market,” he said. Amoun is currently concentrating on the local market, and just started looking to the export market a few years ago.
“When I sold my first company to GSK, I sold it with 523 registrations outside Egypt,” recalled Bassily. “When we started the second company, we had to start making the registrations of the new products from scratch. Today, we have 211 products registered and 281 under registration outside Egypt.” Despite these drawbacks, Amoun is still a key actor in the Egyptian pharmaceutical sector. Dr. Bassily is particularly proud to have sold its companies to GSK and contributed to the success of this MNC in Egypt.
“If we take into consideration all our activities, the company ranks number two as per the IMS ranking, and we have approximately 6% of the total Egyptian market. Moreover, we manufacture 23 of the top 160 products in the country. I am proud to say that we were the first company to do this in the private sector,” insisted Bassily.
Amoun is also the only company to have seven different international certifications. It was, for instance, the first pharmaceutical company in the world to get the certification BS-7799 for information safety and security, and the only pharmaceutical company in the region with OHSAS-18001 certification for Occupational Health and Safety. It was also given a prize by UNIDO as one of 50 Innovative Enterprises in Africa, and by the end of 2004 Amoun achieved the EU certification to export to the European market.
“The key to success is being ahead of others. In the pharmaceutical business, a person has to have a good reputation, and in Amoun we are keen to build it year after year. We are very well known for our credibility, effective products and straight-forward reactions,” he concluded.
An increasing local market
The story of EIPICO, the number one private company in the country, is also very relevant to the tricks and resilience pharmaceutical companies had to show in order to break the national structural constraints.
“When, in 1962, we started the nationalization of the pharmaceutical industries, we were facing the problem of consumption,” remembered Dr. Borhan El-Din Ismail, chairman of the board of directors and executive director of EIPICO. “We could not meet the demand. So, until 1977, we only supplied the local market. This is what the Minister of Health demanded, and we had to satisfy him. We therefore became experts in the local market, but knew nothing of exportation. We were totally oriented towards the local market which was growing rapidly and kept us very busy.”
In 1980, Dr. Ismail started EIPICO purely for the challenge of being the one company in Egypt that could meet the GMP standards set by the WHO in 1977. “It became a personal challenge, and I succeeded. And as my standards are so high, when we had met the GMP standards, we were also ready for exportation. It hasn’t been easy. The Egyptian pound is, after all, not a strong currency. Exportation is much easier for Jordan, which has had a strong currency and focus since day one in this strategy,” he recalled.
EIPICO is today exporting to 42 countries, including the UK. “In order to be able to export, we are often monitored and inspected by all the authorities in this country. I am now planning to start building factories outside Egypt,” Ismail concluded.
The challenge of mergers and acquisitions
Although the protectionist policies implemented in Egypt in the 1980s and early 90s were the milestone to develop a strong local pharmaceutical industry, it limited the country’s trading performance. Therefore, as shown with the EIPICO story, the industry is at a turning point, finding its way to enhance its export development. Thus, assessing the potential of the export market, the Minister of Health and Population and the Minister of Industry have embarked on a mission to boost the export to US$1 billion for 2011.
“Egyptian manufacturers have to export their drugs at Egyptian their drugs at Egyptian prices which make it impossible for them to successfully conduct export activities. The government is now aiming to help them in this regard and change things. However, I believe that in order for the industry to be able to exploit its potential, companies should start thinking about mergers and acquisitions, and about specializing in certain products,” explained Dr. El Gabaly.
Dr. Sherine Hassan Helmy is proud to recall that his company, Pharco Pharmaceuticals, currently ranks number three on IMS and was the first to merge in the country. “We saw opportunities in merging and acquiring companies as a growth strategy,” he explained. Also, as the head of the Export Committee, Dr. Helmy considers that “playing a TEAM” will really help to enhance the industry.
This strategy was followed by private October Pharmaceuticals, whose main lines are cardiology, hormones, slimming aids, and, from their own research, a product called Vitivera for Vitiligo made from Egyptian aloe vera.
“We are exporting it to Saudi Arabia and a few other countries,” boasted Dr. Adel Fouad, chairman of October Pharma. Soon, we will expand our exports to the rest of the world. Exporting is our biggest strategy, but we are subject to many audits, and this takes time.” For the moment, only 5% of its profits come from export, but October Pharma targets 15% in the next three years. “We are in the first stage at the moment. Our initial expansion will be towards Yemen, Sudan and Libya. These are promising markets for us,” noted Dr. Fouad.
According to Dr. Fouad, with more and more Egyptians covered by health insurance, the local market will grow considerably. “Our local market will be our first priority. However, as an export incentive, we are hoping to get some subsidies from the government,” he explained.
The company is also very careful about the ongoing merger and acquisitions process. “If the M&A is a win-win situation – helping the growth of both companies, giving the chance for more people to find work – then it is welcomed. A successful company is the result of the human beings that run it. Our staff has many years of experience, our factory is equipped with excellent machinery, and our new recruits are being trained under the best international standards,” concluded Dr. Fouad.
On January 1, 2005, the Trade Related Intellectual Property Rights Issues (TRIPS) agreement came into full effect in Egypt. For local drug makers struggling to come to terms with tighter IPR regulations, things went from bad to worse.
The pressure of MNC
TRIPS set a minimum standard on intellectual property protection (patents, copyright and trademarks) to which WTO member countries, including Egypt, must adhere. The 1995 agreement provides worldwide patent protection for new drugs developed by R&D pharmaceutical firms by prohibiting unlicensed rival companies from manufacturing products with identical chemical formulas for a period of 20 years from the date the application is filed.
Developing WTO countries were given a ten year transitional period to prepare for the agreement’s full implementation and to incorporate this 20-year patent protection into their own legislation. Egyptian legislators responded with Intellectual Property Rights Law No. 82 of 2002, which was implemented in the same year, except for its articles on patent registration, which only came into effect this year.
“Ten years was not enough time for us to build up our R & D facilities as this is extremely costly,” observed Dr. Mohy Hafez, CEO and general manager of Delta Pharma, which, among the 532 manufacturers in Egypt, ranks today as the second fastest growing company of the country. One new chemical entity could cost up to $200 million to develop. We are a developing country, and the only thing we could do to try and compete was developmental research.
” Despite being a medium-sized company, it chooses to emphasize itself in research. Since then, it has already established three patents, and is strongly focusing on NDDS. “Our policy is to have a budget available for this,” said Dr. Hafez. “Delta Pharma is also putting agreements into place with the research institute in Egypt to find new chemical entities from herbal sources and micro-organisms.”
In his opinion, Egypt, as a developing country, simply does not have the means to do R&D. But, as its native companies are focusing on survival, the five largest MNCs and all the innovators are merging to make very large institutes. They now control 23% of the R&D turnover in the world. “When they produce new chemical entities, they protect the molecules in a most unethical way,” said Dr. Hafez.
It is no wonder the Egyptian government strongly disagrees with the argument of some multinationals that trade secrets, undisclosed information and data exclusivity are all one and the same. The government argues that TRIPS signatories never agreed to data exclusivity and that this definition is strictly a U.S. law, not an Egyptian or international one.
“Our hottest issue is TRIPS,” ensured Dr. Zakaria Gad, chairman of the Egyptian Pharmacist Syndicate. “According to TRIPS, we have had a grace period of five years, and then another five years which is now coming to an end. There is a lot of pressure on us to cancel this grace period and implement the regulations in the industry. We did not accept that at all.” According to Dr. Gad, the pressure comes mainly from the trans-national companies and a gathering cessation called Pharma.
“We are in a real fight with pharma and the trans-nationals. Generic drugs in the USA constitute about 52% [of the market], so there is now a cessation for the generic industry because the USA is not the main manufacturer of generics. There are a lot of problems coming from the USA.
The importance of deregulation
“TRIPS are already there,” said Dr. Mohamed Roushdy, regional director of Pfizer Middle East. “Who out of the local companies are suffering? Nobody.”
Despite Pfizer being one of the first MNCs to start manufacturing pharmaceuticals and the fact that it was actually the first USA pharmaceutical company to be established in the country, it still struggles to reinforce its position. “Firstly, we are a stand-alone company, meaning that the acquisitions we made were with companies that didn’t have major franchises in Egypt, unlike our competitors Sanofi or BMS. Secondly, most of our medications are competing in sectors that are underdeveloped or under-diagnosed, such as cardiovascular or neuroscience,” explained Dr. Roushdy. These inconveniences did not prevent Pfizer from targeting a country like Egypt and trying to gain market shares.
“The Middle East is important no matter what the numbers are. It is the most vibrant region in the world. Geopolitically, it is an important and strategic region. If we consider, hypothetically, that in the near future there will be peace in the Middle East soon, most economists support the idea that the region could represent 10% of the international trade,” he said.
If most of its products are number one in all therapeutic segments, or to a lesser extent maybe second, its number of products will be limited, and in segments that are underdeveloped. “We can gain leadership mainly by creating awareness so that we grow the markets in hypertension, dislipidimia and neuroscience,” explained Dr. Roushdy. “The more awareness we give to patients and educational programs about the risks of these diseases and other serious segments is the way we are going to attain leadership.” Lipitor is indeed the number one product in most of its Middle Eastern markets, and the company expects to have the same trend in Egypt for products like Norvasic or even Zoloft.
Overall, Dr. Roushdy is convinced things will get far better in the country. In his opinion, the “entry fee” today in Egypt is low. “Later, with strategies like the ones Dr. El Gabaly and the new cabinet will put in place, we will certainly be moving toward a market economy. When this happens the economy will boom, as it did in the early 1990s. Therefore, the improving of the economy will make the entry fee to the market higher. My advice to my peers is to take the opportunity now,” he said.
Becoming a center of excellence
The GSK strategy of penetrating the Egyptian market was, on the other hand, to acquire stable companies in the country. “As a MNC, we needed to consider the social-economic dimension of the country, and that our medicines need to be accessible to as many people within the community as possible. So, we acquired two local companies in order to develop their portfolio to international standards. As a result, we can provide medicines at all price ranges to 100% of the population, rather than to just to 10%,” explained Amre Mamdouh, chairman and managing director of GSK Egypt.
This was part of its key success – along with other strategies of introducing new products, seeking commercial excellence, focusing on people, rationalizing expenses and reducing the cost of manufacturing.
Like Pfizer, it was necessary for a company such as GSK to have a subsidiary in Egypt. “We are serving 70 million patients,” explained Mamdouh. “Every minute, 3000 patients are benefiting from our medicines in one way or another, and we are also providing solutions for eight out of ten diseases. By providing true value to a country, we provide true value to the company as a whole.”
There are many advantages of producing medicines in Egypt as, according to Mamdouh, the manpower is very competitive, the technical abilities are very good, they have state-of-the-art manufacturing capabilities and the cost of manufacturing is quite low in comparison to the West. “All these criteria indicate that Egypt could be a center of excellence regarding export,” he summed up.
Regarding the polemic issue of the pricing by MNC, Mamdouh is very clear: “Pricing by MNC is not exaggerated. From a pricing perspective, Egypt is one of the lowest in the world. We asked for small price increases just to compensate the losses, and we reinject the profits that make into R&D, because without R&D the pharmaceutical industry has no future. There are still a lot of diseases that cannot yet be treated even though we are in the 21st century.”
These arguments don’t convince all Egyptian institutions, such as the Egyptian Pharmacist Syndicate. “The net profit of these multinational companies is much too high,” said Dr. Gad. “How do you justify billions of dollars of net profits and then keep 70% of these net profits? Why have pharmaceutical multinational and transnational companies forgotten that the reason for their existence is to provide affordable medicine for every human being on earth?”
Sowing the Seeds of Growth
Egypt has all the skills to manufacture effective and good quality drugs, but what is lacking here are marketing and R&D skills. Companies have to start catching up, because if they don’t, only a few players will be able to really go global.” As explained by Minister El Gabaly, the challenge of research will certainly prove decisive in the years to come.
Developing new treatments for influenza, cancer and AIDS requires an enormous investment of time and money. Research and development drug companies claim they spend up to 15 years and between $800 million and $1 billion to develop one new molecule that can be used to make a new drug or drug component. Yet it costs next to nothing for a company to reverse engineer a drug to identify its components, then manufacture a copycat product. In this case, R&D drug companies are unable to recover their costs. This gives them little incentive to invest in discovering more creative drugs.
Providing safe, well-tolerated remedies
The country has very accurately decided to compensate these weaknesses by occupying niche markets. Herbal medicines definitely stand among them. “Herbal medicines are coming back because the efficacy of conventional medicines is on the wane. They often provide safe, well-tolerated remedies for chronic illness,” claims Dr. Ahmed Kelani, chairman and managing director of MEPACO, the leader in the sector since its appearance 16 years ago. “For centuries, people used plants for medication. However, no in-depth study of their curative properties was ever done, and the medicines had therefore not been standardized.”
Today, the story is different, and companies like MEPACO have developed formulas from the medicinal plants and have standardized them as per GMP requirements. “MEPACO was developed for the purpose of being a medicinal plant pharmaceutical company,” noted Dr. Kelani.
The company’s vision is to tackle the market according to therapeutic classes needs – meaning that for arthritis, for example, because the conventional drug was showing side effects, they decided to develop a medical plant to cover this area. At the end of the day, MEPACO has covered more that 20 different therapeutic classes. “We are not only developing food supplements and vitamins, we are deeply involved in developing medication,” ensured Dr. Kelani.
Herbal medicines will never, in his view, replace conventional pharmaceuticals. But, as a complementary medicine, he thinks they deserve a better position. “If we see the total market, we don’t even represent 10%. I don’t think this is enough. Herbal medicine should be at least 30% of the market.”
The implementation of these complementary medicines might take time to change mentalities and sweep away prejudices. To Professor Dr. Ibrahim Abouleish, chairman of SEKEM Holding, a group of nine companies, “the biggest hurdle is that physicians are not very well aware of herbal medicines and they are not used to prescribing these kinds of drugs, therefore we have to train them. On the other hand, the patients are more used to chemicals and they are not aware that herbal medicines are an excellent option to help in chronic diseases and acute cases. The main problem is creating awareness of how important the herbal medicine could be as a complement to conventional medicine regarding intensive healthcare.”
Taking advantage of mother nature
These misconceptions did not prevent a group like Eva Pharma from investing a big sum to produce their own molecules from medicinal plants. Already ranking 13th as per IMS and one of the fastest growing companies in the industry, Eva Pharma, with roots dating back to 1935, is looking forward to become one of the top ten pharmaceutical companies in the country.
Just as MEPACO, its niche strategy was to explore and isolate single entities from natural products that might serve as leads for new pharmaceuticals and which might address therapeutic needs. Hence it invests in the research and development of highprofile pharmaceuticals products and innovative delivery systems. Eva Pharma fulfils a shortage in disease areas not adequately addressed by its main competitors in the country. Thus, they were the first to introduce thiotic acid for the management of diabetic neuropathy, glucosamine and dropropizine, an inhibitor for the management of dry cough.
It is famous for using Egyptian plants that have been known for centuries, like aloe vera and ferns. It also extracts new acids, which will be introduced into the market following clinical trials.
“Eva Pharma is not focused on NCE like the class A companies that can spend millions of dollars on R&D,” explained Dr. Mounir Armanious, chairman of Eva Pharma. “There are other ways, like ours. We take advantage of mother nature to extract API from the plants to make effective drugs. We are taking something that has been given for free by God – medicinal plants – and developing the know-how. We can see developed countries are trying to do the same. The USA, for instance, is conducting studies to extract insulin out of maize,” he explained.
Regarding the production of APIs, it seems that Egypt has difficulties in equalling countries like India or China, which today have the capacity to come out with new APIs almost every day. “In Egypt, we didn’t take the right pace of speed,” regrets Dr. Armanious. “We lost track of time.”
Eva Pharma considers the only feasible option for an Egyptian player will be to merge with or European company to help them penetrate the other markets. “I welcome this kind of cooperation,” he said.
To catch up, another option could be biotechnology, producing niche bulk drugs. Of course to accomplish such projects, a greater focus should be put on research. “Today we can see how small- and medium-sized companies are being very successful in this segment. This could be the hope for our country, a genius that comes out with an efficient product, efficient in terms of helping to cure an important disease,” he hoped.
The issue of biotechnology
Egypt hasn’t been characterized so far by its biotechnology activities. Always looking ahead, a group like SEDICO, already considered as the pioneers in producing insulin with their own R&D, has decided to enter the biotech club by doing insulin, aprotinin, streptokinase, urokinase and growth hormone, amongst others. “We ventured into this domain because it is the trend of the industry, and we can’t afford to lag behind,” explained Dr. Ahmed Aly Aboul Enein, chairman and managing director of SEDICO. “As we do not have all the expertise, we are working in close collaboration with other developing countries like China, India and Korea. This has made us explore and improve our capacity in this segment.
”SEDICO has been proven successful by managing to export insulin to Yemen and the Emirates. They are under final registration in Romania, Moldova, Morocco and Turkey. “We are paying special attention to the exports. Last year we made $10 million. This year we are expecting to double these numbers,” he said.
With the globalization, Dr. Aboul Enein pleads for the merger of all players in order to become recognizable. “There is no place for small players in the industry,” he claimed. “The whales are joining together to make a dinosaur. The multinational companies merge to make a super dinosaur and swallow the small fish, which are mostly located in the developing countries. This can’t go on. We have to join forces to make a strong Egyptian pharmaceutical industry.”
Rhein-Minapharm Biogenetics, a joint-venture between German Rhein biotech and Minapharm, has been able to introduce a biogenetics line in the Middle East. “The credibility of our joint-venture model and our state-of-the art facilities, together with the need for the target therapeutic proteins, have accelerated the process of registration and pricing until market launch,” explained Dr. El Bardissi, executive vice president of Minapharm Pharmaceuticals, who recalls that the global market for biopharmaceuticals, which is currently valued at $50 billion, has been growing at an impressive compound annual growth rate of 20% over the previous five years.
With over one-third of all pipeline products in active development being biopharmaceuticals, this segment is set to continue outperforming the total pharmaceutical market and is assumed to reach $100 billion by the end of the decade. “This early establishment of our Egyptian German biopharmaceutical partnership confirmed our timely embarkation on recombinant DNA technologies. We have successfully launched three therapeutic proteins already and, to our belief, a great window of opportunity is opening in our home market and regionally,” concluded Dr. El Bardissi.
Distribution: Follow the Leader
When the Chairman of Middle East Chemicals (MEC), Dr. Hossam Omar, started his private business, pharmacists in Egypt were suffering. Each pharmaceutical company catered for the needs of pharmacies around the country from their own factories in Cairo and Alexandria and, consequently, pharmaceutical outlets had to wait for more than one month to take delivery of their orders. Moreover, they had to call in person at the state-owned pharmaceutical distribution center and wait in long lines for their turn to collect their needs.
“What put me ahead of my peers is that very early I realized that distribution was one of the pillars for a successful industry,” recalled Dr. Omar. “Paradoxically, it was a sector that nobody had paid attention to, and was the most problematic area in the industry.”
The self-made professional who started his career with the production of cosmetics added, “I am proud to say that, with approximately EGP2.9 billion (U$500 millions) in annual sales for the year ending December 31, 2005, and 40.2% market share of pharmaceutical’s distribution market, our size is more than three times our closest privately owned competitor. This makes us the undisputed leader in the healthcare marketplace.”
Since being established, Dr. Omar has maintained a successful strategy of creating new companies falling within the sphere of his business interests. Now, these companies are known as United Group employs more than 5,400 persons. Its core business includes import, distribution of pharmaceuticals, the manufacturing of personal care products, pharmaceutical retailing, technology-based management and financial services, as well as marketing.
The Egyptian pharmacists syndicate has awarded Dr. Omar a certificate of appreciation and a gold medal for his role as a pioneer and for his contribution to drug distribution development in Egypt.
Over the past 30 years, United Group has developed strategic alliances with fortune pharmaceutical companies, including Bristol-Myers Squibb, Pfizer, Novartis, Sanofi-Aventis, GlaxoSmithKline, Lilly, Servier and Schering.
Every week, United provides intensive direct coverage to more than 29,000 pharmacies, 700 hospitals, healthcare centers and units throughout Egypt supplying their requirements from pharmaceuticals, paramedical and family planning devices. The group has issued more than eight million invoices in 2005. United Group distribution network is fully computerized and equipped with comprehensive Oracle database systems. It comprises 108 branches and depots, more than 80,000 square meters of warehousing facilities, 1,246 sales representatives and more than 800 distribution vehicles.
“Customer satisfaction is our number one objective and we continually examine our business process management and deploy necessary resources to meet that goal,” Dr. Omar emphasised.
Hedef Alliance, a consortium between Alliance Boots (UK) and Hedef (Turkey), has now 50% stake in UCP (United Company for Pharmacists), the group’s pharmaceutical wholesale arm. “We are very proud that we now belong to this international conglomerate,” Dr. Omar noted.
Leveraging our market leadership in Egypt and the strategic partnership with Hedef Alliance, Dr. Omar is willing to export his success and is looking for opportunities abroad: “Now that I have a solid business in Egypt, I am looking to go beyond the borders. This year, I will put a foot in Algeria and maybe in Saudi Arabia where we have high expectations, since they lack the business model as we have. Now that we have established a European partnership, we are ready to go global,” he s
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