Pharmaceutical market evolution after egypt’s revolution
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  • 1. Pharmaceutical Market Evolution After Egypt’s Revolution By: Mohamed S. Morsy
  • 2. Business Environment SWOT Analysis (1)  Strengths  The country’s geographical location is good for trade as Egypt has access to both the Mediterranean and the Red Sea, not to mention the key Suez canal route, which connects Europe and Asia.  The legal system has issued adjudications in favor of foreign firms, although there are frequent procedural delays. (1) Egypt Business Forecast Report, Business Monitor International, Q2/2012, Chapter 4, P. 27, 2012
  • 3. Business Environment SWOT Analysis  Weaknesses  Egypt ranks 112th out of 180 states surveyed in Transparency International’s Corruption Perceptions Index 2011, comparing unfavorably with regional peers.  The labor market is relatively inflexible, with Egypt performing markedly worse than the Organization for Economic Co-operation and Development average, and also inferior to the regional average on the World Bank’s Hiring and Firing Workers index.
  • 4. Business Environment SWOT Analysis  Opportunities  Efforts towards banking-sector consolidation should bring down the cost of private-sector credit and fuel small business growth over the long term.
  • 5. Business Environment SWOT Analysis  Threats  Patronage networks impede attempts at fighting corruption and cutting bureaucracy.  Although levels of education are relatively high, there is a considerable mismatch between the skills taught in schools and those required by most employers.
  • 6. Business Environment Rank (1) Adapted from: Egypt Business Forecast Report, Business Monitor International, Q2/2012, Chapter 4, P. 27, 2012 (1)
  • 7. Affected Operations* at Q1/2011 * A slowdown in a company’s business activities, scarcity and/or price appreciation of raw materials, logistical difficulties affecting the distribution of products and/or obtaining raw materials, logistical difficulties that led to employees being unable to reach the workplace, etc.
  • 8. Revenue Changes, PPG% - Q1/2011
  • 9. Direct Damages On Assets at Q1/2011
  • 10. Section Conclusion  After the low probability, high impact event at Q1/2011, the general business environment is still not significantly affected except for certain industries.  The business risk rate is still within the average global and regional rate and much more higher than the emerging markets rates.  Pharmaceutical industry did not show any major damage in term of affected operations, industry revenue or direct damage of assets.
  • 11. Health Care and Pharmaceutical Expenditure  Egypt is the second largest healthcare market in the MENA region.  Healthcare expenditure in the country in 2010 was estimated to be EGP 50 bn., or 5.0% of the GDP.  Its total health spending on a per capita basis stood at EGP 650 during the year = EGP 54 / M. (1) EGP 390 / Y EGP 32 .5 / M EGP 260 / Y EGP 21.6 / M (1) Adapted from: MENA Healthcare Sector Report, Al Masah Capital Management Limited, P. 28, 2011
  • 12. Healthcare Expenditure Forecast 1 2 2 4 3 6 48 6 0 7 0 8 4 Bn.EGP % f = forecast. Source: World Health Organization (WHO), CIA World Fact Book, BMI research CAGR% = 8.25 by 2014
  • 13. Pharmaceutical Market Structure (Value in bn. EGP) (1) EGYPT PHARMACEUTICALS & HEALTHCARE REPORT, BMI, P. 15, 2010 (2) IMS Data: MAT/10/2011 Total Value = 18.7 bn. EGP (1)
  • 14. Pharmaceutical Market Forecast 6 1 2 1 8 24 3 0 3 6 4 2 Bn.EGP % f = forecast. Source: Ministry of Health in Egypt, BMI. The slowdown is a response to changes in the market caused by the 2011 patent cliff, pricing, higher domestic drug production output and a diversification of drugs available with competitive prices in the generic drug sector. (CAGR% = 8.4 by 2014) 21
  • 15. Prescription Drug Market Forecast 6 1 2 1 8 24 3 0 3 6 Bn.EGP % f = forecast. Source: American Chamber of Commerce in Egypt, IMS Health, BMI. CAGR% = 7.61 by 2014 The pricing reform for patented and generic medicines will largely affect prescription drugs. 18
  • 16. Patented Product Market Forecast 3 6 9 12 1 5 2 1 Bn.EGP 1 8 CAGR% = 6.57 by 2014 Cost saving through generic substitution f = forecast. Source: Local news sources, domestic companies, BMI. % 13. 5
  • 17. Generic Drug Market Forecast 1.2 2. 4 Bn.EGP 3. 6 4. 8 6 7. 2 8. 4 9. 6 % CAGR% = 14.1 by 2014 Generics will gradually become popular through public education about medicines. Prescribing practices also largely determine the size of the generic market f = forecast. Source: Local news sources, domestic companies, BMI. 4
  • 18. OTC Medicine Market Forecast 3 6 9 12 Bn.EGP % f = forecast. Source: Local news sources, domestic companies, BMI. CAGR% = 11.95 by 2014 Generics will gradually become popular through public education about medicines. Prescribing practices also largely determine the size of the generic market 4
  • 19. CAGR% by 2014 summary
  • 20. Vision and Opinion  Based on Egyptian population individual income during democratic transformation, the personal health care budget will be placed when necessary.  Total pharmaceutical market will continue to grow within its normal growth rate (near to 14%).  There will a significant shift to generics (GP and Specialty products) and OTC products to reduce the cost as possible.  There is an expected strategic growth from multinationals by acquisition of local firms.
  • 21. Thank You Mohamed S. Morsy