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Medicine Exports on The Rise

Exports of Egyptian-made reached LE 3.5 billion in 2009, over three times the expected figure of LE 1 billion, according to Health Minister Hatem El-Gabaly.

The industry hopes to export $1 billion by 2015, and although the minister’s announcement that 76 pharmaceutical plants are under construction, pushing the total number to 180, achieving that goal will take significant investment.

Investment Minister Mahmoud Mohieldin reported last week that total production of pharmaceuticals topped LE 4.1 billion in the first half of fiscal year 2009/10, up 20 percent from LE 3.4 billion last year.

Mohieldin met with members of the industry to review a plan to develop Egypt’s production facilities.

Magdy Hassan, chairman of the government pharmaceutical holding company Holdipharma for Pharmaceuticals, Chemical and Medical Equipment, gave figures that since fiscal year 2007/08, the sector has received LE 666 million in investments.

The next three years will see an additional LE 1,308 million, the bulk of which (LE 1,080 million) will go for the construction of the new factories and improvements to existing facilities.

Most of the remaining LE 300 million will be used to enhance production lines, 80 percent being self-financed and Holdipharma providing additional funds.

Mohieldin emphasized the need for public sector pharmaceutical companies to adjust their position relative to private firms, “in order to improve overall competitiveness in the industry.”

In the , competitiveness depends on technological innovation. Holdipharma’s inauguration last August of Egypt’s first cold chain pharmacy — a project requiring LE 3.5 million — represents “the model for Egyptian pharmacies in the coming 20 years,” Hassan told media at the time.

The facility, located in Bab El-Louq, is designed for biological products whose ideal storage temperature ranges between 2°C and 8°C from the point of manufacturing to administration.

“As biologics outnumber ordinary drugs, cold chains will be an integral part of storing and delivering drugs. A second pharmacy is planned to open in Alexandria,” Hassan continued.

Biologics are defined as medical products produced by biological rather than chemical processes, including blood and tissues as well as recombinant therapeutic proteins and gene therapy products.

Egyptian investment in the health industry includes a “medical city,” announced by Prime Minister Nazif last April, intended for construction on 500 feddans of land in Helwan.

Requiring an investment of LE 8 billion, the medical city is expected to generate 65,000 jobs, and will include 13 specialized hospitals, an international center for medical and pharmaceutical research, an elderly people’s home, an international nursing institute and a medicine college in addition to a hotel and residential area, according to information provided for international investors.

The search for consultants to help shape medical city’s strategy and vision closed on January 15, and it is expected to begin operation within the coming years.

In the meantime, Egyptian exports of traditional medical goods continue to grow. The boom in Egyptian exports resulted from recent legislation that shortened the time necessary for product registration from several years to about 12 to 18 months.

Osama El-Saady, chairman of Sanofi-Aventis SAE and head of Egypt’s Export Council for Medical Industries (ECMIH), named Sudan, Libya, Turkey, Iraq, Pakistan, India, Holland and eastern European countries as the main importers of Egyptian medical products, according to Business Monthly.

Egyptian production has traditionally made up about 30 percent of the market share for Middle Eastern pharmaceuticals, but the recent emphasis on the sector’s importance and the subsequent boom in production see it possibly becoming a global player, rather than a regional powerhouse.

Leading companies GlaxoSmithKline, Novartis and Pfizer all maintain production facilities in Egypt, although government support for local producers pushes the large multinationals away from over-the-counter products towards more specialized medical goods.

Although the medical industry represents a significant source of income for the Egyptian economy, basic healthcare for Egyptians remains an underfunded and overstressed resource. The government’s network of healthcare service facilities can accommodate about 50 percent of the population, providing approximately 4,000 primary healthcare centers and 600 clinics.

The Ministry of Health maintains about 1,300 hospitals, or 60 percent of the country’s bed capacity, while private hospitals serve approximately 15 percent.

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