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EXPORT EXPECTATIONS
PHARMACEUTICAL FIRMS TARGET FOREIGN SALES
BY SARAH MARQUER
Egypt’s pharmaceutical industry has historically thrived by satisfying local demand, but these days most observers agree that exporting offers the sector’s greatest potential for growth as the world emerges from economic crisis.
Exports of pharmaceuticals, para-pharmaceuticals, such as vitamins, dietary products and sunscreen, and cosmetics began about 10 years ago and have grown substantially. About five years ago, pharmaceutical exports were worth $152 million annually, says Osama El Saady, chairman of Sanofi-Aventis SAE and head of Egypt’s Export Council for Medical Industries (ECMI), including pharmaceutical, cosmetics and medical supplies.
harmaceutical exports are currently worth $200 million a year, according to El Saady, and are expected to grow to $500 million annually in five years. He identifies significant export markets as Iraq, Sudan, Turkey, the Netherlands, Pakistan, Libya, India and eastern European countries, particularly Romania.
“There is a strategy to develop this business [pharmaceutical exports] and to double it,” says Farouk Esmat, export director and member of the board at Egyptian International Pharmaceutical Industries Company (EIPICO) and longtime member of the ECMI. This is in line with the government’s goal to boost pharmaceutical exports to $1 billion in the next five years, according to Amre Mamdouh, chairman of GlaxoSmithKline.
According to industry experts, the government is involved in other efforts to increase exports. Esmat explains that support and assistance are available through the Industrial Modernization Center, including helping companies meet standards established by the EU’s European Medicines Agency (EMEA) and the US Food & Drug Administration (FDA).
“They give subsidies... to some manufacturing sites to help them upgrade their facilities... and to help prepare for better exports,” says Mamdouh. “It doesn’t mean there is no quality auditing here in Egypt, but they [the government/IMC] would like to adapt it to be more suitable for EMEA and FDA markets.” Industrial Modernization Center training and consultation can be especially useful for small to medium-sized companies that have limited resources.
In spite of such government support, El Saady says, obstacles exist that can prevent exports from increasing significantly. For example, he explains that only 5-6 percent of pharmaceutical products produced in Egypt are exported to the Middle East and North African (MENA) region. “It’s because of the difficulties in [product] registration,” he says, which until recently has taken two to three years. Because of recent legislation, he says, registration has become more transparent and faster. The government’s aim, Mamdouh says, is to shorten the registration process to 12-18 months.
Considering the time required for export approval and registration, combined with a lack of protection for property rights and patent issues, and insufficient marketing, it’s easy to see why export volumes are not more than they are.
“You cannot compete in a market without doing enough research,” says Esmat, adding that the export council encourages small, medium and large pharmaceutical businesses to invest in marketing and research. “Countries are different. Definitely, we need to understand quite well the needs of these markets.” Moreover, Mamdouh points out that to help increase exports it is necessary to train workers using the equipment and practices needed to meet EMEA and FDA standards.
Proponents of increasing exports point to the size and proximity of potential markets and the need for basic medicines. “Primary healthcare medicines in eastern Europe and other markets are still very much needed.” Mamdouh remains optimistic about future growth of the industry primarily because of the possibility of selling abroad: “In my opinion, [exports] will grow on average 15-20 percent every year.”
Pharmaceutical exports have been increasing by 10 percent to 20 percent annually over the last several years with the exception of 2009, when El Saady says exports fell 15 percent during the global financial crisis. However, Esmat points out that industry need not fear such crises because “whatever the situation is, food and medicine are priorities.”
While there is much potential for growth of Egyptian pharmaceutical exports, says Mamdouh, “it will not happen by chance.” The private sector needs to invest in marketing, research, training, and modernization of equipment, and the government must continue to do what it is doing, with the support of organizations such as the export council. “I believe the government should continue [to offer] more incentives for multinational corporations to [come to this country] and invest here,” says Mamdouh.
With private sector investment coupled with increasingly efficient and transparent government processes, the official vision of $1 billion in pharmaceutical exports by 2015 just might become a reality.
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