Cur­rency drop hits medicines

The plunge in the value of the Egyp­tian pound has led to short­ages in drugs or some be­com­ing un­avail­able

African Independent - - BUSINESS - ARWA GABALLA ERIC KNECHT

PHAR­MA­CIES across Egypt are run­ning short of medicines as a plunge in the value of the Egyp­tian pound cou­pled with strict govern­ment price caps has made scores of prod­ucts un­prof­itable to pro­duce or im­port.

The short­ages in­clude some cancer treat­ments as well as ba­sic items like in­sulin, tetanus shots and con­tra­cep­tive pills.

Un­able to raise prices above lev­els set by the health min­istry but now pay­ing about twice as much to im­port drugs or ac­tive in­gre­di­ents, phar­ma­ceu­ti­cal firms say they have been forced to phase out cer­tain medicines to stay in busi­ness.

“We aren’t a char­ity. We have ex­penses and pro­duc­tion costs, and if a com­pany isn’t mak­ing profit, it will have to halt pro­duc­tion,” said Said Ibrahim, fac­tory man­ager at EIPICO, one of Egypt’s largest phar­ma­ceu­ti­cal com­pa­nies.

That brings no com­fort to phar­ma­cists and sick Egyp­tians. Out of in­sulin for weeks, Ali Et­man said he was forced to turn away eight di­a­betes pa­tients from his Cairo phar­macy in a sin­gle day.

“Pa­tients who come look­ing for in­sulin ask me: ‘What am I sup­posed to do? Die?’, and I don’t know what to tell them. I don’t have the drugs they need,” he said.

Egypt floated its cur­rency on Novem­ber 3, aban­don­ing a peg of 8.8 pounds to the US dol­lar and al­low­ing the cur­rency to roughly halve in value to about 17.50.

The float helped the cash­strapped govern­ment clinch a $12 bil­lion loan from the In­ter­na­tional Mone­tary Fund that it hopes will un­lock in­vest­ment and re­vive growth that has been ham­pered by po­lit­i­cal un­cer­tainty since the 2011 up­ris­ing that top­pled for­mer pres­i­dent Hosni Mubarak. But the medicine short­ages are pil­ing pres­sure on the govern­ment of Pres­i­dent Ab­del Fat­tah al-Sisi, who has been at pains to re­as­sure a pop­u­lace al­ready strug­gling with dou­ble-digit in­fla­tion and in­ter­mit­tent short­ages, that they would be shielded from the worst ef­fects of eco­nomic re­forms.

Talk of a loom­ing health care cri­sis has dom­i­nated talk­shows, with doc­tors call­ing in nightly to re­port rapidly de­plet­ing stocks and pa­tients be­ing turned away from hos­pi­tals for lack of sup­plies.

The health min­istry has blamed the prob­lem on pan­ick­ing Egyp­tians hoard­ing medicines and said it would not raise prices.

Medicines be­gan dis­ap­pear­ing from shelves early this year as a se­vere short­age of dol­lars in the banks meant phar­ma­ceu­ti­cal firms could not pay for the im­ports.

Egypt has strug­gled to earn suf­fi­cient dol­lars since the 2011 up­ris­ing scared off for­eign in­vestors and tourists and the central bank drained its re­serves de­fend­ing the cur­rency peg.

The health min­istry set-up a Drug Short­ages Direc­torate in 2012 to min­imise the im­pact by sug­gest­ing suit­able sub­sti­tutes for miss­ing medicines. But the sit­u­a­tion has only wors­ened.

EIPICO’s vice-pres­i­dent said about 1 600 drugs were now in short sup­ply, in­clud­ing 35 that had no al­ter­na­tives and would dis­ap­pear from the mar­ket if price caps were not eased.

“Dis­trib­u­tors are telling phar­ma­cies noth­ing im­ported is avail­able,” Et­man said.

Egypt’s drugs mar­ket is 40 per­cent multi­na­tional – big sup­pli­ers in­clude Pfizer, No­var­tis, Glax­oSmithK­line and Sanofi – and 60 per­cent do­mes­tic. Nearly all of it is in pri­vate hands, with an­nual sales worth 50 bil­lion Egyp­tian pounds be­fore the float.

Ahmed al-Ez­aby, head of the medicine in­dus­try division at the Fed­er­a­tion of Egyp­tian In­dus­tries, said Egypt im­ported about $600 mil­lion in fin­ished medicines a year and $1.8bn in ac­tive in­gre­di­ents.

Of­fi­cials at multi­na­tion­als said they were con­cerned at the wors­en­ing sit­u­a­tion. One in­dus­try source said com­pa­nies were now in talks with Egyp­tian min­istries on the pos­si­bil­ity of restor­ing some prices to pre-Novem­ber 3 lev­els, in dol­lar terms, to en­sure sup­plies of the most crit­i­cal medicines.

The multi­na­tion­als have lo­cal fac­to­ries set up, but 15-20 per­cent of drugs are im­ported, while 80-85 per­cent are pro­duced lo­cally. About 70 per­cent of all drugs in Egypt are generic and do­mes­tic­made. A Sanofi spokesper­son said the French group was “ac­tively en­gag­ing lo­cal au­thor­i­ties to de­fine a sus­tain­able pric­ing mech­a­nism”.

Egypt’s sup­ply prob­lems echo those in Venezuela, where a lack of dol­lars has also cre­ated drug short­ages and left man­u­fac­tur­ers nurs­ing big losses.

Be­fore the flota­tion, Egypt faced a dol­lar short­age that saw im­ported goods, rang­ing from elec­tronic equip­ment to su­gar, dis­ap­pear briefly from shelves in the past year.

The central bank ra­tioned sup­plies via weekly auc­tions, ear­mark­ing the lit­tle it had for es­sen­tial items like medicine.

Dol­lar sup­ply is less of an is­sue since the flota­tion. But the cost of buy­ing the green­back is be­cause com­pa­nies im­port ac­tive in­gre­di­ents they need to make generic medicines.

The govern­ment, which al­ready raised prices on a slew of medicines this year, is un­der pres­sure to keep drugs af­ford­able for tens of mil­lions of poor Egyp­tians. It has blamed the cri­sis on hoard­ing and greed.

“It’s an or­ches­trated cri­sis. The de­ci­sion to float the pound was taken… and two hours later peo­ple be­gan say­ing we have a cri­sis and we don’t have meds,” health min­istry spokesper­son Khaled Mo­ga­hed told Egyp­tian TV chan­nel Me­hwar. “It’s a way to push for a rise in medicine prices, which will not hap­pen.”

The com­pa­nies want the govern­ment to re­move the price caps en­tirely or re-ad­just them to ease their losses.

The health min­istry met last week with drug in­dus­try lead­ers to dis­cuss an emer­gency plan. It has of­fered to sub­sidise phar­ma­ceu­ti­cal com­pa­nies to the tune of $165m to sup­port im­ports of life-sav­ing drugs that have no vi­able sub­sti­tutes, in­clud­ing some cancer treat­ments.

Com­pa­nies said the amount was not nearly enough and rolling out a new sub­sidy pro­gramme would take time.

“There’s no way of know­ing how long this amount will last be­cause cancer drugs are ex­pen­sive and it de­pends on the short­ages, but the amount is not enough to solve the prob­lem,” said Adel Ab­del Mak­soud, head of the phar­macy division at the Cairo Cham­ber of Com­merce.

The com­pa­nies say they have to stop of­fer­ing the drugs which most cut into their prof­its. Some have sent back ship­ments that were or­dered be­fore the float but ar­rived af­ter, as sell­ing them at the fixed prices would have cre­ated big losses.

“We’re work­ing on a strat­egy to elim­i­nate any prod­uct that’s not prof­itable. But com­pa­nies that de­pend on un­prof­itable prod­ucts will be forced to shut down,” said ITO Pharma’s deputy gen­eral man­ager, Mo­hamed Geoushy.

More life-sav­ing drugs would soon dis­ap­pear, he said. His com­pany is one of two sup­pli­ers of cy­closporine, a drug used to pre­vent or­gan re­jec­tion dur­ing trans­plants. It re­cently had to stop im­port­ing the drug, he said.

Phar­ma­cists say pa­tients have no choice but to re­sort to a black mar­ket for once-com­mon items like saline and glu­cose at prices of­ten 10 times higher than the of­fi­cial caps.

On Twit­ter, Egyp­tians have set up the hash­tag “Twit­ter_Phar­macy” to swop medicines they can­not find in shops. Hos­pi­tals are us­ing so­cial me­dia to ad­ver­tise their needs. – Reuters

PIC­TURE: REUTERS

SUR­VIVAL: Some phar­ma­ceu­ti­cal firms in Egypt say they have been forced to phase out cer­tain medicines to stay in busi­ness.

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