Currency drop hits medicines
The plunge in the value of the Egyptian pound has led to shortages in drugs or some becoming unavailable
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
SURVIVAL: Some pharmaceutical firms in Egypt say they have been forced to phase out certain medicines to stay in business.