The decision to raise the prices of medicines last week is “completely wrong” and only indicates the ignorance of those who issued it, said former chairperson of Holdipharma Galal Ghorab.
Contrary to this, chairperson of the drugs section at the Federation of the Egyptian Chambers of Commerce, Ali Ouf, said that the increase is a “kiss of life” to Egypt’s pharmaceutical industry that has been suffering due to the instability of prices and the devaluation of the Egyptian pound.
According to Ghorab, the increase was imposed without a real study of the nature of the drugs and the proportion of their imported components, explaining that imported active ingredients forms 5% to 25% of all drugs manufactured in Egypt.
Prices should have only been increased by 14% to offset the devaluation of the local currency, he said, pointing out that the increase should be set based on the 25% ratio of the imported ingredients. The Central Bank of Egypt (CBE) secures the US dollar needs of pharmaceutical companies.
The price increase should have only included drugs costing less than EGP 10, which did not suffer much loss after the devaluation of the Egyptian pound, said Ghorab.
The minimum rate of increase was set at EGP 2, so, for example, a EGP 1 drug will be sold at EGP 3—triple its original price. “The decision will make pharmaceutical companies millions,” Ghorab said. “But the poor will suffer the most.”
Justifying the increase by the devaluation of the Egyptian pound should have been interpreted as an increase of a few piasters—not pounds, said the former chairperson.
However, according to Ouf, the increase should have been set at 50% of the original price, saying that this would restore the companies’ original profit margins. “However, 20% is not bad,” he said. He explained that the sector can bear the current conditions for a maximum of three years before needing a further price increase.
Ouf explained that the domestic industry covers 85% of Egypt’s requirements for drugs through 140 factories. He noted that locally produced drugs require 95% of imported materials, including active ingredients, packaging, and even the medication data. He added that the pharmaceutical sector would have suffered significantly from the US dollar scarcity if it was not for this price increase.
Medicine prices have not changed since 1995, despite the price hikes in production costs, raw materials, and labour.
The state should provide the poor with social security and medical insurance so they can buy medicine at the new prices, said Ouf. Producers have endured decreased profit margins to the point of suffering losses, prompting them to halt production of several drugs. “This increase will encourage companies to resume production,” he said. “It will serve in the best interest of patients.”