Official: Egypt is looking to attract investments worth $1.1 billion in the pharmaceutical sector until the end of 2027

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Egypt aims to attract new investments in the sectors of medicines, pharmaceutical raw materials, vaccines, and nutritional supplements with a value of up to $1.1 billion until the end of 2027, according to what the head of the Pharmaceuticals Division at the Federation of Chambers of Commerce in Egypt, Ali Aouf, said.

Aouf explained to Al Arabiya Business that the targeted investments are divided into $100 million during the remaining months of the current year, and $1 billion during the entire year 2027.

“The expected investments are driven by the Egyptian Medicine Authority’s adoption of a new drug pricing system, which includes incentives to encourage foreign companies to enter the local market and expand manufacturing,” according to Auf.

At the end of last September, the Egyptian Medicines Authority adopted a new decision for drug pricing that includes a mechanism for reviewing the equation for moving prices every 6 months, based on changes in the exchange rate, inflation rate, and interest rates, allowing prices to move up or down according to specific controls.

The head of the Pharmaceuticals Division at the Federation of Chambers of Commerce considered that the previous decision on drug pricing in Egypt, which had been in effect for 14 years, was one of the most prominent obstacles to the entry of international pharmaceutical companies into the local market, due to the difficulty of estimating investment returns and dealing with exchange rate changes and production costs.

Aouf explained that the new drug pricing decision sets “clearer rules for pricing modern drugs,” which helps companies calculate their costs, the expected return, and the recovery period for their investments.

According to Auf, the new decision includes mechanisms for reviewing drug prices when the exchange rate continues to change for 45 days, in addition to a periodic review every 6 months, which allows cost changes to be dealt with at a faster pace and limits price gaps that may affect the availability of drugs.

Aouf said it is likely that China, India and Turkey will capture most of the investments expected to flow into the pharmaceutical sector in the coming months, in light of their increasing interest and inquiries about expansion opportunities in Egypt.

He explained that the opportunities of interest include projects to produce medicines and localize manufacturing technology and raw materials, in addition to the manufacture of biological products and vaccines, which require large investments and advanced technologies.

Auf believed that Egypt possesses all the elements that qualify it to be a center for manufacturing and exporting medicines, especially to Africa, in light of its security and political stability and geographical location, in addition to the availability of labor, expertise and investment incentives.

In addition, Aouf ruled out adopting new increases in drug prices in Egypt until the end of this year as long as the price of the dollar stabilizes below 55 pounds and interest and inflation rates remain at their current levels.

Auf pointed out that about 400 companies submitted requests to move the prices of some products during the past July and August, but the Egyptian Medicines Authority rejected about 90% of them.

Earlier, Assistant Chairman of the Egyptian Medicines Authority, Yass Rajai, told Al Arabiya Business that the new drug pricing decision established a more governance framework to respond to economic variables. Whereas the exchange rate was the main element in moving drug prices, the movement now takes place according to a new equation that takes into account other variables such as inflation and interest rates.

“The new pricing equation specified relative weights for each indicator, such that the change in the exchange rate represents 60%, inflation represents 30%, and the change in the interest rate represents 10%,” according to the assistant head of the Egyptian Medicines Authority.

He added: "If the result of the equation exceeds 10% upward, it opens the door for companies to submit requests to increase the prices of medicines. This does not mean that they will be automatically approved. On the contrary, if the result of the equation reaches 10% downward and this change continues for 45 days, the prices of the drugs in circulation are automatically reduced."