Medicines price rise does not commensurate with Egyptian pound devaluation

The increase applied to medicines does not commensurate with the devaluation of the Egyptian pound, said deputy head of Chamber of Pharmaceutical Industries at the Federation of Egyptian Industries Osama Rostom.

Rostom described it as a slight increase. However, he believes that it will encourage pharmaceutical companies to resume production of the drugs they stopped providing due to financial losses.

The Egyptian pound depreciated by about 62% against the US dollar, noted Rostom, adding that prices increased by only 20%. Thus, the increase does not suit the high prices, as the pharmaceutical industry highly depends on the US dollar. The increase in the US dollar price amounts to 82% in the informal market, according to Rostom,

“The increase will encourage the manufacturers of medicine because it will increase the profits of some products, which will compensate the losses caused by other products in the same companies,” said Rostom.

He explained that the profit margin of some medicines will slightly increase, covering the losses caused by some other medicines.

The Ministry of Health approved the decision of medicines prices increasing on the 17 May, after receiving many complaints from medicine manufacturers and the disappearance of some of their products from the market as a result of the losses.

The decision includes increasing the prices by a 20% ratio with a minimum of EGP 2 and a maximum of EGP 6.

It was decided that the step would be implemented immediately without withdrawing the products from pharmacies and distributors and re-pricing them.

The increase includes 7,010 pharmaceuticals with prices less than EGP 30, according to the Ministry of Health.

Rostom said the price increases include about 70% of the total number of medical units, whether they are locally manufactured or imported.

He added that the increase will mainly serve the consumer by providing a local product that costs much less than the imported one. The disappearance of local products from the market pushed patients to purchase the imported pharmaceuticals, which are relatively high in price.

He said that about 90% of the materials used in medicine production come from abroad.

“The decision of increasing the prices alone is not enough,” said Rostom, adding that increasing the prices is a step that should be accompanied by the provision of foreign currency by the Central Bank of Egypt (CBE), especially to facilitate the import of materials and to reduce the cost of industry. Therefore, producers will not be forced to obtain the US dollar at a higher price through the informal market.

In terms of poor families, Rostom said the state must support them with health and social insurances, not to keep medicine prices as they are in the light of the devaluation of the Egyptian pound and put that burden on producers, which in turn reduces the profit margins that they began production with.

He said that the percentage of medicines in health care institutions does not exceed 15% to 20%, as there are tests, surgical operations, tools, and other items. Consequently, “the state should enable a protection system for the poorest classes,” he said.

He explained producers will benefit from the price increases by only 9.6% profit, while pharmacists and distributors will have the rest of the decided percentage.

Rostom stressed that the role of medicine manufacturers is to meet the needs of patients by working on providing pharmaceuticals in a global quality. However, the decrease in the value of the Egyptian pound and not changing prices pushed many producers to stop manufacturing certain medicines for the fact that the medicine specifications cannot be changed due to the price increases. They cannot reduce active substances in medicine or decrease the cost in other ways.

He pointed out that the ministerial decisions that regulate medicine prices stated that medicine prices should be reconsidered, if the value of currencies changed by 10% up or down. However, the decision has not been activated since 1995.

“We demand the profit margin that we agreed on,” he said.

In terms of medicine with prices over EGP 30, Rostom said he is expecting the committee of medicine pricing to deal with each of them separately, and that the date of their price increases depends on requests and complaints that will be made by the producing companies.

He said that some companies submitted requests to re-price products before the current price increase decision, and that none of the companies submitted such requests after the decision.

Source: Daily News Egypt