* Pharma companies halting imports of drugs after currency
* Govt unwilling to ease price controls, deepening shortages
* Companies say govt plan to subsidise key drugs
* Black market springs up
By Arwa Gaballa and Eric Knecht
CAIRO, Nov 22 Pharmacies across Egypt are
running short of medicines, some of them life-savers, 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 roughly twice as much to import drugs or
active ingredients, pharmaceutical firms say they have been
forced to phase out certain medicine 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 recently
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," Etman said.
Egypt floated its currency on Nov. 3, abandoning a peg of
8.8 pounds to the U.S. dollar and allowing the currency to
roughly halve in value to about 17.50 on Tuesday.
The float helped the cash-strapped government clinch a $12
billion IMF loan it hopes will unlock investment and revive
growth that has been hampered by political uncertainty since the
2011 uprising that toppled President Hosni Mubarak.
But the medicine shortages are piling pressure on the
government of general-turned-president Abdel Fattah al-Sisi, who
has been at pains to reassure a populace already strugglng with
double-digit inflation and intermittent shortages that they
would be shielded from the worst effects of economic reforms.
Talk of a looming healthcare crisis has dominated popular
evening chatshows, 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.
Drug shortages are not new to Egypt. More medicines had
already begun disappearing from shelves early this year as a
severe shortage of dollars in the banks meant pharmaceutical
firms could not pay for the necessary imports.
Egypt has struggled to earn enough 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 told Reuters about 1,600 drugs had
gone short in recent months, including 35 that have no
alternatives and would disappear from the market if price caps
were not eased.
"Distributors are now telling pharmacies nothing imported is
available. The problem has been going on for a while, but has
only turned into a crisis in recent weeks," 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 a total of about 50 billion pounds before the float.
Ahmed al-Ezaby, head of the medicine industry division at
Federation of Egyptian Industries, said Egypt imports about $600
million in finished medicines per year and $1.8 billion in
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-Nov. 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
A spokesman for Sanofi said the French group was "actively
engaging local authorities to define a sustainable pricing
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 spokesman
Khaled Mogahed told the Egyptian TV channel Mehwar.
"It's a way to push for a rise in medicine prices, which
will not happen."
Mogahed did not respond to requests from Reuters for
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 $165 million to support
imports of life-saving drugs that have no viable substitutes,
including some cancer treatments.
Companies said the amount was not nearly enough while
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.
In the meantime the companies say they have to stop offering
the drugs which most cut into their profits. Some have already
sent back shipments that were ordered before the float but
arrived after, as selling them at the fixed prices would have
created big losses. They all say they have to downsize and cut
out certain drugs.
"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 now given the new currency
rate," said ITO Pharma's deputy general manager Mohamed Geoushy.
More life-saving drugs will soon disappear, he said.
His company is one of only two suppliers of cyclosporine, a
drug used to prevent organ rejection during transplants. It
recently stopped 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 and far
beyond the reach of most.
On Twitter, resourceful Egyptians have set up the hashtag
"Twitter_Pharmacy" to swap medicines they cannot find in shops.
Hospitals are using social media to advertise their needs.
"Every minister should have sat down with the government
after the float and discussed an emergency plan because it's a
crisis if patients can't find life-saving medicines," said Osama
Tahoon, general manager of medicine producer Julphar Egypt.
"We can give up sugar or tea, but we can't give up
(Additional reporting by Ben Hirschler in London, Editing by