Growth Forecast For Medicines Sector


BMI View: Sourcing accurate and reliable quantitative data on Egypt's pharmaceutical market, including its over-the-counter (OTC) medicines sector, remains challenging. Both primary and secondary research firms are faced with substandard audits, language barriers, porous sales channels, a high prevalence of counterfeits, questionable national statistics, dispensing without prescriptions, sizeable 'grey markets' and the widespread use of traditional remedies.

In 2011, Egypt's pharmaceutical market was valued at EGP18.23bn (US$bn3.06bn), with the OTC medicines sector accounting for 17.2% of total medicine sales (EGP3.14bn, or US$838mn). There is no clear list differentiating OTC and prescription medicines in Egypt and therefore it is difficult to obtain OTC market size data in terms of value or volume. In Egypt, the population's limited spending power and the lack of health insurance results in patients self-medicating, boosting the value of the OTC market. However, growth has historically also been affected by factors such as:

  • The absence of advertising and consumer-focused marketing. Egypt has a high illiteracy rate and almost all medications have foreign names.

  • A lack of healthcare awareness among patients.

  • Hospitals remain the primary point of access for healthcare services and the distribution of consumer health products is only permitted through pharmacies.

  • The prices of OTC medicines are low and rigidly controlled by the Ministry of Health.

Revenue Earning Opportunities
Egypt: OTC Medicines Market (US$mn)

Over the 2011-2016 forecast period, BMI calculates Egypt's pharmaceutical market will experience a compound annual growth rate (CAGR) of 11.93% in local currency terms and 12.48% in US dollar terms. We forecast the OTC medicines sector will reach a value of EGP5.73bn (US$988mn), experiencing a CAGR of 12.82% in local currency terms and 13.38% in US dollar terms. Our forecast assumptions include:

  • Economic growth and the resulting increase in the size of Egypt's middle-class population will lead to an increase in demand for medicines.

  • The country's rising population and increasing urbanisation will increase spending on medicines over the forecast period.

  • Growing urbanisation will help drive growth in the OTC medicines sector as the population will increasingly be affected by issues such as pollution. In Cairo, air pollution is estimated to be 100-times higher than the internationally acceptable standard, which will help drive sales of skin care treatments and cough and cold products.

  • Despite the rising popularity of vitamins and other OTC medicines, analgesics will remain the most popular OTC products. This segment is likely to grow as patients become more attuned to treating pain with consumer health products.

  • Paediatric OTCs should experience sharp growth in the future due to Egypt's young and expanding population. Parents are more likely to spend on the health of their children than they are on themselves, so sales of these products will not be as affected as other treatments by low disposable incomes.

  • The belief that the counterfeit segment will make no further inroads into the legitimate drug market is built into our pharmaceutical expenditure forecasts.

BMI Forecast Methodology

To calculate the sizes of pharmaceutical markets in countries with poor data availability from local sources, BMI has created a forecast methodology, which is both qualitative and quantitative, that takes into account:

  • The import dependence of countries for medicines.

  • The proportion of pharmaceuticals that are sold through public (including public-sector healthcare provision and the purchasing power of state-run pharmaceutical distributors) and private channels.

  • The respective average mark-ups that are applied at the different stages of the supply chain. The information that allows for the calculation of mark-up values comes from a variety of sources and we aim to update our mark-ups data as new information becomes available to best reflect the realities of the market.

  • Local drugmaker operations.

  • Local news sources.

We point out that analysts and their in-depth knowledge of the global pharmaceutical industry are vital for accurate forecasts of difficult-to-quantify markets.

This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: Egypt, Egypt, Egypt, Egypt