Egypt facing major drug supply crisis fueled by weak currency & political turmoil

Dive Brief:

  • Since the political uprising in Egypt in 2011, the value of the Egyptian pound has declined substantially, making it harder to import essential drugs. 
  • According to official government estimates from December 2015, there are 232 drugs in short supply, including 43, which have no substitute. However, according to pharmacists' estimates, there are 18 drugs in short supply with no substitutes.
  • Drug makers are facing losses because they pay for imports in dollars and then sell them in Egyptian pounds. By trying to keep costs affordable and not raise prices, they effectively end up losing money. 

Dive Insight:

The drug shortages cut across the swath of essential therapies, ranging from acute-care drugs to drugs for chronic conditions (including meds for various cardiovascular conditions). In 2011, when a national uprising led to the overthrow of Hosni Mubarak, the value of the Egyptian pound relative to the dollar was 5.8 to 1. The exchange rate now sits at 7.73 to 1. 

Therefore, it has become more expensive to import raw materials, which are paid for in dollars. Drug prices are fixed by the Egyptian Health Ministry, meaning raw material costs are cutting into producers' margins. The net impact has been for producers to opt out of making certain drugs to decrease the losses. 

The political landscape in Egypt continues to be unstable with two presidents unseated over the last five years. Coupled with a deteriorating security situation in the Sinai, investors and tourists have been scared away. 

In its initial repsonse, the Egyptian government set up the Drug Shortages Directorate in 2012, aiming to better track shortages and determine which drugs have substitutes. 

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Manufacturing Marketing
Top image credit: Wikimedia; Raduasandei