International Strategies for Tropical Disease Treatments - Experiences with Praziquantel - EDM Research Series No. 026
(1998; 113 pages) View the PDF document
Table of Contents
View the documentAbstract
View the documentAcknowledgments
View the documentInformation on authors
View the documentExchange rates used in the report
Open this folder and view contentsChapter 1: Policies for praziquantel*
Open this folder and view contentsChapter 2: Bayer & E. Merck: Discovery and development of praziquantel*
Open this folder and view contentsChapter 3: Shin Poong Pharmaceutical Co.: Process development in the Republic of Korea*
Close this folderChapter 4: The Egyptian International Pharmaceutical Industries Co.: Praziquantel formulation*
View the documentHistory of EIPICO’s development
View the documentSchistosomiasis in Egypt
View the documentPraziquantel production
View the documentReferences
Open this folder and view contentsChapter 5: The international supply of praziquantel*
Open this folder and view contentsChapter 6: Demand for praziquantel and national distribution*
Open this folder and view contentsChapter 7: Prices and production costs of praziquantel*
View the documentOther documents in the DAP Research Series
View the documentDAP Research Series No. 26
 

History of EIPICO’s development

Egypt first sought to promote a domestic pharmaceutical industry in the late 1930s, with the establishment of the Misr Pharmaceutical Company in 1939, followed by the Memphis Pharmaceutical Company in 1940 and the CID Pharmaceutical Company in 1942. By 1952, at the time of the Revolution, Egyptian companies provided 10% of the national drug needs (MOH, 1986:41-48). That same year, the Revolutionary Council cut the price of drugs by 15% in an effort to make pharmaceutical products accessible to the majority of the population. In 1957, the government established the Supreme Organization for Pharmaceuticals, to set basic principles for a national drug policy. And in 1960, a Presidential decree ordered that all drug imports would be channeled through the Supreme Organization for Pharmaceuticals, and that prices would be cut by 25%. Through this time, the Egyptian pharmaceutical industry was mostly small laboratories.

In the 1960s, the government under President Gamal Abdul Nasser embarked on an aggressive policy of nationalization and promotion. In 1961, the pharmaceutical industry was nationalized, and the government then started to gather the small companies into larger firms, establishing a series of companies in 1962 and 1963. Egypt’s strategic geopolitical location placed it at the crossroads of the Mediterranean, the Third World, and the Arab World. Physicians throughout the Arab countries came to know Egyptian pharmaceutical products, in part because of the country’s location, but also because many Arab physicians were trained in Egypt and because many Egyptian physicians worked in other countries. During the 1960s, the Egyptian pharmaceutical industry became very powerful, one of the country’s most developed industries, with domestic production covering about 28% of the market in 1960 and reaching over 85% by the late 1970s (Table 4.1). The country had a number of active Schools of Pharmacy, and the Ministry of Health acquired advanced quality control laboratories.

Table 4.1: Pharmaceutical supply by foreign and local drugs

(L.E. million at retail prices)

Year1

1952-53

1960-61

1970-71

19782

1979-80

1980-81

19913

Local drugs

0.5

4.3

44.5

124.1

188.7

267.8

1,500

Imported drugs

4.3

10.6

7.2

17.4

31.6

62.3

103

Total

4.8

14.9

51.7

141.5

220.3

330.1

1,603

Percentage of local drugs to total

10%

28%

86.3%

87.7%

85.7%

81.1%

93.6%

Percentage of local drugs privately produced4

100%

0

21.9%


29.4%

27.3%


Source: Henry E. Cole, Robert H. Smith, and Sohair Sukkary, An Overview of Pharmacies, Pharmacists and the Pharmaceutical Distribution System in Egypt: An Executive Summary, Prepared for the US Agency for International Development, by the Futures Group, Washington, DC, May 1982: 5.

1 Source for 1952-71, 1979-81: Technical Secretariat of the Drug Sector, Ministry of Health, Egypt.

2 Source for 1978: Study of Health Financing and Expenditures: Egypt, Publication No. 1G, Ministry of Health, Egypt, Health Profile of Egypt, April 1980.

3 Menas Associates, “Economy & Business,” Egypt Focus, 1992.

4 Unofficial Statistics for the Technical Secretariat of the Drug Sector, Ministry of Health, calculated from producer prices.

Egypt has a high domestic production capacity, but remains heavily dependent on imported raw materials for pharmaceuticals. In 1988, Egypt’s 19 main pharmaceutical companies produced 80% of national pharmaceutical consumption; yet the industry still imported 90-95% of the necessary raw materials (El Shafei, 1990:13). According to one report, if raw materials and machinery are considered, then “perhaps only 35 percent of value added in pharmaceutical sales are derived locally” (Thomas et al., 1994:2). Imports are particularly important in certain therapeutic areas: insulins, cancer medicines, and infant milk formula (Menas Associates, 1992). A key government entity is The Egyptian Drug Organization, which owns the nation’s public sector drug companies (including 7 production firms), and supervises the private sector companies (including 15 production firms).

The Egyptian pharmaceutical industry has four types of firms (Thomas et al., 1994:2-3):

Public sector: seven government-owned firms provide about 60 percent of consumption, along with two small public firms that import drug products and another public firm that makes bulk chemicals.

Multinational sector: five multinational firms produce and sell pharmaceutical products in Egypt, with two having 100% foreign ownership, and three including minority Egyptian ownership (since they entered the Egyptian market in the early 1960s when 100% foreign ownership was prohibited).

Private sector: fifteen privately owned Egyptian firms operate in the pharmaceutical industry, with EIPICO a prominent example, ranking as the second largest firm in 1991, and as the largest firm from 1992 to 1994.

Scientific offices: most of the 250 firms in the pharmaceutical industry in Egypt do not directly manufacture or sell drugs, but market their products and contract with other companies for local production; this category includes many multinational companies.

The Egyptian International Pharmaceutical Industries Company (EIPICO) was Egypt’s first private company in the pharmaceutical industry. The company started production in 1985, and licensed many products from various multinational corporations (Tables 4.2 and 4.3).

Table 4.2: Local versus licensed products for EIPICO

(as % of total sales)


Local products

Licensed products*

1985

44%

56%

1986

54%

46%

1987

68%

32%

1988

68%

32%

* Note: Licensed products are manufactured using licensed technology (see Table 4.3 for a list of companies that have agreements with EIPICO).

Source: EIPICO, 1989.

Table 4.3: License agreements for EIPICO

From the USA:

Merck Sharpe & Dohme (and Chibret)
Smith Kline & French
Upjohn
Allergan

From the United Kingdom:

Riker

From France:

Rhöne Poulenc - Theraplix

From West Germany:

Degussa Pharma G.P. (Chemie Homborg-Asta)
Dolorgiet Arzneimittel
Hek Pharma
Dr William Schwabe

From Switzerland:

Roche
Ginseng Products Ltd.
Pharmaton

From Sweden:

Leo
Pharmacia

From Denmark:

Biogena

From Italy:

Angelini
Lisapharma
Zambeletti
Luso Pharmaco

From the Republic of Korea:

Shin Poong

Source: EIPICO, 1989.

EIPICO, from the beginning, sought to meet international quality standards, through the implementation of Good Manufacturing Practice (GMP) in the factory’s design and production processes. GMP rules are observed in the ventilation, and in the control of temperature, humidity, air pressure, air suction, and air purity. These procedures are particularly important in the pharmaceutical industry, in order to assure cleanliness, product quality, and to prevent cross-contamination between products.

EIPICO selected its products according to four principles:

• The new products should replace imported products.

• The new products should meet market demand not covered completely by local production of the pharmaceutical industry.

• The new products should represent new technology in the pharmaceutical industry and research.

• The new products should provide mutual cooperation between Egyptian experts, scientists and researchers of EIPICO, and those of foreign international pharmaceutical companies, according to license agreements.

By 1994, EIPICO production covered all pharmaceutical dosage forms: the traditional dosage forms (such as tablets, capsules, emulsions, and ampoules) as well as nontraditional forms (such as soft gelatin capsules and long-acting capsules). About 70% of products was in tablet form, the most common dosage form for most pharmaceutical companies. The company performed its own bioequivalence studies and stability studies. The products covered all therapeutic classes, with the range of products increasing from 50 products in 1985 to 128 products in 1992. EIPICO continues to import most of the raw materials-especially the active raw materials-and is primarily engaged in formulation. The company has sufficient land area for another manufacturing facility, if it decides to begin production of active ingredients.

While the pharmaceutical industry in some developing countries (Brazil, India, Indonesia and Republic of Korea) can manufacture raw materials, the Egyptian industry has not reached that point yet. One state-owned company in Egypt makes active raw ingredients (El Nasr for Chemicals and Drug Raw Materials Company, which was started in 1960), but it manufactures only a limited number of active ingredients, such as analgesics (paracetamol and aspirin) and other products. In addition, one private sector company in Egypt manufactures active ingredients (Acopharm). A future challenge for the Egyptian industry is how to begin domestic manufacture of pharmaceutical active ingredients.

EIPICO is considered a private company in Egypt, and ranked second among all Egyptian pharmaceutical firms (Table 4.4) in 1991-1992.

Table 4.4: Egypt’s leading pharmaceutical manufacturers (Oct 1991-Sept 1992)


Rank

Value
(LE million)

Value
(US$ million)

%

% growth

Total


1,560

469.88

100

7.6

Bristol Myers Squibb

1

108

32.53

6.9

(9.5)

EIPICO

2

88

26.51

5.7

12.5

Ciba-Geigy

3

78

23.49

5.0

2.0

Hoechst

4

67

20.18

4.3

10.6

Sandoz

5

61

18.37

3.9

(11)

Misr*

6

61

18.37

3.9

(3.6)

Nile*

7

59

16.87

3.8

(3.9)

Pfizer

8

59

16.87

3.7

(2.3)

CID*

9

49

14.76

3.2

(16.3)

Alex*

10

47

14.16

3.0

5.2

Glaxo

15

35

10.54

2.2

13.2

* Public sector
Exchange rate of US$ 1 = L.E. 3.32 for 1992.
Source: Glaxo Egypt, cited in: Menas Associates, 1992.

EIPICO’s largest share-holder is ACDIMA (Arab Company for Drug Industries and Medical Appliances), a share-holding company originally generated by a group of Arab governments (Table 4.5). After the 1979 Camp David accord, however, ACDIMA split into two companies, because other governments opposed Egypt, and 3/4 of the company moved to Jordan, while the remaining 1/4 stayed in Egypt. The Egyptian firm now holds 11 separate companies, involved in all aspects of pharmaceutical production, including manufacture, supplies, packaging, and glass. EIPICO buys its glass, capsules, some active materials, packaging materials, and other items from various ACDIMA companies. ACDIMA is a pan-Arab company owned by governments. The founder and Chairman of the Board of Directors of ACDIMA, Dr Abdul Salam, died in 1992, and the post remained vacant for two years, until the retiring Minister of Health, Dr Ragheb Dewidar, decided to fill the position himself.

Table 4.5: Share holders of EIPICO

ACDIMA

33.91%*

Kahira Pharmaceutical Company

27.65%

Egyptian Trading Company

18.75%

Arab Drug Company

8.75%

Memphis Chemical Company

4.38%

Medical Union Pharmaceutical

4.38%

Members from EIPICO

2.18%

Total

100%

* Note: The proportions are rounded to two decimal places and to total 100%.
Source: EIPICO, 1989.

Private pharmaceutical companies in Egypt have complained about economic difficulties, due to a combination of continued price controls (to provide low-cost pharmaceuticals as part of social welfare objectives) and the devaluation of the Egyptian pound in 1987 followed by the implementation of a free foreign exchange market, which has resulted in sudden and substantial cost increases for raw materials (El Shafei, 1990:12; Menas Associates, 1992). Foreign companies in particular have complained about low and even negative profit rates (Table 4.6).

Table 4.6: Private sector companies in Egypt: Economic health in 1989

L.E. million

Company

Sales

Net profits

Net worth

Return on sales (%)

Adwia

5.2

0.65

8.9

12.4

EIPICO

76

8.0

41.2

10.5

Hoechst

93

2.5

15.1

2.6

Pfizer

52

1.7

12.9

3.2

Pharco

44

13.3

11.8

20.2

Rhone Poulenc

18

0.75

15.2

4.2

Squibb

66

(6.2)

9.0

(9.4)

Swisspharma

91

(1.2)

12.1

(1.3)

Source: El Shafei, 1990, p. 20.

The squeeze between product prices and production costs applies to domestic private companies and public companies as well, resulting in major losses for private companies and for public sector companies, although good statistics for public sector companies are not easily obtained (Menas Associates, 1992). According to one report, “Public sector firms lose money on over 700 of the 1300 products they sell, largely because the prices for those products were set in the 1970s and have been adjusted only marginally since” (Thomas et al., 1994:11). Prices for pharmaceutical products are set for both public and private companies by a committee within the Ministry of Health, based on a cost-plus formula, as part of the registration process. The committee includes several MOH officials, representatives of the drug control agencies, the First Undersecretary of the Ministry of Supply, and the First Undersecretary of the Ministry of Economics, according to Dr Zakaria Gad, President of the Egyptian Syndicate of Pharmacists (Gad, 1995). (This information contradicts the report by Ravenholt and Russell (1993:29), which states that the committee also includes representatives of public sector firms and local private companies.)

Multinational firms have also complained about inadequate patent protection in Egypt. Patent law in Egypt provides legal protection for processes for 10 years, but does not provide protection for products. Egyptian firms therefore can legally manufacture products-such as praziquantel-that are protected by patent law in other countries. This practice is considered to be “patent piracy” by multinational pharmaceutical firms (Thomas et al., 1994:8). Egyptian policy in this area has recently undergone some changes, since Egypt has agreed to comply with the Trade-Related Intellectual Property Rights conditions and will respect international product patents. Consequently, the MOH will not approve new drugs that violate international patent laws, although currently marketed products will continue to be sold until 2004 (Nathan Associates, 1995).

In its 1991 agreement with the World Bank and the International Monetary Fund, the Egyptian government agreed to liberalize most of its economy, including the pharmaceutical sector. But the government has resisted efforts to liberalize prices in the pharmaceutical sector, because it is considered a sensitive industrial sector, in which sudden price rises could have sharp political consequences. As reported in December 1992, “liberalization and privatization has moved extremely slowly in Egypt even in non-sensitive areas and that of the pharmaceutical sector is still a long way off” (Menas Associates, 1992).

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