In 1983, in EIPICO’s start-up phase, its research staff began looking for new products and identified praziquantel as a good prospect. The product provided excellent treatment for all forms of schistosomiasis-a disease that affected millions of Egyptians-and EIPICO’s staff identified a “price problem” confronted in Egypt. In 1983, when Bayer entered the praziquantel market in Egypt, it sold four tablets (of 600 mg.) for L.E. 16 (US$ 17.78). Praziquantel was produced in Egypt under license from Bayer by a public sector company in Alexandria, and sold on the Egyptian market as Biltricide. If EIPICO could obtain a low-cost source of the active ingredient, the company could undercut Bayer and compete effectively both on the private market and in government tender sales. Praziquantel was identified as a major strategic opportunity.
Praziquantel was not the only anti-schistosomiasis drug available in the Egyptian market. Two other products were sold: Bilarcil (metrifonate 100 mg.) against S. haematobium and produced by Bayer; and Vansil (oxamniquine HCL 250 mg.) against S. mansoni and produced by Pfizer-Egypt. From a clinical point of view, however, praziquantel was considered a superior product, with significant potential for market growth compared to the two competitive products.
Because Bayer was already heavily involved in the Egyptian market, EIPICO needed to look elsewhere for praziquantel active ingredients. A Chinese source was identified and samples were obtained, but technical staff at EIPICO determined that the material was inferior to Bayer’s and contained about 1% impurities, perhaps from residual solvent. Another source was Shin Poong Pharmaceutical Company in the Republic of Korea, and its samples, once tested, showed very good quality. EIPICO then prepared the dosage form, as tablets, and asked the Tropical Diseases Institute in the Egyptian Ministry of Health to conduct a clinical trial, compared to Bayer’s Biltricide. EIPICO officials reported some efforts by Bayer to interfere in the clinical trial-but the results nonetheless showed Shin Poong’s product to be excellent, and EIPICO successfully registered the product in Egypt.
EIPICO’s entry into the praziquantel market in Egypt in 1987-1988 pushed the prices down, and gave EIPICO a majority share of the private and public markets. EIPICO sold a four-tablet package at L.E. 7 (US$ 0.52 per tablet) in 1994, less than half the price in local currency of L.E. 16 (US$ 4.44 per tablet) that Bayer charged for the same four-tablet package in 1983, when they entered the Egyptian market. Bayer had no choice but to cut its prices in response to the competition. In 1995, in private pharmacies, Alexandria/Bayer sold its product (Biltricide) at L.E. 8.95 (for four tablets, US$ 2.65), while EIPICO/Shin Poong sold its product (Distocide) at L.E. 9.45 (also for four tablets, US$ 2.80). By contrast, the competing products of metrifonate (Bilarcil) and oxamniquine (Vansil) in 1995 were sold at much lower prices per treatment, L.E. 0.80 (for three tablets, US$ 0.24) and L.E. 1.75 (per capsule, US$ 0.52), respectively. Metrifonate requires three doses one week apart, so that a full course of treatment costs L.E. 2.40 (US$ 0.71). The recommended treatment for oxamniquine is six capsules given over one day, and a full treatment has been available in Egypt in a box of six capsules for L.E. 9.00 (or US$ 2.65, although oxamniquine is no longer produced in Egypt, probably because of competition from praziquantel).
For 1993, EIPICO reported private market sales of about 22,000 (four-tablet packages) per month, or about 1 million tablets per year. In that year, praziquantel was ranked number 6 among EIPICO’s products, according to sales including government tenders, and number 20 for private market sales only.
From 1990 on, EIPICO won the Egyptian government’s tender for praziquantel. In 1992, EIPICO sold the Ministry of Health about 6.8 million tablets of praziquantel, at a price of about 88 piasters per tablet (or about US 0.26-0.27 per tablet), and in 1993, about 3.3 million tablets, due to budgetary problems. According to EIPICO, the company sold the Ministry of Health a total of about 64 million tablets of praziquantel through tenders from 1987 to 1994, “at approximately one-half the imported drug price” (EIPICO, 1995).
In the early 1990s, EIPICO began to consider export opportunities for praziquantel. The licensing agreement from Shin Poong apparently contained no restrictions on export, and EIPICO registered its product in a number of countries: Sudan, Uganda, Yemen, and the six countries on Lake Victoria (Burundi, Kenya, Rwanda, Sudan, Tanzania and Zaire). If true, then Shin Poong apparently gave EIPICO the right to export praziquantel, in exchange for Shin Poong’s access to the Egyptian market (through EIPICO) for sales of its raw material.
The biggest problem EIPICO confronted in exports to African countries was timely payment by the governments, which tended to be chronically short of foreign exchange. EIPICO also needed to consider export opportunities for praziquantel as part of a broader export strategy for all its products, because the Egyptian government did not guarantee exports as done by some other countries. By 1994, EIPICO had opened two foreign offices-one in Romania, and one in the Russian Federation-because of rapid growth potential. Neither country, however, had significant demand for praziquantel. EIPICO’s efforts to expand exports reflected a broader recognition about the importance of this strategy for the development of the Egyptian pharmaceutical industry. The growing demand for pharmaceuticals in the Middle East and the difficulties of rapidly increasing raw material production led one report to conclude: “Export promotion of drugs was considered the strongest medium for development of the [Egyptian] Industry” (El Shafei, 1990:21).
EIPICO was also exploring other sources for praziquantel’s active ingredient. In 1994, once Bayer’s main patent expired, a number of new sources appeared, with some very low prices. EIPICO’s management, however, wanted to assure product quality and also wanted to protect its existing license and procurement relationship with Shin Poong. The availability of other sources, however, might persuade Shin Poong to provide its active ingredient at a lower price, especially if EIPICO could gain access to larger markets outside Egypt, through international agencies or to African governments directly.
For the future, EIPICO’s management believes it can compete with Shin Poong’s own product on quality and formulation, and can also compete on price, because of the Republic of Korea’s comparatively high-cost labor. But so far, EIPICO has not secured any significant sales of praziquantel outside Egypt, either to an international agency (like UNICEF or the World Bank) or to an African country government. EIPICO also needs to maintain its government tender in Egypt, in order to protect its overall sales of praziquantel as among its top ten products. If the international market becomes highly competitive, then there is a small chance that EIPICO could lose this domestic contract, which would put a sizable dent in praziquantel’s history as a successful product for EIPICO.
Another option for EIPICO is to explore other domestic markets for praziquantel. As the result of a new law passed in July 1992, establishing a School Children’s Health Insurance Programme in Egypt, the Health Insurance Organization (HIO) has assumed responsibility for school health services (Reich and Swelam, 1994). EIPICO could approach HIO about sales of praziquantel for the treatment of school children in rural areas. In addition, since HIO purchases enormous quantities of pharmaceuticals, EIPICO could explore sales of other products as well, with special packaging for HIO. EIPICO could also consider marketing praziquantel for its treatment of other helminthic diseases, which would require different dosage and packaging. While these markets are relatively small (compared to the anti-schistosomiasis market), they could provide some protection to EIPICO in case it loses the MOH tender in the future.