Over the past days, the controversy has remained heated over medical testing laboratories in Egypt, in the wake of the decision by the Journalists, Lawyers and Engineers syndicates to stop renewing their contracts with the “Al-Borg”, “Al-Mokhtabar” and “Alfa” laboratories, because of the large increase these laboratories imposed on the prices of the medical services they provide. The syndicates considered this increase to be exaggerated, as the prices exceeded the rates agreed with the Doctors Syndicate, which led to the decision to suspend the contracts with these laboratories.

The Journalists Syndicate said in an official statement that the contracts concluded with the three laboratories stipulate that prices are set according to the standards determined by the Doctors Syndicate, but the laboratories violated these agreements by raising prices by more than 30% compared with other laboratories. The statement added that the laboratories raised prices by about 42% at the end of last year, which prompted the syndicate to reject this increase and to demand that the laboratories adhere to the previous year’s prices, which was rejected by the laboratories, leading to the decision to stop contracting with them.

At a time when the medical testing market in Egypt has been witnessing a state of continuous turbulence since the 1990s, it is clear that some laboratories engage in monopolistic practices, while some other laboratories operate without a licence, amid an absence of adequate oversight by the competent authorities. This exposes patients to the risk of illegal practices, and makes them bear a financial and health burden because of the chaos in the market.

The Beginning of the Crisis

In late 2018, the Federation of Medical Professions Syndicates was without a director to approve the annual increase, and the officials therefore decided to issue a list called (Non-Medical Professions), to be used in dealing with the other syndicates, with an increase at the time, in 2019, exceeding the Doctors Syndicate’s prices by 10%. At that time, officials at the Journalists Syndicate agreed to the increase in violation of the contract, and this increase then continued to rise annually, year after year, until the percentage reached 30%.

The Al-Borg and Al-Mokhtabar laboratories are part of Integrated Diagnostics Holdings. It was founded in 2012 on the island of Jersey, one of the islands belonging to the British Crown, which is known as a tax haven used by companies to avoid paying taxes in the countries in which they operate. Several companies operating in Egypt, Sudan, Jordan, Saudi Arabia and Nigeria are affiliated with it, including (Al-Mokhtabar, Al-Borg, Al-Mokhtabar Sudan, Ultra Lab, Echo for Tests and Radiology, Biolab).

It specialised in the field of healthcare in the Middle East and North Africa, and the company provides diagnostic services that include patient care, molecular diagnostics, genetic testing and radiology, in addition to the other laboratories that operate through six different brands, and its medical activities also include Wayak Pharmaceuticals and the Golden Care group of clinics. The number of branches of testing laboratories and radiology centres owned by the company rose from 235 branches in 2012, distributed across Egypt, Sudan, Jordan and Saudi Arabia, to 608 laboratories at the end of last year. It owns 567 branches in Egypt alone, 93% of its total branches in the various countries, and it captures more than half of the revenues of the medical testing market, according to its website, despite the existence of about 18,000 licensed laboratories in Egypt.

According to a post by the “Matsda2sh” platform in the wake of the ongoing dispute between the testing laboratories and the three syndicates, the company “IDH” holds registration number 117257, and its address appears as (Capita Registrars (Jersey) Limited 12 Castle Street St Helier Jersey JE2 3RT), which is one of the company registration addresses that appeared in the “Paradise Papers” leaks, published by the International Consortium of Investigative Journalists in 2017, of records of shell companies registered in tax havens for businessmen and investors around the world.

The company’s net profit grew from EGP 155 million in 2015 to EGP 468 million in 2023. The company raised average prices by 23% during the current year compared with last year, while the average price per test reached EGP 142 in the first nine months of 2024, compared with the figure of EGP 115 recorded in the first nine months of 2023, according to the results report for the third quarter of 2024.

According to the company’s official data, the Egyptian market contributed 82.1% of the company’s total revenues, which amounted to EGP 4.1 billion in the first nine months of last year, 2024, of which net profit was EGP 724 million, an increase of 87% over the same period of 2023.

In May 2021, the aforementioned company obtained an eight-year loan of USD 45 million from the International Finance Corporation, to finance its growth plans across new and existing markets and to help expand access to high-quality diagnostic services in high-growth emerging markets, in addition to its current presence in Egypt, Jordan and Nigeria. Egypt, according to the company’s data, is the country in which the profit margin on the company’s revenues before expenses rose the most during the first nine months of 2024, compared with the same period of 2023, as the rate increased by 35% in Egypt.

Attempts at Negotiation

For his part, the head of the Journalists Syndicate, Khaled El-Balshy, explains that the syndicate, for its part, made attempts to negotiate during the past period (in cooperation with the Engineers and Lawyers syndicates) with the three laboratories, in order to apply the prices set by the Federation of Medical Professions Syndicates, especially as those prices had risen by 20%, which was rejected by those laboratories.

The syndicate offered a 5% increase on the set prices in an attempt to solve the problem, but the three laboratories were intransigent in their decision and rejected that solution too, which prompted the head of the syndicate to contact Abdel Halim Allam, head of the Lawyers Syndicate, and Tarek El-Nabarawy, head of the Engineers Syndicate, to refuse to contract with those laboratories that exercise their monopolistic practices over the medical testing market in Egypt, according to “El-Balshy”.

According to the data of the “Integrated Diagnostics” company, it provided its service to 6.2 million patients in Egypt during the first nine months of 2024, representing 94% of the patients who received its services in the various countries.

The “Integrated Diagnostics” company was established through a series of acquisitions carried out by the Emirati Abraaj Capital group in the Egyptian market, which began in 2008 with the purchase of 76.9% of the Al-Borg laboratory chain, rising to 99.3% by 2012, the same year in which it acquired 99% of Al-Mokhtabar laboratories. The two deals, whose total value amounted to EGP 2,044,000,000, resulted in “Abraaj” controlling half of the private medical testing market in Egypt, according to the company’s data.

In the year 2016, “Abraaj Capital” exited Integrated Diagnostics Holdings, after it had helped create a quasi-monopolistic entity that controls prices and dominates about 50% of the medical testing market, as well as radiology and other medical services.

Commenting, Wael Gamal, an economic researcher, affirms that Integrated Diagnostics is the largest player in the medical testing market in Egypt, explaining that the Emirati company Abraaj had a relationship with the company and was the one that managed the acquisitions of Al-Borg and Al-Mokhtabar, especially as it was the main shareholder in Integrated Diagnostics, which was established in 2012. It exited the company after the corruption crisis that brought it down, and it does not currently own any stake in the company.

He adds, speaking to Zawia3, that the company has investments in other countries, but the Egyptian market is considered the largest, at more than 80% of its income, and it captures more than half of the sector’s revenues, a sector that includes all the laboratories of public and private hospitals.

In this context, “Gamal” explains that the company benefited greatly during the coronavirus crisis, which enabled it to achieve huge profits during 2021, as the number of patients it dealt with exceeded ten million.

The economic researcher affirms the existence of control over this sector, which is considered one of the monopolistic practices that require the intervention of the Egyptian Competition Authority, so that prices are not controlled by particular institutions.

He says that, according to the official figures the company discloses, it captures shares exceeding 50% of the medical testing sector in Egypt, in addition to the fact that many small laboratories that own the required medical equipment are considered mere intermediaries between the patient and the large laboratories, which makes them unable to compete fairly.

“Gamal” praises the position of the three syndicates, which did not submit to the monopolistic practices of applying the non-compliant prices by this company, in application of the principle of supply and demand, especially as the number of members of these syndicates is large, representing a large segment of customers, stressing the need for the Egyptian Competition Authority to look into this sector and to issue data confirming or denying the existence of monopolistic practices.

In a related context, Tarek El-Nabarawy, head of the Engineers Syndicate, affirms that the position of the three syndicates came as a result of the medical testing laboratories’ insistence on applying prices significantly higher than those set by the Medical Professions Syndicate, despite negotiation attempts that lasted nearly two months, explaining, speaking to us, that exaggeration in the set prices affects both parties, whether the member or the syndicate.

He points out that “the laboratories have not backed down from their position so far, so the syndicate set about providing alternatives by contracting with other laboratories that enjoy the same efficiency and quality for the members and are committed to applying the set prices, and they are also distinguished by a good spread across the various governorates.”

He comments on the monopolistic practices from which the medical testing market suffers. He says: “This issue represents a problem facing all citizens, which requires the intervention of the relevant state bodies to regulate the work of these laboratories in line with the laws of competition and transparency.”

The Chaos of the Medical Laboratories Market

From time to time, the Central Administration for Non-Governmental Treatment Institutions and Licensing issues decisions to close numerous medical laboratories, due to their failure to comply with licensing requirements, or their failure to apply infection control policies, as well as the presence of unqualified workers.

Alaa Ghannam, the official responsible for the right to health at the Egyptian Initiative for Personal Rights and an expert in health sector reform, affirms that the medical laboratories market in Egypt suffers from monopolistic practices by some companies that impose their prices, and that the failure of the Private Treatment Department to confront these entities to change their prices multiplies those practices, in addition to its suffering from chaos and lack of organisation, given the presence of entities working in this medical speciality without adhering to the necessary standards.

He explains, speaking to us, that there is an imbalance in the pricing of most medical services, whether tests or radiology, in the medical sector in Egypt, which grows with the absence of the role of oversight bodies, stressing the importance of unifying the prices of those services, and affirming that the solution to these problems lies in applying the law on preventing monopolistic practices, as well as increasing oversight of entities not authorised to work in this activity, in order to protect citizens and provide the necessary care services in line with the laws.

“The position of the three syndicates is considered a first step towards opening the file of the medical testing and radiology sector, and a move towards studying the problems from which it suffers in an attempt to put in place the necessary solutions to protect citizens”, in addition to the fact that the absence of oversight of medical laboratories, especially those in the countryside and the governorates of Upper Egypt, has caused a kind of chaos in the working mechanisms of these laboratories and in their test results, “Ghannam” says.

The official responsible for the right to health at the Egyptian Initiative for Personal Rights adds that there is no specific figure for the number of testing laboratories in Egypt; according to Law No. 367 issued in 1954, graduates of the faculties of (Science, Medicine, Pharmacy, Veterinary Medicine, Agriculture) are entitled to obtain a licence to practise the testing profession.

In this context, Rasha Abdel Hadi*, a doctor working at a medical testing laboratory in Giza Governorate, explains that this sector suffers from many illegal practices, starting with thousands of laboratories practising the profession without a licence or renting them from others, particularly in rural areas and the governorates of Upper Egypt, noting that she trained at many of them so that she could join work at one of the large laboratories in her governorate.

She explains that most of these laboratories do not have the necessary equipment to perform medical tests, which makes them send the samples that need to be analysed to one of the large laboratories through a representative who comes daily to collect the samples in exchange for a percentage of the price, which does not enable them to compete fairly with the laboratories; in addition, many of those laboratories contract with doctors to refer patients to them in exchange for a percentage that the doctor receives monthly, which weakens the fair distribution of the work mechanism among those laboratories.

The laboratory doctor adds that “the strong financial solvency that characterises the large testing laboratory companies in Egypt enables them to control this sector and its prices, in addition to their expansion across the governorates and cities of Egypt, which makes them the main destination for many patients”, affirming that the “Al-Borg, Al-Mokhtabar and Alfa” laboratories are alone in performing certain medical tests in Egypt, especially those that require expensive equipment, such as some types of endocrine tests, which makes doctors direct their patients to the testing centres affiliated with them.

With the continuation of monopolistic practices and chaos in the medical testing sector in Egypt, patients’ suffering is worsening, especially with the imposition of unfair prices and with unqualified entities working in this medical sector.

Editorial correction: The first version of the report stated that the value of the loan that Integrated Diagnostics Holdings obtained from the International Finance Corporation in May 2021 amounted to USD 15 million, whereas it in fact amounted to USD 45 million according to the company’s announcement and the International Finance Corporation’s statement, both issued in May 2021.

Editorial correction: The first version of the report stated that the “Paradise Papers” leaks were published by the International Federation of Journalists, whereas the body that published them in 2017 is the International Consortium of Investigative Journalists (ICIJ).

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