The supply crisis resulting from the regional war that has been raging since 28 February last touches all the vital sectors in Egypt, from gas to various food commodities and on to medicine, which relies on imported raw materials at a rate of 90%, at a cost of about $3 billion a year, in addition to hundreds of millions of dollars for the import of finished medicines for which no local alternatives are available, some of them life-saving.
For its part, the Egyptian Association for the Right to Medicine warned of the possibility of a medicine crisis as a result of the current regional repercussions, or of some companies exploiting the circumstances to raise prices, calling on the Egyptian Drug Authority and the Unified Procurement Authority to issue a statement clarifying the size of the current stock of raw materials and the status of shipments of finished medicines, and to announce their preparations in order to reassure public opinion and prevent market manipulation.
The association expected that rising shipping and energy costs, the rise of the dollar and the disruption of trade through the Red Sea would lead to delays in the arrival of raw materials, whose import bill exceeds $1.3 billion a year, as well as delays in the arrival of imported medicines worth about $700 million and of medical supplies linked to surgical operations, which may aggravate the medicine shortage and affect treatment and health insurance programmes.
For his part, Ali Ouf, head of the Pharmaceuticals Division at the Federation of Chambers of Commerce, acknowledged the possibility of the Egyptian medicine market being affected by the tensions to a large extent, and said in press statements that the continuation of the current geopolitical tensions for more than three months may push the pharmaceutical industry to face an expected increase in production costs of up to about 30%, pointing out that the medicine sector in Egypt is going through a delicate phase as a result of the simultaneous pressures arising from movements in the dollar exchange rate and the disruption of global supply chains, which places the industry before major challenges.
The United States and Israel attacked Iran at the end of February last, while Tehran responded by attacking Tel Aviv and US bases in the Gulf states, and the exchanged attacks are still continuing at the time of writing. At the same time, airspaces were closed and most flights suspended, in addition to the partial closure of the Strait of Hormuz and the threat to navigation in the Bab el-Mandeb Strait, which led ships to head towards the Cape of Good Hope around Africa, increasing costs and delaying their arrival.
With the growing risks to navigation in the Red Sea and the Hormuz and Bab el-Mandeb straits, the rise in shipping costs via the route around the Cape of Good Hope, along with the effects of the military escalation on global oil prices, and the rise in the exchange rate of the dollar in Egypt to more than EGP 52, experts in the medicine sector expect medicine prices to rise in the coming months, as well as delays in the arrival of some medicine shipments and medical supplies.
Observers warn that continued regional turmoil and the disruption of supply chains may push the market to face new pressures, whether in terms of prices or the availability of some vital products, and these fears take on particular importance given the heavy reliance of the local pharmaceutical industry.
For his part, Mahmoud Fouad, head of the Egyptian Association for the Right to Medicine, explains that previous experiences have shown that geopolitical crises, such as the Russian-Ukrainian war or the tensions linked to the war in Gaza and the disruption of navigation in the Red Sea, are often reflected in medicine supply chains, and he wonders whether the regulatory bodies have accurate data on stocks and clear management of potential crises, pointing out that the association contacted the foreign pharmaceutical companies operating in Egypt to ask them about the size of their stocks and their supply plans, and to understand market trends during the crisis.
He tells Zawia3: “The current fears are mainly linked to the possibility of delays in the arrival of medicine shipments or raw materials, for a period that may reach two months, as a result of the disruption of global trade routes and some shipments being forced to pass via the Cape of Good Hope route instead of the shorter routes, which will in turn affect factories’ ability to operate at their full production capacity.”
He stresses that Egypt relies to a large degree on importing pharmaceutical raw materials from abroad, in addition to fully manufactured imported medicines, and this heavy reliance makes the local market vulnerable to any disruption in international trade or in shipping prices and foreign currencies, noting that local pharmaceutical manufacturers are already facing pressures linked to rising production costs after the increase in energy and fuel prices, and some companies indicate that these costs have risen by rates that may reach about 20%.
He adds: “Rising shipping costs and changing maritime transport routes may lead to an additional increase in the costs of importing raw materials and medicines, along with the effect of the rising dollar; these factors may raise once again the question of increasing medicine prices, an issue that has sparked repeated controversy in past years amid demands by some parties to link prices to cost fluctuations.”
Fouad believes that the accuracy of official statements speaking of the existence of stocks sufficient for several months cannot be verified in the absence of declared official data, as information on medicine stocks, especially that related to government tenders or supplies to sovereign bodies, is not usually available to public opinion or even to those following the sector, adding that Egyptian factories usually keep a stock of raw materials to secure the production process, but the size of this stock and the regularity of its use remain unclear in the absence of declared data.
He notes that the medicine market in Egypt is already suffering from shortages in a limited number of products, amounting to about 168 products, stressing that the main responsibility at this stage falls on the Egyptian Drug Authority, as the regulator of the medicine market, to prevent a repeat of the acute crisis the market witnessed during 2023, and calling on it to announce clear data on the size of the strategic stock of raw materials and medicines, and to clarify the crisis management plan in the event that supply chains are affected.
At the official level, Dr Khaled Abdel Ghaffar, Minister of Health and Population, affirmed on 3 March of this month that the strategic stock of medicines, pharmaceutical raw materials and medical supplies is stable, and that some vital products have a reserve sufficient for up to three months, while the stock of other products extends beyond six months. Likewise, Dr Ali Ouf, head of the Pharmaceuticals Division at the Federation of Chambers of Commerce, stressed in media statements that the Egyptian medicine market has a strategic stock of raw materials and packaging materials sufficient for 6 months, extending to 10 months when the finished product is counted.
Repercussions of the regional tensions
MP Nevine Iskandar, a member of the Health Committee of the House of Representatives for the Coordination of Party Youth Leaders and Politicians, warned of the repercussions of escalating regional tensions on the medicine sector in Egypt, amid growing pressures on supply chains, trade movement and the provision of foreign currency, explaining that the local pharmaceutical industry relies for about 90% of its raw materials on imports, at an annual cost estimated at about $1.8 billion, in addition to about $600 million for importing finished medicines.
Nevine submitted a request for a general debate in parliament to assess the government’s policy in managing the medicine crisis and the extent to which it is consistent with the goals of strengthening economic resilience and reducing dependence on abroad, stressing that achieving medicine security requires localising domestic manufacturing and guaranteeing the sustained availability of essential medicines, especially medicines for chronic diseases.
The MP explains to Zawia3 that data presented by the Egyptian Drug Authority during previous discussions inside parliament showed that Egypt has a stock of medicines sufficient on average for about nine months, distributed between six months in government warehouses and three months in pharmacies, and that these estimates reflect a time average of the available stock of medicines circulating in the market.
Nevine believes that these figures should be viewed in light of the nature of the medicine market in Egypt, which relies to a large degree on imports, pointing out that about 90% of the components of locally manufactured medicines are imported from abroad, while the proportion of finished imported medicines does not exceed about 10%, and stressing that this heavy reliance on imports makes the medicine market vulnerable to any disruption in global trade or supply chains, especially amid the regional tensions and their effect on maritime navigation and air transport.
She says: “The medicine market in Egypt is already suffering from a shortage of some medicinal products, and the government previously announced that about 540 products were unavailable in the market, before later announcing that about 400 of them had been made available, which means that a shortage of nearly 100 medicinal products continues to this day, most of which depend entirely on imports.”
She adds that the effect of the current crises is not limited to fully imported medicines, but also extends to locally manufactured medicines, since their manufacture relies heavily on imported raw materials, explaining that many medicine factories have already begun to speak about the challenges they face in securing these materials, amid the disruption that global supply chains are witnessing.
Nevine expresses her hope that the state will not be forced to take decisions to raise prices during the current period, given the sensitivity of this sector and its importance for citizens, especially as medicine is an essential commodity that cannot be dispensed with, pointing out that many patients rely on medicines daily, especially patients with chronic diseases such as blood pressure and diabetes, as well as patients who need oncology medicines, medicines used to treat viruses or supplies related to kidney dialysis, and these groups cannot bear new price increases.
She explains that medicine pricing in Egypt is carried out centrally through the Egyptian Drug Authority, according to a binding system that sets medicine prices in the market, pointing out that the existence of a stock of medicines sufficient for about nine months should help maintain price stability during this period, and calling for no decisions to be taken to raise medicine prices while this stock is available, and for market stability to be maintained and the continued availability of medicines for citizens to be guaranteed.
She calls for preparation for the potential scenarios after the period covered by the available stock ends, pointing to the need for the bodies concerned to begin taking pre-emptive measures to deal with any disruptions that may hit medicine supply chains, and explaining that “these measures should include holding urgent meetings between the Drug Authority and the bodies concerned in the medicine sector, as well as working to diversify the sources of imports of raw materials and medicines, in a way that limits dependence on specific trade routes that may be affected by geopolitical crises”.
She notes that Egypt previously announced a strategy to localise the pharmaceutical industry, but recent international circumstances impose the need to assess the extent of progress in implementing this strategy and to determine what has been achieved on the ground, calling for these plans to be announced clearly to public opinion, along with issuing awareness guidelines to avoid a state of panic among citizens in the event of a temporary shortage of some medicines.
She also points to the importance of studying the possibility of diversifying the sources of imports of pharmaceutical raw materials, for a large part of which Egypt currently relies on countries such as China and India, stressing the need to search for additional alternatives in other markets to reduce the risks associated with reliance on a limited number of suppliers.
Medicine production affected by the war
The pharmaceutical industry in Egypt is by its nature highly vulnerable to any geopolitical or regional tensions, because of its heavy reliance on importing raw materials and manufacturing inputs from abroad, and this effect is not limited to Egypt alone, but includes most countries of the world that rely on international supply chains in producing medicines, according to Dr Mostafa El-Wakil, deputy head of the General Pharmacists Syndicate, who points out that political or military crises often push states to rearrange their priorities regarding the strategic stock of basic commodities, foremost among them medicine.
He tells Zawia3: “Medicine is a strategic and vital commodity, not a luxury, so the effects of any disruption in supply chains appear quickly on the market and on patients, and medicine production has already begun to be affected to some degree as a result of fears linked to import plans during the coming period”, pointing out that the continuation or widening of the tensions may lead to a shortage or deficit of some medicines.
He explains that reliance on imports is not limited to pharmaceutical raw materials only, but includes an integrated system of production inputs, such as packaging materials like aluminium foil, manufacturing powders, inks, papers and other components linked to the production process, pointing out that the rate of reliance on imports for these inputs is extremely high, currently reaching about 95%.
The deputy head of the General Pharmacists Syndicate expects the rise in the price of foreign currency to affect the cost of production, and consequently the prices of medicines and medical supplies, along with the rest of commodities, but he explains that any increase in medicine prices does not happen automatically or immediately with the movement of the dollar exchange rate, as this matter is subject to studies and regulatory procedures.
He shows that pharmaceutical companies facing an increase in production costs as a result of higher raw material prices or exchange rate fluctuations submit official requests to the Egyptian Drug Authority to reprice their products, with the authority studying these requests and assessing the stability of the economic changes before taking any decision on adjusting prices.
He also points out that companies usually rely on long-term import contracts to secure their raw material needs for periods that may extend to six or seven months, which mitigates the immediate effect of any sudden changes in prices or in supply chains; nevertheless, he believes that the possibility of an increase in the prices of some medicines remains plausible if economic pressures and rising import costs continue.
The deputy head believes that the current situation highlights the importance of strengthening local manufacturing, as complete reliance on imports represents a major weakness in the medicine system, pointing to an official orientation in recent years towards expanding the establishment of factories to produce pharmaceutical raw materials, with the aim of narrowing the gap, reducing dependence on abroad for the industry’s inputs and strengthening local production of raw materials and industrial inputs.
He explains that most countries now rely in their health systems on clear policies for stockpiling necessary medicines and medical materials, in anticipation of crises such as pandemics, wars or any sudden disruption, pointing out that Egypt already has a stock of medicines and basic materials sufficient for a period of time, but its existence does not necessarily mean the disappearance of the phenomenon of medicine shortages from the market, which happens for reasons including the shortage of some raw materials or problems in manufacturing, as well as the culture of medicine consumption, as many patients become accustomed to a specific brand name for a medicine and refuse to use alternatives that carry the same active ingredient and concentration but under different brand names.
For his part, Dr Mahmoud Fattouh, head of the General Syndicate of Government Pharmacists, believes that the military escalation and the disruption of shipping and global supply chains will necessarily be reflected in various sectors, among them the medicine sector, explaining that prolonging the war may aggravate the problem of medicine shortages in Egypt, especially under the compulsory pricing system, which sets medicine prices at low levels compared with production costs linked to the dollar exchange rate.
He explains to Zawia3 that the rise in the dollar exchange rate and in shipping and energy costs imposes great pressure on factories, which may push some of them to reduce production or to put some products on the market at a loss to avoid their registration being cancelled, considering that talk of a specific strategic stock of medicines is inaccurate, because stocks differ from one company to another.
The size of the medicine market in Egypt in 2025 is estimated at about $7.072 billion, with growth expected to reach $14.5 billion by 2034; meanwhile, medicine sales within the domestic market reached about EGP 307 billion, or about $6–7 billion, in 2024, a growth rate of 42% compared with the previous year. The market relies on local production that covers about 80% of needs, and there are more than 170 licensed medicine factories in Egypt, which produce more than 150 million packs of medicine a year.
Increased production costs
The pharmaceutical industry in Egypt relies to a large degree on international supply chains, especially regarding the transport of raw materials and production inputs, and the bulk of these materials is transported by sea freight, while another part is transported by air freight, and both routes have been affected recently as a result of regional tensions and disruption to navigation, according to Dr Mahfouz Ramzy, head of the Pharmaceutical Manufacturing Committee at the Pharmacists Syndicate.
He explains that these disruptions have led to a large rise in shipping costs, pointing out that the cost of transport has in some cases risen about five- to six-fold, in addition to the increased cost of insuring shipments, which is ultimately reflected in the direct and indirect cost of producing medicine.
He tells Zawia3: “The effect is not limited to transport costs only, but also extends to rising energy prices globally, which in turn leads to an increase in manufacturing costs inside factories, pointing out that the operating costs of many factories are directly linked to energy prices, which makes any rise in these prices automatically reflected in the cost of production, which includes the costs of labour, distribution, printing and packaging, and which together make up the final cost of the medicine.”
Ramzy explains that medicine in Egypt is subject to the compulsory pricing system, under Decision No. 499, which links the possibility of adjusting a medicine’s price to movement in the dollar exchange rate of up to 15%, upwards or downwards, and although the dollar exchange rate has moved recently, it does not, in his opinion, call for an immediate increase in medicine prices.
Regarding the effect of the crisis on production inputs, he explains that many components used in the pharmaceutical industry may see price increases, such as the paper used in printing, cardboard, package inserts, aluminium and the PVC used in tablet packs, in addition to empty capsules, starch and some other materials, pointing out that many of these inputs are manufactured inside Egypt, but their raw materials are imported from abroad and often arrive by sea freight in large quantities, which makes them vulnerable to rising transport costs.
He explains that the aluminium used in packaging medicinal tablets, as well as the PVC that forms the transparent part of the blister strip, are manufactured in factories inside Egypt, but the raw materials needed to produce them are imported from abroad, which makes their cost directly linked to the conditions of international trade and to shipping and energy prices.
He adds: “If the current circumstances continue for a long period, it may be necessary to consider some price adjustments, but he stressed that any increase must be calculated very precisely, and must take into account the economic circumstances of citizens and the social dimension of medicine, as an essential commodity that cannot be dispensed with.”
Nevertheless, the head of the Pharmaceutical Manufacturing Committee at the Pharmacists Syndicate opposes any general increases in medicine prices at the present time, especially for medicines for chronic diseases, such as blood pressure and diabetes medicines, given the burden that large increases may represent for patients, pointing out that patients’ inability to buy these medicines may lead to serious health complications whose cost the state will later bear in the hospital treatment system.
He believes that a basic aspect of the challenge facing companies is linked to medicine being a commodity with compulsory pricing, while many of the industry’s inputs are not subject to compulsory pricing, explaining that some importers or suppliers may set the prices of these inputs freely, which may increase the financial pressure on medicine-producing companies, as the absence of clear pricing for some industry inputs opens the door to speculation, especially in times of crisis or of rising foreign currency prices, when some suppliers may reduce the quantities offered and put them on the market at higher prices.
He continues: “The previous crises the medicine market witnessed in past years were linked to a large extent to the foreign currency shortage crisis and the sharp rise in the dollar exchange rate, which at the time led to a large increase in import and production costs, whereas companies currently do not face difficulty in securing foreign currency to import raw materials, as the state gives the medicine sector priority in the provision of foreign currency.”
He points out that Egypt currently has a strategic stock of pharmaceutical raw materials ranging between three and nine months, which gives the market a degree of stability in the short term, and that pharmaceutical companies usually build their production plans on the basis of sales forecasts and secure their raw material needs according to these forecasts.
Amid regional tensions and geopolitical crises, the medicine market in Egypt finds itself before a new test of its capacity to withstand the fluctuations of global supply chains and the rise in energy prices and the dollar exchange rate.
Between official reassurances about the existence of a strategic stock sufficient for several months and warnings from experts about the repercussions of continued tensions on production costs and the availability of some products, the future of the market remains linked to developments in the regional scene and the speed with which the bodies concerned move to manage potential risks.
Editorial correction: The first version of the report attributed medicine sales in the domestic market (EGP 307 billion) to 2025; the correct year is 2024, according to the statement of the Egyptian Drug Authority.
