In BMI's Business Environment Ratings table for the 17 countries in the MEA region, Egypt occupies an improved 9th position, up two places in relation to the previous quarter and now, significantly, above Israel. In global terms, however, Egypt ranks in the bottom third of the list featuring 71 countries assessed by BMI, held back by low per capita spending on drugs and the risks present within the country's pharmaceutical market operating environment, such as unfavourable pricing and reimbursement policies as well as the lack of adequate intellectual property (IP) protection. Nevertheless, due to some improvements in tackling counterfeits and reducing approval times, Egypt was downgraded to 'Watch List' status in the 2008 and 2009 editions of the Special 301 Submission prepared by the United States Trade Representative (USTR). Generally speaking, given its sizeable (and growing) population of over 76mn, Egypt will continue to represent significant commercial opportunities for multinational players. To this end, following its 2008 acquisition of Bristol-Myers Squibb (BMS)'s Egyptian branded generics business, in July 2009 UK pharmaceutical major GlaxoSmithKline (GSK) paid US$23.2mn for a portfolio of 13 branded generics sold in five other Middle Eastern countries. The drugs, which generated US$11.8mn in 2008 on the markets of Lebanon, Syria, Jordan, Libya and Yemen, will eventually be manufactured by GSK at its Egyptian plant in Giza, demonstrating the company's firm commitment to the local market. In the meantime, factors such as the government's plans for universal health insurance coverage, privatisation of pharmaceutical production and growing health awareness will be some of the key drivers of increased pharmaceutical expenditure in Egypt over the next five years. The market value at retail prices is forecast to rise from EGP12.98bn (US$2.34bn) in 2008 to EGP17.74bn (US$3.86bn) in 2013, posting a compound annual growth rate (CAGR) of 6.45% in local currency terms (but at 10.52% in US dollar terms) and representing 1.31% of GDP. However, the government's much-criticised restrictive pricing and reimbursement policies and IP provisions will continue to hamper faster market development. Additionally, Egypt's economic trajectory will continue to pose some risks to the modernisation of its healthcare and pharmaceutical systems. In the absence of substantial oil reserves, the country has had to rely on strict price controls to provide affordable healthcare, thus antagonising foreign industry and deterring investment. Nevertheless, since the advent of the Ahmad Nazif government, the long-term outlook for the Egyptian economy has improved substantially - the administration has lowered taxes, opened Egypt's industries up to foreign direct investment (FDI) and improved the business environment. The government has also identified manufacturing, tourism, communication and information technology and construction as key sectors to be developed for growth, which should also positively impact the country's pharmaceutical export potential.
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