Sarah Farid

900113953
ECON 302 Dr. Tarek Selim
Research Assignment 3
Pharmaceutical Market Analysis in Egypt

Product-Price Table:
The following represents the product-price table for the top selling 10 drugs in the
Egyptian Pharmaceutical industry.

Product
Price
(L.E)
Product
Price
(L.E.)

Cefotax 1g
16

Amaryl 1 mg
11

Erec 100 mg
48

Flumox 1g Augmentin 1g
7
58

Diamicron 80mg Virecta 100mg Cataflam 50 mg Congestal Biomil1 450 gm

9
9
18
9
17

It must be noted that when dealing with the pharmaceutical industry as a whole, there is a
distinction between essential drugs such as insulin for diabetes patients and non-essential
drugs and pharmaceutical products. Of course, essential drugs are relatively price and
income inelastic when compared to non-essential drugs.

Market Organization:
The Pharmaceutical Industry in Egypt consists of:

Public Sector Companies (subsidiaries of Drug Holding Company now known as

Holdipharma)
Local Private Sector Companies (LPSCs)
Multinational Corporations (MNCs)

There are a total of 47 total manufacturers in Egypt, and out of these, only 8 are public
sector companies. Half the market share belongs to 10 manufacturers (6 MNCs and 4
LPSCs)

Market Share of the Top 10 Pharmaceutical Manufacturers in Egypt

Amriya
Pharmaceuticals
, 2.8
Sermer, 3

GlaxoSmithKline
, 7.5

Amoun Pharm.
Co, 3.5

Bristol-Myer
Squibb, 4.2

Novartis, 6.7
Pfizer, 4.3

Sanofi-Aventis,
6.3

PHARCO,
4.9
EIPICO, 5.1

After researching the market thoroughly, I believe the best way to segment it would be to
first segment the whole market into two large segments. The first segment consists of the
10 manufacturers with 50% market share which we previously mentioned. All other
manufacturers represent the other segment.

Pharmaceutical
Market (Egypt)

10 Companies
with highest
market share

37 other
companies with
remaining
market share

Then after segmenting the market as such, I took a more in-depth look at the two
segments. I believe the 10 companies with the highest market share represent a
differentiated oligopoly, which is a combination of an oligopoly and monopolistic

competition in the sense that these 10 firms compete fiercely because their medicines are
homogenous in terms of consumer usage and effectiveness. Also, fixed costs are high due
to the enormous amount of financing that goes into Research and Development. They are
differentiated, however, it terms of brand names and each of the 10 manufacturers is a
monopolist over its own brand(s).
An example of this would be GlaxoSmithKlines monopoly over the brand of Panadol,
which is the most well-known and highest selling over the counter pain reliever and fever
reducer in Egypt. The active ingredient of Panadol is Paracetamol, which is also the
active ingredient in Cetal, another Paracetamol-based drug manufactured by EIPICO, but
since Panadol is a popular brand name and has a better reputation, it has an advantage in
terms of sales over Cetal and hence GlaxoSmithKline has a competitive advantage over
EIPICO and other brands. To conclude, brand loyalty is crucial within these 10
manufacturers as they differentiate themselves based on not only price, but also
quality and market share.
The remaining 37 manufacturers with the remaining 50% of market share can be
considered to exhibit perfect competition since most of their products are homogenous
and since brands are not well-known, there is no brand loyalty. Consumers are likely to
buy products that are most accessible to them in terms of price and in terms of physical
availability. Since the firms are mostly price-takers, a firm must be able to produce with
the lowest costs in order to achieve a competitive advantage. The nature of competition
is mostly dependent on price (cost-minimization).

The Nature of Competition

As I previously stated, analyzing the market called my attention to the fact that the
differentiated oligopoly (10 top firms) had a nature of competition based on not only
price, but also quality and market share. The perfectly competitive market has a nature of
competition based on marketing products to consumers at decent prices while minimizing
costs. This was further asserted during my interview with Dr. Riham ElAsady, a
representative from the World Health Organization (WHO). Dr. ElAsady is the technical
officer of the department of Health Care Delivery. She had this to say about the nature of
competition of the pharmaceutical market:
The market of pharmaceuticals is quite a unique one in that the products are not always
marketed to the target market (patients) directly. Drugs are usually marketed first to doctors in
hospitals or clinics (and to pharmacists in pharmacies) to persuade them to keep the
manufacturer's drug in stock and to use it in practice before they are marketed to the general
public. When it comes to companies with high market share such as Novartis and
GlaxoSmithKline, each manufacturer differentiates itself on the basis of market share, quality of
their products and customer loyalty. For the remaining companies, they rarely go through the
intermediary process of marketing to doctors or pharmacists first, rather, they market directly to
patients in the general public. Since much of the population is inadequately educated (especially
in medical terminology), and since many of the drugs they manufacture are generic and R&D
expenses are not as high, the companies differentiate themselves on the basis of prices more
than anything else.

Sources:
ElAsady, Riham S. "The Pharmaceutical Market in Egypt." Personal interview. 16 Nov.
2014.
Saafan, Walid. "Egyptian Pharma Sector." Strategy & Corporate Performance Sector at

SAIB. Socit Arabe Internationale De Banque. Web.

"THE PHARMACEUTICAL MARKET IN EGYPT." Healthcare and Pharmaceuticals in

Egypt (n.d.): n. pag. American Chamber of Commerce in Egypt. Business Studies

and Analytical Center. Web.
<https://www.amcham.org.eg/resources_publications/publications/business_studies
/PDF%20Files/pharmasample.pdf>.
"Pharmaceuticals." General Authority for Investment