Egypt’s drug shortage exposes deeper cracks in the pharmaceutical sector

Egypt’s pharmaceutical industry, which supplies more than 90 percent of the local market’s needs, is under strain. Industry leaders warn that drug shortages are not a tactic to push prices higher, but a reflection of structural imbalances between production costs and official price ceilings.

Ali Aouf, head of the Pharmaceutical Division at the Federation of Egyptian Chambers of Commerce (FEDCOC), told local media this week that the crisis threatens to deepen unless a compromise is reached between manufacturers, regulators, and importers.

Costs outpace official prices

At the heart of the crisis lies a mismatch between production costs and state-approved drug prices. The sector is heavily reliant on imported raw materials, packaging, and printing supplies, all denominated in foreign currency. With the Egyptian pound weakening from LE 30 to LE 50 against the US dollar, costs have surged well beyond the increases approved last year by the Egyptian Drug Authority (EDA).

Manufacturers argue that the approved price hikes were partial and insufficient, while the EDA has resisted further adjustments, citing the need to protect patients from unaffordable medications. The stalemate has left companies squeezed, especially those producing lower-margin essential drugs.

The rise of a black market

As official supply struggles to keep pace, a black market has emerged. Imported drugs, particularly those without local substitutes, are being sold at double their official price—sometimes reaching LE 50,000 per package compared to the standard LE 30,000.

This shadow market not only increases financial pressure on patients but also undermines trust in the official distribution system. It risks pushing vulnerable populations toward unregulated suppliers, where quality and safety standards are uncertain.

Balancing industry survival with patient access

The pharmaceutical industry’s dual identity as both a national security sector and a competitive business complicates policymaking. On one hand, local producers account for 92 percent of domestic demand, making them indispensable. On the other, if production becomes economically unviable, companies may reduce output or cut jobs, worsening shortages.

Aouf emphasized that the sector’s demand for a price adjustment—capped at around 10 percent—is modest compared to the real surge in costs. “We are not seeking profit, but rather maintaining a balance between production and the provision of medicine,” he said.

Risks of inaction

If the government maintains its rejection of any increases without addressing costs, companies warn they will be forced to scale back production. That could trigger a vicious cycle: fewer medicines on the market, greater reliance on imports, higher black-market activity, and deeper financial stress for households.

Beyond supply issues, layoffs in the pharmaceutical sector could ripple into the wider economy, undermining employment in an industry that has long been a pillar of Egyptian manufacturing.

A call for compromise

For now, the industry is calling for dialogue rather than confrontation. Aouf urged the state to prioritize patients’ interests while safeguarding the sustainability of local producers. Potential solutions could include targeted subsidies on imported inputs, temporary tax relief, or currency stabilization measures that reduce the cost burden on manufacturers.

The crisis illustrates a broader challenge facing Egypt: how to navigate a fragile economic environment, high import dependency, and currency volatility without undermining industries critical to public health. Unless a middle ground is found, the “real” shortage described by industry leaders may become Egypt’s new normal.