Opportunities to invest in health care for Egypt’s 96m citizens continue to increase as the population grows and applies pressure on existing hospital infrastructure, including updating technology, training and retaining skilled personnel. Attracting new market participants will be critical to meet new demands brought on by the changing patterns in hospital visits as the government implements universal health insurance coverage.
Key Stakeholders
Egypt’s health care system is composed of a variety of public and private entities. The primary government actor is the Ministry of Health and Population (MoHP), which dictates health policy and provides most of the country’s services at free, public hospitals. According to the latest data available from Egypt’s Central Agency for Public Mobilisation and Statistics (CAPMAS), in 2015 public facilities provided 75% of Egypt’s available hospital beds – a total of 93,267 out of 124,361. That same year, CAPMAS reported the government paid LE4.5m ($297,000) in treatment costs for citizens receiving public care within Egypt. The management of hospitals is split between the Ministry of Higher Education (MoHE), which oversees university teaching hospitals such as Qasr El Eyni at Cairo University, while the Ministry of Social Affairs (MoSA) is responsible for religiously affiliated and other charitable organisations that provide health services. The landscape of private facilities continues to grow and diversify, including both for-profit and not-for-profit providers, ranging from large international hospitals such as Children Cancer Hospital Egypt 57357, located in old Cairo and achieving high cancer cure rates in benign brain tumours, to smaller NGO-funded clinics. As of 2015 the number of private facilities that provide beds had reached 60.3% of the total, from 49.9% in 2003. However, the number of beds in those same facilities account for just 25% of the overall number of beds available.
Government Expenditures
Egypt’s constitution, updated in 2014, guarantees each citizen the right to quality health care and mandates that government spending on health care reach at least 3% of GDP. Although other countries in the region regularly meet or exceed this target – Turkey, spent 4.3% of GDP on health in 2016 and Jordan’s expenditure 7.5% in 2014 – in recent history Egypt has fallen short of this goal. This has prompted criticism from health care professionals and international organisations. The World Bank estimates Egypt’s public expenditure on health care amounted to 2.2% of GDP in 2014 compared to the global average of 6%. According to the World Health Organisation (WHO), in 2016 health spending was 5.6% of the overall government expenditure, with the FY 2016/17 budget allocating LE53.3bn ($3.5bn) to sector spending, representing 5.7% of total government expenditure, or 1.6% of GDP.
However, there are indications this is improving. As part of the FY 2017/18 budget, the MoHP announced the health sector would receive LE103bn ($6.8bn), equivalent to 2.5% of an anticipated 2018 GDP of LE4.1trn ($270.1bn), or 5.7% of total government spending. Continuing the upward trend, the 2017 budget for university hospitals is LE9.9bn ($652.2m), up 16.4% from 2016. In addition to plans for increased budgetary expenditures, in May 2017 Dr Ahmed Emad Eldin Rady, the minister of health, announced the MoHP plan to produce a map of existing medical capabilities in order to determine the specific needs of each gover-norate. The ministry has also committed to developing additional research facilities, announcing in September 2017 that in the 2014-17 period it had established 17 new hospitals, reaching a total of 106. At the time of the announcement, four additional university hospitals were ready to be inaugurated, including a National Liver Institute Hospital at Menoufia University, Kafr El Sheikh University Hospital, Al Rajhi Hospital in Assiut, and the New Children’s Hospital at Ain Shams University.
Basic Care Status
Egypt has achieved success in reaching international health benchmarks set by the WHO, including substantially reducing child and maternal mortality rates while maintaining a low prevalence of HIV/AIDS. UNICEF’s 2017 “Statistical Digest” highlighted maternal mortality in 2015 was down to 49 maternal deaths per 100,000 live births, far below the global rate of 70. Similarly, deaths for children under the age of one per 1000 live births declined significantly from 63 in 1990 to 15.8 in 2016. In addition, according to the Institute for Health Metrics and Evaluation (IHME), 2016 saw the average life expectancy reach 75 years for Egyptian women and 69.4 years for men, both above the global average.
However, as also noted by the IHME, Egypt has not yet closed the gap between its level of access to quality health care and the best possible level of provision. The discrepancy between urban and rural access and quality persists, particularly in Upper Egypt, as well as access based on economic means. According to the US Agency for International Development (USAID), low-income women are 20% less likely to receive regular antenatal care than high-income women, while mortality rates for children under five are 19 deaths per 1000 live births for the wealthiest quintile compared to 42 deaths for the poorest.
CAPMAS also notes that of Egypt’s 1397 first aid centres, the most crowded are in the Upper Egypt governorates of Minya, Asyut and Sohag. The minister of health highlighted that upgrades to Egypt’s 3642 intensive care units from 2015 to 2017 have increased the percentage of units that are active and accessible from 40% to 95%. Another basic-care shortcoming comes in the form of child and adult nutrition. Despite becoming a middle-income country in the 2000s, Egypt has experienced an increase in both chronic undernutrition and overnutrition. In 2016 the International Food Policy Research Institute (IFPRI) identified Egypt’s longstanding food subsidy programme as a fundamental part of the problem; subsidised items which include staples like bread, sugar, edible oil and rice are high in calories but low in nutritional value. Changes made to the food subsidies in 2017 should help to address this issue moving forward (see Agriculture Chapter).
Medical Staff & Training
In addition to the need for increased hospital space and beds (see analysis), the health care sector faces a key challenge when it comes to staffing. Dr Mohamed Sherief, vice-president of the private Misr International Hospital in Cairo, told OBG, “In Egypt the ratio of hospital beds to people is already low by international standards, and the personnel compared to the number of beds is lower still.”
Indeed, the latest data from the CIA World Factbook puts Egypt’s physician density at 0.81 physicians per 1000 people, well below many of its neighbours, including Jordan at 2.65, Turkey at 1.75 and the UAE at 1.56. Estimates from financial services firm Colliers International indicate that to manage the new hospital space needed over the next 10 years, Egypt will require an additional 6000 doctors across all governorates each year, with Cairo and Giza alone requiring 1100. Sherief highlighted the nurse shortage as particularly acute; latest figures from the WHO put Egypt’s nurse density at 14.8 per 10,000 people, one of the lowest in the MENA region. The WHO has cited a variety of reasons for this low figure, including minimal pay and a lack of social respect for nurses, as well as high turnover at the MoHP preventing the passage of reforms to improve working conditions.
Sherief told OBG that sourcing international talent had been made more all the more challenging by the November 2016 devaluation of the Egyptian pound, explaining, “Before the devaluation, we were bringing some nurses from abroad, but after, salaries for foreign staff are very high; average international salaries are around $700-800 per month, making them often three times as expensive as Egyptian nurses.”
International Interest
As with other sectors of the economy, the currency flotation in combination with other pro-business policies, such as the New Investment Law (Law No. 72 of 2017) passed in May 2017 has made Egypt’s health care space a more attractive market for international investors. GCC investors remain especially active in building the supply of hospital infrastructure. The Cleopatra Hospitals Group, owned by Dubai-based Abraaj Group, has consistently invested in Egypt along with other players (see analysis). In addition to physical infrastructure, there has been increased interest in the pharmaceuticals sector. During an August 2017 visit, representatives of US pharmaceuticals companies hinted at possible investments in Egypt, while British manufacturer GlaxoSmithKline announced that their investments in the country had reached $800m, with the company expressing a desire to expand further into the pharmaceuticals sector.
Health care also remains a popular sector for international development agencies, despite August 2017 headlines of the US holding back aid delivery. In September 2017, USAID signed a $6m agreement to support the continuing MoHP efforts to improve women’s and reproductive health. As part of a $400m World Bank programme, the authorities launched a conditional cash transfer scheme that offers regular payments to families based on their use of maternal and child health care services in an effort to improve nutrition and health outcomes.
Insurance Update
Supervised by the MoHP, Egypt’s public Health Insurance Organisation (HIO) was established in 1964 to oversee the provision of health insurance to workers in the formal sector. In recent years, private insurance companies have become increasingly popular, with the Egyptian State Information Service estimating that 30% of the population is enrolled in private health insurance plans. However, according to IHME, out-of-pocket spending still comprises the largest portion of financing health care each year at $30.2bn out of a total $51.8bn. These figures are a significant reason behind Egypt’s public commitment to achieving universal health coverage by 2030.
In May 2017 the minister of health announced a new draft law on medical insurance was under review by the State Council to be revised for referral to Parliament. If approved, the reformed health insurance system would cover the cost of treatment for citizens who cannot afford to pay as determined by the Ministry of Social Solidarity, which at that time had estimated this to be approximately 30-40% of the population. Ultimately, Egypt intends to implement the system via the use of electronic cards, following the model of countries such as France. A pilot project was recently launched in seven governorates as the first step towards the implementation of this long-promised, if controversial, universal health insurance initiative. Announcement of the proposed law has met with criticism, including from Egypt’s Doctors Syndicate, both on how care will be administered, and the process by which hospitals are expected to handle a surge of new patients. Sherief of Misr Hospital told OBG, “I can serve 10,000 customers per day, but if tomorrow I found 100,000 at my door, I would not be able to provide service to anyone. People insured privately are currently around 20-30% of the population. If tomorrow these services are open to the whole population, this will be a real challenge.”
Pharmaceuticals Industry
Dating back to 1939, today Egypt’s pharmaceuticals industry is composed of 165 factories manufacturing products that meet just over 90% of the large and growing population’s needs. However, the November 2016 currency devaluation hit the industry particularly hard, exacerbating a longstanding dispute over the issue of government-set prices for pharmaceuticals products.
Historically, the government did not allow the private sector to set prices for potentially life-saving medicines as it was determined to be too politically sensitive. However, from the perspective of Egyptian manufacturers, this has made for an unsustainable business environment as low prices have made profitability a challenge both from domestic sales and exports, since prices listed on the international market are tied to local prices. After a series of negotiations between pharmaceuticals industry representatives and the MoHP, Egypt announced price increases for a number of products in February 2017, covering 15% of domestically manufactured medicines and 20% of imported medicines, ostensibly to cover 30-50% of the value of the depreciation of the Egyptian pound.
While this was seen as progress, according to company leaders, profitability continues to be a challenge. Amal Saad, CEO of local company Riva Pharma told OBG, “There has been a 15% price raise for products, but given that the devaluation was more than 100%, we are back to earning even less than under previous prices. This has been even more challenging for some companies, given the price distortion resulting from different companies receiving different prices for the same generic products, with variances up to LE100 ($6.60).” In an effort to remain financially viable, companies have been adjusting production strategies.
Dr Mohamed Mabrouk, CEO of Pharmed Healthcare, told OBG, “Companies need to pursue parallel solutions, focusing both on export markets and registering new products for local markets at a price that allows for cost recovery.” Despite challenges, Saad believes there are long-term opportunities in the pharmaceutical industry, particularly as a cost-effective producer of generics for export: “The industry can bring foreign currency to Egypt because we make good medicine at a low price. We are looking to developing markets that are ripe for entry in sub-Saharan Africa, as well as Yemen, Iraq, Sudan and Libya because they do not manufacture locally and Egyptian products are well received.” Egypt is still developing as an export market; as of August 2017, local pharmaceuticals companies announced exports for the first half of 2017, worth $102m, were down 18.4% from $121m during the same period in 2016, with local press citing companies such as Egyptian International Pharmaceuticals Industries, Pharco Corporation and Medical Union Pharmaceuticals as the leading exporters, respectively. However, local market sales were stronger, reported at LE23.1bn ($1.5bn) over the first half of 2017, up by 26.8% from the same period the previous year.
Communicable Diseases
Hepatitis B and C remain leading causes of death across the country. The WHO estimates that roughly 7% of Egyptians suffer from hepatitis C, a highly infectious blood-borne virus, making it the highest incidence in the world. This elevated rate is often attributed to infections contracted from the use of inadequately sterilised needles during mass campaigns to treat the chronic parasitic disease schistosomiasis between the 1960s and 1980s. A 2015 study from Egypt’s National Liver Institute and US-based Centre for Disease Analysis estimated the economic burden of hepatitis C at 1.4% of Egypt’s GDP. As with many diseases, according to the most recent Demographic and Health Survey (DHS), Upper Egypt suffers the most. However, a significant success story of recent years is been the successful local production of hepatitis C treatments. Mohamed Mabrouk of Pharmed Healthcare – one of the 18 companies with a licence from Gilead, the US innovator company of the treatment of hepatitis C, to locally produce the drug Sofosbuvir – told OBG, “Egypt has treated more than 1m patients from mid-2015 through the beginning of 2017.” Egypt has also been working to translate this local success in treating hepatitis C into a larger medical tourism endeavour, promoting travel to Egypt for high-quality, low-cost treatment as a way to see the country’s tourist sites.
Non-Communicable Diseases
Egypt’s primary health challenge remains combating non-communicable diseases (NCDs), which are estimated to account for 82% of all deaths and 67% of premature deaths in the country, according to the WHO. The IHME reported the two leading causes of death in the country as NCDs: ischemic heart disease and cerebrovascular disease. Heart disease is diagnosed at double the rate of neighbours Jordan and Bahrain. As laid out in the most recent “Egypt Health Issues Survey” by the MoHP, hypertension, smoking and obesity remain major risk factors that can lead to life-threatening NCDs such as diabetes and cardiovascular disease. According to a 2017 study from the IHME’s Global Burden of Disease research programme, Egypt had the world’s highest rate of obese adults, with 35% of the population categorised as such. A 2017 CAPMAS survey found that 20.2% of Egyptians over the age of 15, or 12.6m people, smoke, with the average annual expenditure on cigarettes a year per family standing at LE3968 ($261). In addition, around one in six Egyptians between the ages of 15 and 59 was classified as hypertensive, with 73% of men and 47% of women unaware of their condition.
Outlook
As the Egyptian population grows and the government continues to develop legislation for universal health coverage by 2030, there will be an increasing need for services and facilities, presenting widespread opportunities for provision of goods, services and training in both urban and rural settings.
One of the biggest success stories in recent years has been the local production of hepatitis C treatments, with more than 1m patients treated from mid-2015 to 2017
Read More from OBG
