Has Egyptian Arabic falling

Egypt's healthcare market on a growth path

Security is a political priority

The domestic political situation in the Arab Republic of Egypt has stabilized since the summer of 2013. Safety is a priority and other issues are secondary. The state of emergency has already been extended several times in a row. Since the re-election of President Abdel Fattah El Sisi in March 2018, there have been even more signs of continuity. Major projects such as the new capital, the "1.5 million feddan" land reclamation project, the economic zone on the Suez Canal and the first Egyptian nuclear power plant are likely to continue vigorously.

The unpopular dismantling of the multi-billion dollar subsidies for fuel and electricity is expected to be completed in a few years. The savings are intended to reduce the growing budget deficit and provide better security for those in need. In addition, the expansion of the infrastructure enjoys priority and is supported by foreign donors with loans. In mid-2018, the supply of electricity and natural gas, falling inflation and rising foreign exchange reserves were massively better than in the recent past.

Egypt mainly exports raw materials and low-processing products and, on the other hand, is heavily dependent on imports, especially for machines and vehicles. International know-how is often used for special technical tasks. In terms of foreign policy, the El Sisi government has been expanding its cooperation with numerous countries, particularly since 2015. Egypt is part of a dense network of trade agreements and has an association agreement with the European Union, which is a key trading partner. Economic cooperation with Russia and China has increased significantly. In the natural gas sector, the construction of a pipeline to Cyprus is pending, and an electricity exchange with Sudan is to be established shortly in addition to Saudi Arabia. Relations with African countries, which are becoming more interesting as economic partners, have recently been expanded.

Basic demographic data for Egypt

2014 2015 2016
Total population (in millions) 91,8 93,8 95,7
Population growth (in%) 2,2 2,1 2,0
Life expectancy at birth women (in years) 72,6 73,1 73,5
Life expectancy at birth men (in years) 69,9 70,3 70,7
Age structure of the population
Share of under 14-year-olds (in%) 31,3 31,3 31,3
Share of people over 65 years of age (in%) 5,0 5,1 5,1

Source: CAPMAS statistics office

Health expenditure Egypt

2017 * 2018 * 2019 *
Total (in billion US $) 8,3 9,0 9,5
.per capita (in US $) 85,3 90,4 93,4
Share (state; in%) 39,8 39,9 39,9
Share (private; in%) 60,2 60,1 60,1

* Estimate or forecast

Source: Business Monitor International (BMI Research)

Hospitals and Doctors in Egypt

2014 2015 2016
Number of hospitals 2.062 2.069 2.076
.Private 1.403 1.408 1.412
.state 659 661 664
number of beds 130.900 126.500 122.248
Number of doctors 281.972 296.007 310.742
.per 100,000 inhabitants 31 32 32

Sources: BMI Research; Statistics Office CAPMAS; Calculations by Germany Trade & Invest

High dependency on imports for medical technology

The combination of a growing domestic market, high dependency on imports and still low per capita spending means that Egypt continues to appear as an attractive healthcare market. With the increase in life expectancy, more and more elderly patients have to be cared for. The fact that the government wants to increase the coverage of health insurance should provide the underfunded system with new financial resources. So far, the government's options to resolve the investment backlog in the healthcare sector have remained very limited. Projects are partly based on loans from international donors. In addition to the public health providers, private companies have established themselves with an offer at an international level. Their presence in Egypt is increasing. Several large private investment projects were pending in mid-2018. In Alexandria, in Matruh and in the new administrative capital east of Cairo, "Medical Cities" with extensive health infrastructure are being built. In addition, there are at least three new hospitals in the greater Cairo area as well as a specialized oncology and a radiology clinic.

The health insurance system is to be expanded

In Egypt, employees are mostly insured through their public or private employers, although the scope of benefits and the amount of co-payments can vary widely. The government's goal is to expand the reach of health insurance. As part of the Health Insurance Organization, which was founded in 1964, around 50 million out of around 93 million residents were insured in 2014. The publication of the implementing provisions for the "Law on comprehensive health insurance scheme; Law number 2-2018" is expected in mid-2018. For the first time, all citizens are to be included in the system. According to media reports, compulsory membership and income-related contributions are planned. Employers should pay bonuses worth four percent of employee salaries and employees one percent. It is also planned that all companies active in the country pay sales tax of 0.0025 percent to finance health care.

The state wants to enable free membership for financially weak citizens. In order to strengthen the quality competition, it is provided that insured persons are given a choice of where they can be treated. Starting with the first of the 27 governorates, the new system is to be gradually extended to the entire country by 2032. Port Said in the north of the country should make the start. Private health providers hope for quick clarity as to whether and to what extent the state wants to regulate the prices for private health services.

Significant increase in chronic diseases

According to media reports, diabetes, obesity and high blood pressure are on the rise as a result of changed lifestyles and eating habits. Egypt also has an exceptionally high prevalence of hepatitis C, which is believed to be the result of poor hygiene in previous mass vaccinations of children. The World Bank is providing the country with a US $ 200 million loan to conduct an extensive nationwide survey. The government plans for Egypt to be hepatitis C free by 2020. The experience gained in the fight against hepatitis C will also serve to stimulate medical tourism in this area. The "Tour n 'Cure" program was developed for this purpose. In the Siwa Oasis, natural treatments are also said to attract medical tourists. In addition, new visas are being developed specifically for medical tourists.

Medical technology imports continue to grow

In 2016, as in previous years, Germany was Egypt's most important supplier country for medical technology with a share of 36.6 percent. The USA achieved 12.4 percent and China 10.1 percent. All other reference countries achieved significantly lower results. In terms of value, Germany primarily supplied other instruments and devices (US $ 54.7 million), electrodiagnostic apparatus (US $ 34.2 million) and portable aids (US $ 22.3 million). The weak year 2016 is an exceptional case due to the height of the currency crisis and the release of the Egyptian pound. Everything indicates that medical technology imports will return to the usual growth path in the following years.

Forecasts for Medical Technology Sales in Egypt (in MILLION US $)

2017 * 2018 * 2021 *
Bandages 18,4 21,6 33,1
Sutures 9,2 10,9 16,9
Syringes, needles and catheters 26,4 30,9 46,1
Other consumables 10,4 12,5 18,5
Electro-diagnostic apparatus 55,0 62,8 82,4
Radiological apparatus 23,7 29,6 51,8
Parts and accessories for imaging procedures 15,9 17,9 22,5
Dental capital goods 9,6 11,2 15,5
Dental instruments 21,1 25,6 36,8
Orthopedic technology and prosthetics 27,3 31,9 46,1
Aids for patients 42,6 50,4 74,3
Therapy devices 15,2 17,7 23,6
Other medical equipment 118,3 135,9 192,9
total 393,1 458,8 530,7

* Estimate or forecast

Source: BMI Research

Local production in Egypt is mainly limited to bandages, needles, syringes, tubes, medical furniture and basic products for dialysis. This means that only this requirement can be met from domestic sources. Large international companies in the industry do not currently manufacture in Egypt. Some start-ups are also active in the health sector. For example, Mogassam produces 3D printers for the dental sector. Vezeeta offers the option of coordinating doctor's appointments online and evaluating services. Ta2heal develops interactive software for children with learning difficulties.

Interesting market for German providers

Since the need for medical technology will continue to be covered by imports for the foreseeable future, Egypt is an interesting market for German suppliers. The implementation of some investment projects is likely to broaden the local supply, but not be able to meet the demand decisively. In the pipeline is a factory for unspecified medical technology products of the partners Medtech from the Republic of Korea and the National Organization for Military Production. The Ministries of Higher Education and Military Production are planning a research-intensive company to manufacture medical equipment and prosthetics.

At the initiative of the Ministry of Health, one of three international companies will build a factory for blood products such as plasma for around 280 million euros. A subsidiary of the state-owned Vacsera, the Abu Dhabi Medical Devices Company and Maadi Company for Engineering Industries are planning to build a factory for disposable syringes with a capacity of 100 million units annually within two years. AMECATH wants to build a second plant for the manufacture of catheter kits.

Rehabilitation and long-term care in a new dimension

In 2017, Colliers International analyzed market opportunities and future trends in the publication "The Pulse. Egypt Healthcare". The market researchers assume that in the course of technical progress the demand for surgical centers with short patient stays will increase. Since the number of people over 65 years of age is set to skyrocket from 4.8 million to 16 million between 2015 and 2050, the topics of rehabilitation and long-term care will take on a completely new dimension. Laboratories and diagnostic centers will also be increasingly required. The already existing trend towards beauty treatments and the associated wellness and cosmetics are fueling demand, especially in the more affluent areas of Cairo. Last but not least, Colliers concludes from the large population and the occupancy of the hospitals that basic medical care must also be significantly expanded.

Heavily regulated environment

Medical device manufacturers and importers must register their devices with the Central Administration of Pharmaceutical Affairs (CAPA) at the Department of Health in order to obtain marketing approval. Depending on the nature of the goods, various documents may be required for the registration application, including a declaration of conformity from the manufacturer, a consular certified over-the-counter certificate and proof of good manufacturing practice.

Medicines and medical devices must be imported into Egypt directly from the country of origin. Anesthetic or psychotropic substances and their preliminary products are subject to approval. The import of goods into Egypt is only possible after the CAPA has been inspected at the time of import.

The importer of medical devices must provide evidence that they are brand new and that they have customer service for their products, including maintenance, spare parts procurement and repairs. According to several sources of information, the Ministry of Health bans the import of used and remanufactured medical technology. This also applies to donated medical equipment.

Direct purchases from private healthcare facilities are common

Central tendering portals for the healthcare industry do not exist in Egypt. In general, various jobs advertise on their own websites or in local newspapers. This is mostly done in Arabic and sometimes with short deadlines from the perspective of international providers. The Tenders Alert Service of the American Chamber of Commerce in Egypt is helpful. It also offers sector-specific compilations of tenders for the "Medical - Pharmaceuticals & Laboratory Sector".

In the absence of local production, Egyptian customers are particularly dependent on foreign products for high-tech products. El Gomhoreya is a large government medical device importer and distributor. Direct purchases from private health facilities abroad are also common. German products are highly valued in Egypt. A good aftersale service as well as locally available spare parts and a reliable maintenance service can be arguments to set yourself apart from the competition. Bureaucratic requirements can be time-consuming in doing business with the public sector. The private customer business is characterized by personal relationships and aggressive sales strategies by local manufacturers, especially for instruments and implants.

The AHK Egypt can help with the search for dealers / sales partners. As part of the market entry advice, she offers, among other things, address research, the mediation of business partners and credit information. There is usually no shortage of potential interested parties to work with German companies. However, the potential partners often differ greatly in terms of quality. This means aspects such as a proactive approach, constant commitment, reliability and trustworthiness. The support from the locally well-networked AHK with 3,200 members can be a considerable relief and reduce the risk of a mistake. When dealing with Egyptian partners, show interest and regular visits are very important. Sporadic and superficial contacts are quickly perceived as disinterest. Last but not least, lively contact also ensures that both partners work permanently towards the same goals and that deviations or misunderstandings are avoided.

Cultural differences in business life

Compared to Germany, Egypt is a very conservative country that is strongly influenced by Sunni Islam. Eating, drinking and smoking in public is frowned upon during the fasting month of Ramadan. In business life, Egyptian partners usually know the cultural differences. However, this does not automatically mean that they are also understood and accepted. Conservative and, for women, not too short business attire is a good choice. Titles and hierarchies play a more important role in Egypt than is sometimes recognizable for foreign guests. Conversations with a counterpart should take place on a similar hierarchical level. The main goal is always to get to know each other and to build a basis of trust. Instead of a clear no, more indirect formulations are common or the indication that something is to be checked or tried.

Popular themes include national achievements and the country's most delightful travel destinations, sports and the family. Egyptian interlocutors are also aware of the positive and negative aspects of their country. However, if critical points are addressed by foreigners, this can quickly be hurtful and instructive and damage the important personal level. Conversations about politics, religion, the military, Israel, women and homosexuality, for example, are almost guaranteed to lead to faux pas.

English is widely used as a business language, but it cannot automatically be taken for granted. Arabic translators can be of great help. Anyone who learns a few words of Egyptian Arabic can use them as an icebreaker. Business cards with English and Arabic letters and Arabic or bilingual company documents that demonstrate commitment and interest in the country are even better. German guests are expected to be punctual, which is otherwise rather lax in Egypt. The physical distance is less than in Germany, and distance is quickly interpreted as a rejection.

Conclusions for German exporters

opportunities Risks
Expansion of the health insurance system. Expect state price limits for private healthcare providers.
Medical technology requirements for "medical cities" and new hospitals. Generally poor planning security.
High dependency on imports will continue in the medium term. Bureaucracy and corruption.
Recovery in purchasing power after the 2017 inflation shock. Very different levels of qualification of skilled workers.
The comparatively low level of expenditure suggests significant growth opportunities. Doctors and paramedical staff are often migrating abroad.

In order to be able to participate in the opportunities of the growing Egyptian healthcare market, companies should closely follow current developments. New legal requirements such as the Health Insurance Act change the framework decisively. Private companies are currently waiting for the details of the implementing regulations. Previously, media reports about possible price caps or price targets caused concern. In addition, it was observed in the first half of 2018 that significantly more new investment projects were announced. In particular, projects such as the three "Medical Cities", but also the construction and renovation of hospitals, create a need for medical technology.

German products highly valued

Since an estimated 90 percent of the demand is covered by imports, foreign suppliers in particular are in competition with one another. Basic information on registration and the regulations in the field of medical technology can be found on the website of the Egyptian Drug Authority. According to reports, Egyptian authorities do not always answer inquiries from unknown people by email. At times it can be difficult to reach someone by phone from official agencies. In addition, the English language skills of interlocutors can vary greatly. In particularly important cases, it makes most sense to inquire directly at the ministry or the authority and to bring an Arabic-speaking person with you. Sometimes processes or structures are unclear or not regulated in detail. In general, a reliable local partner is a valuable help.

The appreciation for German products is very high in Egypt. This is especially true for trust in quality and reliability in such a sensitive area as life and health. Since the level of training varies greatly from person to person and doctors and nurses keep moving to the Gulf region, for example, the training aspect is particularly important with more complex technology. According to reports, there are hospitals in which devices cannot be used due to a lack of knowledgeable staff. Similar difficulties are conceivable when there are bottlenecks in maintenance or repair. Providers can collect points with a good after-sales service and a reliable local spare parts supply.

Market players

Further information at http://www.gtai.de/gesundheitsmaerkte-afrika and http://www.gtai.de/aeggypt