The Final Code

Feb, 2008
Cairo- Egypt
École Supérieure Libre des Sciences

Commerciales Appliquées
(ESLSCA)
Master of International Business Administration
Research Project Supervised By

Dr. Wafaa Marzouk
The Impacts of PharmaCode on the

Pharmaceutical industry in Egypt
Presented By
Ahmed Hassan
ESLSCA 18
October 2008
Acknowledgement
I would like to thank Dr. Wafaa Marzouk for the effort

she spent with me during each step in this research
project. I am also so grateful to all instructors who have
used their experience and knowledge during different
courses sessions.
2
Table of content
Executive summary
Introduction.
Chapter 1 Literature Review.
1.1 What is the Code of Conduct?
1.2 Code of Promotional Practices for Pharmaceutical Representatives in
Egypt
. 1.3 The role of pharmacy board in regulating promotional activities
1.4 Code for pharmaceutical promotion in Egypt.
1.5 Ethical standards.
1.6 Global Pharmaceutical Market.
1.7 Egyptian Pharmaceutical Market.
1.8 Top leading corporations in Egypt
1.9 Top leading products in Egypt
1.10 Industry Developments
1.11 Healthcare sector
1.12 Pharmaceutical sector
Chapter 2 Research Methodology.

2.1 Research Problem.
2.2 Research Objective.
2.3 Research Hypothesis.
2.4 Research Design.
2.5 Population and sampling.
Chapter 3 Research results and Hypothesis testing

3.1 Testing H1–All Pharmaceutical companies operating in Egypt applying
PharmaCode
3.2 Testing H2 the majority of Physicians aware of PharmaCode and its
Importance
3
3.3 Testing H3-The implementation of PharmaCode has a positive effect on
industry image.
3.4 Testing H4-The application of PharmaCode Reallocate the Marketing
Expenditure / Budget
3.5 Testing H5- The physicians and pharmaceutical sales representatives
react positively with PharmaCode
Chapter 4
Research Conclusion and Recommendation
4.1 Conclusion.
4.2 Recommendation.
References
.
4
5
List of Acronyms
CPP Certificate of Pharmaceutical Product

DIC Drug Information Center
DPPC Drug Planning and Policy Center
EIPR Egyptian Health and Human Right
FDI Foreign Direct Investment
GDP Growth Domestic Product
GNP Growth National Product
IMS International Medical Statistics
IPR Intellectual Property Right
MENA Middle East and North Africa
MNC Multinational Corporation
MOHP Ministry Of Health and Population
NODCAR National Organization for Drug Control and Research
OECD Organization of Economic Co-operation and
Development
OTC Over the Counter
PhRMA Pharmaceutical Research and Manufacturers of America
TRIPS Trade Related Agreement of Intellectual properties
WTO World Trade Organization
6
EXECUTIVE SUMMARY
The Pharmaceutical industry is one of most strategic industries in Egypt and it is fully
supported by the government since its essential to improve the Public Health and the
.quality of life
The Pharmaceutical industry always has great impact on the Egyptian Economy as it
is very large business and divided into
Local Governmental companies -1

Local Companies owned by individuals-2
Multi National Manufacturing Companies-3
Multi National operating through scientific offices-4
The biggest Markets in The MENA (Middle East and North Africa) are Turkey, Egypt
and Saudi Arabia Respectively and Egypt is considered the largest producer of
Generic drugs
TRIPS (Trade Related Agreement of Intellectual properties) and GATT (General

agreement for trade and Tariffs) are widely applied in Egypt which extend the patent
protection of the product
Recently, in the last few years the pharmaceutical corporations in Egypt especially the
Multinational companies embark in the application of PharmaCode which is crucial
,factor for industry to maintain the growth and improve the industry image as well
The main purpose of this study is to assess the expected influence of Pharmaceutical
code of conduct on the Egyptian Pharmaceutical Market and how the industry
members would react
Six experts' interviews were conducted to explore the effect of Pharmaceutical code
of conduct on the Egyptian Pharmaceutical Market, industry image, awareness of the
physicians, and reallocation of pharmacy budget under PharmaCode
7
In the short run the PharmaCode application have impact on business as the customers
(physicians) may develop resistance; it takes time for the customers to react positively
when they find that certain benefits presented by the pharmaceutical companies like
.food, travel and entertainment are no longer available
In the long run the PharmaCode is a fact in the pharmaceutical industry not only in
Egypt but also in the global Market and that’s due to
Consistency of PharmaCode application
Alliance of all pharmaceutical companies operating in Egypt to apply the

PharmaCode
The Media will play a great role in awareness of PharmaCode
The code will be widely distributed in the pharmaceutical industry

The Pharmaceutical companies will make effort to manage their marketing practices
according to the Code and where Necessary will modify their marketing practices
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Introduction
9
The pharmaceutical industry is one of the oldest industries in Egypt and it starts its
evolution after the Egyptian revolution in 1952, where the government started to
invest in this industry as part of its programs to support health care system.
The industry started to be pure governmental where the government controlled the
drug market, knowing that the main objective at that time is to secure traditional
medicines to Egyptians at affordable prices. Effective indicated period, government
commenced to interfere the pricing process belongs to medicines.
By 1975 the government permitted the private investment in the pharmaceutical

market by both sectors national and foreign multinational companies; Based on that,
many drug factories have been established.
The market started to evolve and the market dynamics was in the favor of the
multinational companies till the beginning of the 21st century where the market
dynamics started to be in favor of the national companies
Medicines form a critical part of the healthcare system. The challenge facing most
healthcare systems today is to enable the public access medicines that are of good
quality, safe and economically affordable. Ethical promotional activities for
pharmaceuticals should enhance access to medicines by the general Public. Increased
access should go hand in hand with rational prescribing, dispensing and use.
Ethical promotional practices by the Pharmaceutical Representatives must be founded

on the following principles:
Appropriate and uniform training curriculum
Standard licensing procedures
Universally acceptable Code of Promotional Practices
Currently, a majority of persons practicing as Pharmaceutical Representatives lack

Pharmacological training hence are not able to conceptualize medical issues. On the
other hand, the Pharmacy and Poisons Act, does not provide for training and licensing
of the Pharmaceutical Representatives exhaustively. The Act only prescribes the
licensing of Pharmaceutical Representatives to carry Part I Poisons, ideally omitting
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relevant aspects of the Practice. It is noteworthy that most Pharmaceutical
Representatives lack ethical knowledge on advertisement and promotional activities
for pharmaceutical products as well.
In an attempt to counter the adverse effects of unethical promotional activities in the
pharmacy industry, the Pharmacy and Poisons Board together with the stakeholders
established a sub-committee to come up with appropriate guidelines on the challenges
stated in the preceding. At national level and in major hospitals, the Ministry of
Health through the Pharmacy and Therapeutic Committees endeavors to promote
rational use of medicines by overseeing adherence to the established Essential Drugs
List.
With regard to pharmaceutical promotion, the pharmacy industry is faced with an
enormous challenge of striking a balance between promotional activities for branded
names and the WHO recommended rational use of Essential Medicines. As we
grapple with various dilemmas in the industry, the big question remains ‘IS there a
need for PharmaCode?
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Chapter 1
Theoretical Framework
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1.1What is the Code of Conduct?
Code of Conduct sets the standards for the ethical marketing and promotion of
prescription pharmaceutical products in Egypt. It complements the legislation
requirements of the Therapeutic Goods Regulations and the Therapeutic Goods Act. .
The following are the key amendments to the Code:
• Level of substantiating data

• Promotional material – including advertising, brand name reminders,
competitions and printed promotional materials
• Company representatives
• Product starter packs
• Product familiarization programs
• Sponsorship
• Research – PMS studies, market research
• Patient support programs
• Relationship with Health Consumer Organizations
• Travel
• Consultants and advisory boards
• Administration of the code
• Sanctions
• Appeals – appeal process open to complainants
• Membership of Committees
• External reporting – quarterly reporting
Code provisions include standards for appropriate advertising, the behavior of

medical representatives and relationships with healthcare professionals. Medicines
Egypt’s Code of Conduct, which was established in 2002, has been revised on a
regular basis.
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The Code of Conduct has two arms, firstly the adjudication of complaints undertaken
by the Code of Conduct Committee and secondly the proactive monitoring of
promotional activities undertaken by the Monitoring Committee.
Areas covered by the Code of Conduct include:
• Nature and Availability of Information and Claims – false and misleading

claims, level of substantiating data
• Types of Product Information
• Promotional Material – advertisements, brand name reminders, competitions,
gifts and offers
• Company Representatives – medical representatives
• Product Starter Packs
• Involvement in Educational Symposia, Congresses and Satellite Meetings –
trade displays
• Sponsorship
• Research
• Relationship with the General Public
• Relationship with Healthcare Professionals – travel, hospitality, remuneration,
entertainment, consultants and advisory boards
• Administration of the Code – complaints process, committee membership
• Sanctions
• Appeals
1.2CODE OF PROMOTIONAL PRACTICES FOR PHARMACEUTICAL

REPRESENTATIVES IN EGYPT
It is the goal of the Ministry of Health and that of the Pharmacy and Poisons Board to
provide the public and healthcare providers with accurate, fair and objective
information about medical products so that rational decisions can be made as to their
use. With this in mind the Board has domesticated the International Code for
Promotion of Pharmaceuticals to guide the work of Pharmaceutical Representatives.
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This code is not intended to restrain the promotion of medicinal products in a manner
that is detrimental to fair competition. It is intended to promote rational prescribing,
dispensing and use by the players in healthcare systems.
These guidelines should be read in conjunction with the Report of the Sub-committee
on Pharmaceutical Representatives of May 2006, Pharmacy and Poisons Act, and the
International Code for Promotion of Pharmaceuticals.
DEFINITION OF TERMS
Pharmaceutical Product: All Pharmaceutical or biological products which are
registered by the Pharmacy and Poisons Board as drugs including Part I and Part II
poisons.
Promotion: Any activity undertaken or organized or sponsored by a company,
distributor, or and importer that is promoting the prescription, recommendation,
supply, sale or distribution of a Pharmaceutical product.
Health care professionals: Members of the medical, dental, pharmacy and nursing
professions and any other persons who may as a result of their legal qualification be
able to prescribe, supply or administer medicines.
Pharmaceutical Representative: Those persons whose duties comprise calling upon
doctors, dentists, pharmacists, wholesalers or government officials who are involved
in the provision of healthcare.
1.3 THE ROLE OF THE PHARMACY BOARD IN REGULATING

PROMOTIONAL ACTIVITIES.
The Pharmacy and Poisons Board is empowered under sections of Pharmacy and
Poisons, to control pharmaceutical advertisements whereas Form 18 and 19 of the
same act give provisions for licensing of Pharmaceutical Representatives to carry Part
I Poisons as free samples.
Nothing is mentioned about the minimum qualification for one to be considered for a
Pharmaceutical Representative Permit. There is also nothing about licensing
procedure and Code of Promotional Practices. Through these guidelines the Pharmacy
and Poisons Board wishes to define a criteria for registration as a Pharmaceutical
15
Representative, licensing procedures and an applicable Code of Promotional
Practices. Subsequently Cap 244 shall be reviewed to reflect these changes.
GENERAL PRINCIPALS
Pharmaceutical Representative
A representative of manufacturing company, importer, distributor, wholesaler, etc.,

licensed by the Pharmacy and Poisons Board to conduct promotional activities
through provision of information about drugs on behalf of the firm to health care
professionals. They are also licensed to carry drugs as samples in the course of their
duties.
Order Takers
Shall be involved in taking orders on behalf of their companies. They shall not be
involved in provision of scientific information about drugs and will not carry and/or
issue out samples.
Training and Academic Qualifications

The following qualifications shall be the minimum criteria for consideration as a
Pharmaceutical Representative by the Pharmacy and Poisons Board.
A degree in Pharmacy
A diploma in Pharmacy,
A degree in Medicine and Surgery,
A degree in Veterinary Medicine,
A degree in Dentistry
A degree in Nursing
A diploma in Clinical Medicine
A diploma in Nursing,
Any other qualification the Pharmacy and Poisons Board deems satisfactory
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Transition Period
All Pharmaceutical Representatives in the field by the commencement date of these

guideline will be absorbed subject to the following conditions:
A) Pharmaceutical Representatives with a field experience of four (4) years or more

will be evaluated by a committee appointed by the Pharmacy and Poisons Board,
based on criteria to be established for the purpose of enrolment.
B) Pharmaceutical Representatives who have been in the field for less than four years
will be expected to undergo an appropriate Pharmacological training as prescribed by
the Training and Assessment Committee of the Pharmacy and Poisons Board.
Licensing
A person requesting to be issued with a Pharmaceutical Representative Permit shall

submit an application to the Registrar, Pharmacy and Poisons Board on a prescribed
form
The Pharmacy and Poisons Board may, upon consideration, approve with or without
conditions, or reject, such an application.
If a permit is allowed, it shall be valid for a period ending on 31st December of the
calendar year.
A licensed Pharmaceutical Representative must, at least three (3) months before the
expiry date, apply to the Registrar, for renewal of a permit in accordance with the
procedure prescribed by the Pharmacy and Poisons Board.
The Pharmacy and Poisons Board may without assigning any reason thereof cancel a
permit for a Pharmaceutical Representative
A roll of Pharmaceutical Representatives will be kept by the Registrar, Pharmacy and

Poisons Board, and every employer will have to pay a fee for the annual practice
license for every Pharmaceutical Representative in their firm.
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All Pharmaceutical Representatives will sign a code of conduct based on the Code of
Pharmaceutical Promotion in Egypt.
Foreign Pharmaceutical Representatives to be given temporary permits by the

Pharmacy and Poisons Board according to the guidelines to be developed
1.4 CODE FOR PHARMACEUTICAL PROMOTION IN EGYPT
The Code sets out standards for the ethical promotion and conduct of Pharmaceutical
Representatives in their interactions with healthcare professionals to ensure that they
are appropriate and perceived as such.
Interactions
The relationship of the Pharmaceutical industry with healthcare professionals is
intended to benefit patients and to enhance the practice of medicines. Interactions
should be focused on informing healthcare professionals about products, providing
scientific and educational information, and, supporting medical research and
education.
Independence of Healthcare Professionals
No financial benefit or benefit-in-kind (including grants, scholarships, subsidies,
support, consulting, contracts or educational or practice related items) may be
provided or offered to healthcare professionals in exchange for prescribing,
recommending, purchasing, supply or administering products or a commitment to
continue to do so. Nothing may be offered or provided in a manner or conditions that
would have an inappropriate influence on a healthcare professional’s prescribing
practices.
Appropriate Use
Promotion should encourage the appropriate use of Pharmaceutical products by
presenting them objectively and without exaggerating their properties.
Transparency of Promotion
Promotion should not be disguised. Clinical assessments, post-marketing surveillance,
experience programs and post-authorization studies must not be disguised promotion.
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Such assessments, programs and studies must be conducted with a primarily scientific
or educational purpose. Material relating to Pharmaceutical products and their uses,
whether promotional in nature or not, which sponsored by a company or
distributor/importer should clearly indicate by whom it has been sponsored.
PRE-APPROVAL COMMUNICATION
No Pharmaceutical product shall be promoted for use unless it has been registered by
the Pharmacy and Poisons Board.
STANDARDS OF PROMOTIONAL INFORMATION

Consistency of product information
Promotion should be consistent with the approved product information.
Accurate and not misleading

Promotional information should be clear, legible, accurate, balanced, fair, objective
and sufficiently complete to enable the recipient to form his or her own opinion of the
therapeutic value of the Pharmaceutical product concerned. Promotional information
should be based on an up-to date evaluation of all relevant evidence and reflect that
evidence clearly. It should not mislead by distortion, exaggeration, undue emphasis,
omission or any other way. Every effort should be made to avoid ambiguity. Absolute
or all-embracing claims should be used with caution and only with adequate
qualification and substantiation. Descriptions such as ‘safe’ or ‘no side effects’ should
generally be avoided and should always be adequately qualified.
Substantiation
Promotion should be Capable of substantiation either by reference or reference to
approved labeling or by scientific evidence. Such evidence should be made available
on request to healthcare professionals.
SPONSORSHIP
Companies may sponsor healthcare professionals to attend events provided such
sponsorships is in accordance with the following requirements:
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• The event complies with the hospitality requirements in this code as described
in 6.0.
• Sponsorship to healthcare professionals is limited to the payment of travel,
meals, and accommodation and registration fees.
• No payments are made to compensate healthcare professionals for time spent
in attending the event.
• Any sponsorship provided to individual healthcare professionals must not be
conditional upon an obligation to prescribe, recommend or promote any
Pharmaceutical product.
Guests
Companies should not pay any costs associated with individuals accompanying
invited healthcare professionals.
Payments for Speakers and Presenters

Payments of reasonable fees and reimbursement of out-of-pocket expenses, including
travel and accommodation may be provided to healthcare professionals who are
providing genuine services as speakers or presenters on the basis of a written contract
with the company at the event.
HOSPITALITY
Appropriate Venue
All events should be held in an appropriate venue that is conducive to the scientific or
educational objectives and the purpose of the event or meeting. As a general rule, the
hospitality provided should not exceed what the healthcare professional recipients
would normally be prepared to pay for themselves.
Limits of Hospitality
Hospitality should be limited to refreshments and or meals incidental to the main
purpose of the event and not their guests, and, if it is moderate and reasonable as
judged by local standards.
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PRINTED PROMOTIONAL MATERIAL
All Printed Promotional Material including Advertisements

Must be legible and include:
The name of the product (normally the brand name)
The active ingredients, using approved names where they exist
Name and address of the company or its agent responsible for marketing the product
Date of production of the advertisement
Advertisement for OTC medicines

The advertisement shall not be run unless they have been approved by the Pharmacy
and Poisons Board.
GIFTS AND ITEMS OF MEDICAL UTILITY
Cash
Payments in cash or cash equivalents (such as gift certificate or airtime) must not be
offered to healthcare professionals
Personal Gifts
Gifts for the personal benefit of healthcare professionals (including, but not limited to
music CD’s, DVDs, sporting or entertainment tickets, electronic items) must not be
offered.
Promotional Aids
Promotional aids or items may be provided or offered to healthcare professionals and

appropriate administrative staff, provided the gift is of minimal value and relevant to
the practice of the healthcare profession.
Items of Medical Utility
Items of medical utility may be offered or provided free of charge provided such
items are of modest value and are beneficial to the provision of medical services and
for patient care.
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SAMPLES
Samples
Samples may be supplied to healthcare professionals in order to enhance patient care.
Samples should not be resold or otherwise misused.
Samples of Part I Poisons
Samples of Part I poisons shall not be offered to the general public or patients
Samples and Clinical Trials
Samples shall not be used to conduct clinical trials
Acceptance of Samples
Pressure should not be placed on healthcare professionals to accept samples
Marking of Samples
Samples must be marked in an appropriate manner
1.5 ETHICAL STANDARDS

Products, activities or representatives of other Pharmaceutical companies must not be
disparaged.
The Medical and scientific opinions of opinion leaders and health professionals must
not be disparaged.
Promotional materials must not be deliberately disguised.
During the course of study, Pharmaceutical Representatives shall not disguise
themselves as patients or relatives.
Name tags indicating Name and Organization represented shall be worn by the
Pharmaceutical Representatives for easy identification.
Pharmaceutical Representatives shall carry their registration certificates issued by the
Pharmacy and Poisons Board, which shall be produced on demand.
Clinical areas shall be out of bounds for detailing unless prior approval has been
granted.
Continuing Medical Education shall be organized and conducted on request and on
agreed terms between the group of healthcare professionals and the organizing
organization.
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INFRINGEMENT, COMPLAINTS AND ENFORCEMENT
Detailed reports of infringement and complaints shall be forwarded to the Pharmacy

and Poisons Board. However, it is recommended that industry try and resolve issues
before forwarding to the Pharmacy Board.
1.6Global Pharmaceutical Market
The Pharmaceutical Market
USA represents nearly 50% of the total world pha

Sales through Retail Pharmacies
(Twelve months to May 2008*)
NORTH AMERICA $223.3billion up 2%

United States $206.5billion up 1%
Canada $16.7billion up 6%
EUROPE (Top 5) $114.3billion up 4%
Germany $34.4billion up 7%
France $30.8billion up 4%
United Kingdom $17.1billion 0%
Italy $16.9billion 0%
Spain $14.8billion up 7%
JAPAN (including hospitals)
up 5%
$63.2billion
LATIN AMERICA (Top 3)
up 9%
$23.2billion
Brazil $11.6billion up 10%
Mexico $8.7billion up 6%
Argentina $2.8billion up 21%
AUSTRALIA/NEW ZEALAND
up 13%
$7.8billion
The top 5 therapy classes at ATC3 level in the 12 months to May 2008 were:
1. - Cholesterol & Triglyceride regulators

2. - Antiulcerants
3. - Antidepressants & mood stabilizers
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4. - Antipsychotic
5. - Anti-epileptics
The top 5 products in the 12 months to May 2008 were:

1. Lipitor
2. Nexium
3. Plavix
4. Seretide/Advair
5. Enbrel
The top 5 corporations in the 12 months to May 2008 were:

1. Pfizer
2. GlaxoSmithKline
3. Novartis
4. Astrazeneca
5. Merck & Co
1.7 Egyptian pharmaceutical market:

The theoretical Background focuses on the main following points:
An overview on the pharmaceutical industry in Egypt
The pharmaceutical industry in Egypt is similar to that of the developing countries in
many aspects could be illustrated as follows:
1- The market is dominated by the local companies (55%), whereas the multi-
national companies contribute by (45%)
2- The market growth is in the favor of the local companies
3- The top leading products belongs to some therapeutic classes such as anti-
infective and non steroidal anti-inflammatory which means that it is an
immature market. On the contrary, we can admit that market is dominated
by chronic and advanced medication at the developed countries.
4- No respect for the worldwide agreements such as TRIPS where many local
generic products have been registered and priced before the patency of the
original products became off.
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5- The government supports the local companies where some of these companies
are governmental companies and most of its products are cheap, which
supports the human dimensions of the government where the health care is
of the top priorities for the government.
The following graph supports the above mentioned points
2.1.1 National Companies Evolvement
82% 92%
2%
Year 2002 Year 2007

No. 272 Corp No. 528 Corp
Figure (1) the national companies' evolvement from 2002 to 2007.
In year 2002, number of local national companies was 272 (82% of the
pharmaceutical companies) and the number dramatically increases to 528 companies
in 2006 (92% of the pharmaceutical companies).
These data mean the followings:
The national companies are huge in numbers but most of them small in business size
whereas the multinational companies are small in numbers but giant in business size
due to merges and acquisitions.
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1.1.2 National-Multinational
CORP
Growth Evolution 4 0
35
Value Growth Rate % 30
25
20
15
10
0
M A T/7 /0 4 M A T/7 /0 5 M A T/7 /0 6 M A T/7 /0 7
N a tio na l C O R P 1 4 .5 3 4 .3 2 2 .6 2 0 .4
M ultina tio na l C O R P 1 1 .7 1 6 .1 1 5 .8 1 3 .4
Figure (2) the national-multinational corporations' growth evolution from 2002 to

2007.
The above graph shows the consistent growth of the national local companies
(average growth in 4 years is 23%) over that of the multinational corporations
(average growth in 4 years is 14%).
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National-Multinational CORP
Sales Evolution
6
4
L.E. BLN
0
MAT/7/03 MAT/7/04 MAT/7/05 MAT/7/06 MAT/7/07
National CORP 2.4 2.7 3.7 4.5 5.4
Multinational CORP 2.8 3.1 3.6 4.2 4.7
Figure (3) the national-multinational corporations' sales evolution from 2002 to 2007.
The above graph shows the increase in value for the national companies from
2.4BLN in 2003 to 5.4BLN in 2007(cumulative growth is 225%) while that of the
multinational increases from 2.8 BLN in 2003 to 4.7 BLN in 2007 (cumulative
growth is 225%).
1.8 Top Leading CORP YTD 2007

Table (1) shows the top leading corporations in the pharmaceutical industry in Egypt.
Rank Sept. Sept. %G %MS EV G/L

2006 2007 %
Total Market 0 9319.2 10957 17.6 100.0 100 0.0
NOVARTIS 1 634.9 751.1 18.3 6.9 93 0.1
GLAXOSMITHKLINE* 2 666.9 699.2 4.8 6.4 6.9 0.8
SANOFI AVENTIS 4 598.2 657.1 9.9 6 113 0.4
EIPICO* 3 550.5 642.1 16.6 5.9 91 0.0
AMOUN PHARM.CO 8 434.3 519.3 19.6 4.7 95 0.0
PHARCO 5 437.6 487.3 11.3 4.4 82 0.3
PFIZER* 6 385.5 433.3 12.4 4 98 0.1
SERVIER 9 288.4 354.3 22.8 3.2 87 0.1
BRISTOL MYER SQUIBB 7 330.1 343.4 4 3.1 78 0.4
EVA 10 148.2 230.8 55.7 2.1 132 0.5
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According to the new data for In-Market Sales, which focus on the top leading
pharmaceutical companies, it is clear that four out of ten leading companies are local
while the rest are multinational, which is due to the numerous merges and acquisitions
applied in the area of the multinational companies resulted less number of companies
but huge in size and volume of business.
1.9 Top Leading Products YTD 2007

Table (2) shows the top leading products in the pharmaceutical industry in Egypt
Rank LE.M LE.M %G %MS EV G/L

2006 2007 %
Total Market 0 9,319.2 10,957.0 17.6 100.0 100 0.0
FLUMOX 1 110.8 125.4 13.1 1.1 90 (0.1)
CEFOTAX 2 84.1 113.3 34.6 1 119 0.1
DIAMICRON 3 93.1 109.2 17.6 1 107 0.0
AUGMENTIN 4 76.5 102.7 34.3 0.9 66 0.1
CATAFLAM 5 67.3 77.4 15 0.7 117 0.0
AMARYL 6 99.2 75.1 -24.4 0.7 101 (0.4)
DURICEF 7 59.9 67.6 12.9 0.6 76 0.0
VOLTAREN 8 52.7 60.9 15.7 0.6 124 0.0
INS MIXTARD 30 HM 9 62.8 59.3 -5.7 0.5 95 (0.2)
CEPOREX 10 56.5 59.2 4.8 0.5 94 (0.1)
According to the In-Market Sales new data for September 2007, which focus on the
top ten leading products in the pharmaceutical Egyptian market, it is clear that four
out of the top ten leading products belongs to national companies and top two
products are local products as well, while six out of the top leading products belongs
to the multinational companies.
So, the pharmaceutical market in Egypt is a typical model for the markets of the
developing countries as market is incredibly price sensitive and responds very quickly
and aggressively to promotion.
The market is characterized by the evolution of the national companies on the expense
of the multinational ones and this phenomenon will carry on till the end of next
decade upon accomplishing the implementation of TRIPS agreement.
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Finally, the health care and in specific the medicine availability in a good and
reasonable prices is one of the top priority for the Egyptian government, so, the
government continually supports the national drug industry which mainly focuses on
the production of basic products with an economic prices.
The Egyptian pharmaceutical market is the second-largest market in the region, after
Turkey, and has about 74 pharmaceutical factories. There are around 35 drug makers
in the country, of which eight are state-owned, with the remainder in private hands.
The Egyptian drug industry is drug formulation rather than research-based. Egypt is
the largest producer and consumer of pharmaceuticals in the Middle East and North
Africa (MENA) region, because of its large population, although it has relatively low
per capita income and drug consumption.
The main growth drivers for pharmaceuticals in Egypt are the young and expanding
population and GDP growth. Healthcare expenditure is reported to be about 3.6% of
GDP and pharmaceutical expenditure was 1.5% of GDP in 2006. Per capita spending,
however, is among the regions' lowest at about US$34 in 2006, of which government
spending amounted to US$22. About 90% of private healthcare expenditure is out-of-
pocket spending; pre-paid plans make up less than 1% of private spending. Up to two-
thirds of primary healthcare visits are in the private sector, despite the cheap, heavily
subsidized healthcare services offered by the state sector.
Drug market growth is expected to continue in the short term, with the market
reaching US$2.6bn at retail prices by 2008. Along with basic social factors such as
population growth, availability of cheap healthcare is also likely to drive the growth in
the market. Spending levels are expected to increase due to improvement in health
awareness and greater access to medicines. Furthermore, the imposition of a TRIPS-
compliant intellectual property regime should help the domestic sector to develop in
the long term. However, strict pricing regulations, which do not take into account
local currency fluctuations, have discouraged foreign investment. In fact, many
multinationals operate losses in Egypt due to high production costs. In 2006,
prescription drugs accounted for 85% with OTC medicines accounting for the
remaining 15% of sales. In the prescription drug market, the two leading segments
were antibiotics and alimentary tract/metabolism drugs each reaching sales of
S$484mn and US$286mn, respectively. Central nervous system and oncology drug
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sales accounted for US$I43mn and US$89mn, respectively. Generics represent about
16% of the total market.
Pharmaceutical companies in Egypt fall into three categories: public sector companies
that are subsidiaries to the Holding Company for Pharmaceuticals, private sector
companies, and multinational companies. A significant proportion of local production
is focused on exports. Leading local producers include Egyptian International
Pharmaceutical Industries (EIPICO), El Amriya, El Nasr, Minapharm, October
Pharma and the South Egypt Drug Industries (SEDICO).
Most multinationals are active on the Egyptian market. Not all, however, have a direct
manufacturing presence, with many importing drugs or licensing production to local
manufacturers. Multinational companies supply about 65% of the market through
direct local manufacturing or through licensing agreements. Leading players with
production facilities include Bristol-Myers Squibb (BMS), Novartis and Pfizer.
GlaxoSmithKline (GSK) claims to be the domestic market leader, with a share of
about8.6%. About 90% of the subsidiary’s production is sold in Egypt, with the
remaining 10% being exported to other Middle East and North African markets.
The government is currently embarking on a restructuring process, with stakes in a
number of state-state owned drug companies being put up for privatization. In
December, it was announced that there would be an initial public offering (IPO) for
between 10% and 35% of Chemical Industries Development Company (CID).
Meanwhile, state-controlled drug distribution company Egyptian Pharmaceutical
Trading Company is also being prepared for sale to a strategic investor.
1.10 Industry Developments:
Egypt’s Minister of Foreign Trade and Industry has asserted that the pharmaceutical
and healthcare industry in Egypt faces many challenges, the most important one being
that of striking a balance between the cost and the citizen’s needs and income. The
MOHP also outlined plans to develop the local industry in an attempt to keep pace
with international competition.
30
1.11 Healthcare Sector:
The state healthcare system suffers from under-funding, poor management, obsolete
equipment and the increasing pressures on account of population growth, which is
about 2% per annum. At present, very little medical equipment is manufactured in
Egypt. Though the use of sophisticated medical equipment is growing, total
expenditures are still small for a country with a population of nearly 79mn people.
The government has outlined plans to further upgrade more than 60 general hospitals,
clinics and laboratories in rural areas. It also plans to build eight new hospitals during
the period 2006-2008. The most promising sub-sectors for further development
include dialysis equipment and lasers, medical, and laboratory equipment.
However, despite being relatively modem and well-funded, Egypt’s healthcare system
is struggling to cope with overpopulation. Egypt has approximately 2mn children
born every year and 40% of the population is under 20. This demographic shift will
require substantial investment in healthcare facilities in the future. Despite this, Egypt
only allocated 3.3% of its GNP to the MOHP in 2001, compared to a figure of 7.1%
for Saudi Arabia. Part of the problem stems from high levels of urbanization. Roughly
42% of the population reside in cities, with 24mn alone living in Cairo. As a result,
many hospitals and clinics in urban areas are unable to cope with demand.
Government spending is also biased towards higher income groups, and health
insurance only covers 50% of the population. However, the Family Health Fund has
been initiated - financed by both public and private sources - which is it is hoped will
make up some of the shortfall. In the long term, the government is planning to
implement a universal health insurance scheme in which every Egyptian is a
beneficiary. Privatization is a growing trend within the Egyptian healthcare sector and
the sector is undergoing considerable change. Prior to the 1990s, the sector was
predominantly state-controlled, with the private sector playing only a minimal role in
the provision of health care. The private sector now plays an increasingly important
role in healthcare provision, emerging largely as a result of the declining standard of
public sector care.
The inefficiency and poor quality of primary healthcare services has turned Egyptians
to the private sector, and has increased the population’s burden of health care costs.
Amid these problems, the US Agency for International Development (USAID)
outlined plans to invest a considerable amount for healthcare and family planning
31
projects in Egypt. Furthermore, the government, in its current five-year plan (2002-
2007), has allocated about US$I.5bn for upgrading medical facilities and healthcare
services, which includes the construction of new hospitals, enhancing medical
services in urban and remote areas, broadening the training of physicians, increasing
the number of nurses, supplying hospitals and medical centers with modern
equipment, and increasing the budget for research and development (R&D) at
universities and research centers. Medical imports into the country are expected to
grow at a rate of 15% and the modernization of the heath sector has been able to
generate high demand for medical items such as laboratory and testing equipment.
However, despite the problems with the healthcare system, Egypt's health indicators
have improved. Female life expectancy at birth rose from 70.5 to 72.8 years between
1999 and 2004, while male life expectancy rose from 66.3 to 68.4 years in the same
period. The infant mortality rate for under-fives declined from 36.9 per 1,000 in 1999
to 28.6 in 2004. This was largely due to immunization and other programs such as
rural healthcare schemes funded by foreign donors.
Egypt’s success in the public health system is measured by its ability to satisfy local
demands and to respond efficiently in crisis. In 2002, the government initiated a rapid
local development of recombinant human insulin and treated about 75% of the
diabetic population. The local firms in the country have the ability to manufacture
sufficient quantities of insulin by importing insulin crystals, which are used in their
production. Earlier, more than 90% of the country's total insulin requirements were
being imported from Novo Nordisk at a cost ofUS$35mn per annum. Egypt has
witnessed a similar success in the production, diagnostics and treatment for hepatitis
Band C, with hepatitis C being the fastest growing disease in the country.
Furthermore, schistosomiasis is a parasitic infection, which is most common in the
rural population of the country and is a leading cause of death among men aged
between 24-44 years. A project named Schistosomiasis Research Vaccine
Development was outlined in co-operation with US partners in order to control the
spread of the disease. It included the development of two vaccines called paramyosin
and the synthetic peptide called microtubule-associated proteins 4 (MAP4), identified
by the World Health Organization (WHO).
Egypt has made progress in the field of biotechnology. Several local firms have
entered this market, with most importing in bulk and then packaging the products.
Local companies such as EIPICO, SEDICO, El Nil Pharmaceutical and the Vaccine
32
and Inoculation Authority (VACSERA) have been manufacturing biotechnology
products locally.
Although Egypt has a relatively low incidence of HIV/AIDS, some 8,000 cases
according to WHO estimates, there is the potential for a rapid spread in the disease.
Part of the problem is that promoting condom use has caused discord among religious
leaders in the country, who equate such practices with promoting adultery. Sex
education in school is also not common due to the conservative nature of the country.
Social stigma surrounding the disease has discouraged many from going for testing.
However, the situation is improving. Until five years ago, all those who tested
positive for HIV/AIDS had to be reported to the Health and Population Ministry.
Prior to 10 years ago, all those who tested positive were simply quarantined in special
institutions.
1.12Pharmaceuticals Sector:
In 1950, the pharmaceuticals industry in Egypt consisted of about 50 small national

producers of drugs. Leading multinationals supplied 10% share of the local market. In
the 1960s, three foreign firms, namely Hoechst, Pfizer and Swiss Pharma, had
established joint venture operations. By 1970, following nationalization, 11 local
producers contributed 90% of the domestic market. In the 1990s a more liberal policy
opened up the market to foreign and domestic newcomers and by 1996, the industry
had nine multinationals, eight private and 11 public sector companies, employing
about 60,000 people. In the mid1980s, the share of public firms stood at 80% of the
domestic production.
Due to the great diversity of products, companies tend to specialize, thereby making
the Egyptian pharmaceutical market highly fragmented. Multinationals tend to
specialize in non-OTC healthcare medications, as they are less likely to be produced
from unlicensed generics. In doing so, they also avoid the unfair competition with
local producers, which are backed by government support and unequal treatment
when it comes to importing raw materials. Low wages in Egypt is one of the benefits
available to pharmaceutical production in the country. At less than 15% of production
costs, intermediates account for about 50%, wages are extremely competitive in what
is essentially a labor and technology intensive industry. Another major asset of the
pharmaceuticals industry is the large pool of highly trained doctors, pharmacists,
33
engineers and skilled technicians whose experience in the sector has given Egyptian
pharmaceutical products a distinguished reputation in the entire region.
Highlights of the sector include:

 The private sector controls over three-quarters of the local market;
 The five largest pharmaceutical companies control about one-third of the
market;
 There are eight multinational corporations operating in the industry, which
account for over one-third of total private sector sales;
 Egypt is the largest producer and consumer of pharmaceuticals in the MENA
(Middle East and North Africa) region;
 The US plays an active role in the industry through its contribution to
investment and imports;
 Local production of pharmaceutical satisfies 93% of the domestic
consumption, with imports being limited to high-technology products such as
interferon α-2b and anticancer monoclonal antibodies and small molecules;
 Europe supplies the majority of Egypt’s pharmaceutical imports; and
 Exports comprise about 6% of pharmaceutical production.
In the latest developments, members of the Egyptian-Russian Business Council

recently held several rounds of negotiations on the pharmaceutical industry with a
number of Russian pharmaceutical companies. Negotiations were aimed at helping
realize several agreements on joint co-operation in the manufacture of medicines and
related technology transfer, especially with regard to raw materials required for
developing vaccines. Russian expertise is being sought by Egypt to develop the raw
materials for pharmaceutical products inside Egypt itself. This should not only lead to
the achievement of self-sufficiency at a local level, but should also help Egypt export
these materials to several African countries and other countries neighboring Russia.
US-based Pfizer has also outlined plans to expand its production facility worth
US$18mn situated at Al-Maza near Cairo. The decision is significant as it represents a
long-term commitment to the country by Pfizer. The US giant had been planning to
modernize its Cairo facility for several years but has held back because of poor
trading conditions. Despite having the largest pharmaceuticals market in the region by
34
population, tight price controls imposed by the MOHP and the devaluation of the
Egyptian pound had left local pharmaceutical manufacturers unable to recover their
costs. However, with the appointment of a new cabinet assigned with the task of
liberalizing the country's economy, Pfizer has given the go-ahead to its modernization
project, although this will reportedly not include a new factory.
The WHO has outlined plans to use the new polio vaccine first in Egypt as a critical
part of its polio eradication strategy. This is being developed by Sanofi Pasteur, the
vaccines business of the Sanofi-Aventis group. It has been granted a license by the
Agence Francaise de Securite Sanitaire des Produits de Sante (AFSSAPS) for Mono-
valent Oral Polio Vaccine 1 (MOPVI), which is reported to be the first vaccine
developed to fight polio in decades. Once licensed by the NODCAR of Egypt, Sanofi
Pasteur is expected to produce 50mn doses of MOPV 1 in mass immunization
campaigns in Egypt.
In June 2005, GlaxoSmithKline Egypt was awarded a loan ofEGP60mn
(US$10.46mn) from its parent company UK-based GlaxoSmithKline (GSK) to
finance its activities in Egypt. GSK’s investments in Egypt are over US$100mn and
the company has a 9% share of the country's drug market. Approximately 90% of
production is consumed locally, while the remaining 10% is exported to the Middle
East & North Africa (MENA) region. Drug companies in Egypt are currently
suffering due to a mandatory pricing system, imposed by the government. Combined
with the high costs of production and R&D, drug firms have been forced to absorb
these losses. During Q105, GSK Egypt's net loss increased 127% to EGP24.5mn
(US$4.27mn). The company is aiming to reduce its production costs in order to
reverse losses. Sales in Q105 were positive, rising 14% to reach EGP78.8mn
(US$13.74mn).
In December 2005, the Egyptian Ministry of Investment announced that a stake of
between 10% and 35% was to be offered in the upcoming IPO of state-controlled drug
firm Chemical Industries Development Company (CID). CID is entirely owned by the
state Holding Company for Pharmaceuticals and generated profits ofEGP30.8mn
(US$5.37mn) for the financial year 2004/05, an increase of35% year-on-year.
However, the Ministry of Investment has also recently announced that the merger of
the two state-owned drug makers, Cairo Pharmaceuticals and Chemical Industries and
Arab Drug and Chemical Industries Company would be postponed. The government
is planning to conduct further studies to ensure the move would help improve the
35
operations of both partners. The Holding Company for Pharmaceuticals is also
planning to offer stakes for two other state-owned pharmaceutical companies, El Nasr
Pharmaceutical Chemicals Company and Misr Pharmaceutical Industries Company,
as the government continues to promote privatization in the public drug sector.
In another development, modernization plans are being implemented for the
pharmacies of state-owned distribution firm Egyptian Pharmaceutical Trading
Company, in preparation for selling the company to a strategic investor. Egyptian
Pharmaceutical Trading Company is responsible for the distribution of drugs to
hospitals and pharmacies throughout the country. The firm owns 41 pharmacies and
has a network of 51 distribution locations. The company’s paid-up capital stands at
GBP120mn (US$209.85mn).
36
Chapter 2
Research Methodology
37
2.1 Research Problem:
The impacts of PharmaCode on the Pharmaceutical Industry in Egypt

The Egyptian government set the health care services and medicine availability as one
of its top priorities, due to the global Implementation of PharmaCode, the application
affects the pharmaceutical industry in Egypt and consequently the drug availability
and prices.
So All Pharmaceutical Corporations sooner or later must apply PharmaCode, it has to

play a new role with the drug manufacturers in Egypt in order to minimize the
negative impacts and to work on the new opportunities that will be created upon
PharmaCode application.
2.2 Research Objective:
The main purpose of this study is to assess the expected influence of application of
Pharmaceutical code of conduct on the Egyptian Pharmaceutical Industry and how
some Pharmaceutical Companies & Customers (Physicians) should react
2.3The research hypothesis
H1 –All Pharmaceutical companies operating in Egypt applying PharmaCode

H2-The majority of Physicians aware of PharmaCode and its importance
H3-The implementation of PharmaCode have a positive effect on industry image.
H4-The application of PharmaCode Reallocate the Marketing Expenditure / Budget
H5- The physicians and pharmaceutical sales representatives react positively with
PharmaCode
2.4Research design
Depth interviews are structured and direct; Personal interview is chosen to be the
design of collecting secondary data.
This method is selected the research is looking for depth information collected from
professionals and industry experts, knowing that they are competitors as well.
38
Depth interviews were the prober method of choice because the respondents were
very well selected and all of them are general managers, managing directors, and
industry experts.
2.5Population and sampling
Sampling Criteria:
The original sample was composed of Six experts in the pharmaceutical industry with
the following criteria.
• The title of the expert; expert should be either Marketing Director or Chief
Executive officer.
The previous experience of the expert in the industry; long years of experience (not
less than 20 years) in the field of pharmaceutical industry
Finally we were keen to include the 3 multinational Executive and 3 Local Egyptian
companies Pharmaceutical companies industry Expert.
Secondary Data
Literature on the pharmaceutical market, the effect of pharmaceutical code of conduct
as gathered from various sources to investigate the following issue
1-The effect of PharmaCode on Industry image

2-The effect of PharmaCode on reallocation of spending marketing budget
3-The effect PharmaCode on Physicians and Pharmaceutical Representative
Primary Data:
Due to the exploratory nature of the research a qualitative approach will be employed.
Expert interview will be the method of primary data collection.
39
Chapter 3
Research Results and Hypothesis
Testing
40
3.1 H1 –All Pharmaceutical companies operating in Egypt
applying PharmaCode
Do your company applying PharmaCode?
1) Marketing Director for Multinational Manufacturing Company operating in

Egypt.
Yes, as we working in global company operate in more than 150 countries we had to
sign the PhRMA Pharmaceutical Code of Conduct
2) Marketing Company President for Multinational Pharmaceutical company
operating in Egypt.
Yes, we are Multinational Manufacturing company and we apply the PharmaCode in
Egypt since 4th Quarter 2006
Recently, a lot of pharmaceutical companies operating in Egypt is applying
3) Chief Executive officer for Multinational pharmaceutical company
Yes, we are applying code of conduct which is approved by PhRMA pharmaceutical
code of conduct
4)Chief Executive office of local Egyptian Pharmaceutical company Egypt.

Our company is implementing its own code of conduct that resembles PharmaCode in
many aspects.
5)General Manager of Egyptian Pharmaceutical Company.
.Yes, we are Multinational Company and we apply the PharmaCode in Egypt since 1st
Quarter 2006
6) Marketing Director For Egyptian Pharmaceutical Company operating in
Egypt
Yes, we are applying our code of conduct which is quiet similar to the PhRMA
pharmaceutical code of conduct
41
3.2 H2-The implementation of PharmaCode have a positive
effect on industry image.
What is the impact of application of PharmaCode on industry

image?
Egypt.
Sure will improve the industry image, people do not invest in companies with bad
reputation so the pharmaceutical industry will gain the share holder value and attract
high quality qualified employees to the industry
operating in Egypt.
The code will improve the industry image among the other industries and competition
will be healthy and clean

Immediate improvement of industry image and that is good news for all employees in
the pharmaceutical industry

This will enhance its image & improve its relation with government bodies & society
which were always claiming for the right allocation of resources to decrease prices
not only aggressively marketing.
42
5) General Manager of Egyptian Pharmaceutical Company.
The code is improving definitely pharmaceutical industry image and all companies
must unite to apply the PharmaCode

Egypt
In recent studies they found that Tobacco industry had better image than the
pharmaceutical industry, it was really shameful for all employees working in
pharmaceutical industry, sure the PharmaCode will improve the industry image
What are the motives for application of PharmaCode?

Egypt.
The code regulates the marketing activities, optimizes marketing expenditure &
directs interests to invest in other scientific activities.

operating in Egypt.
Improvement of image
Right allocation of resources

Healthy competition, image, ethical environment


Improving company and industry image
Increasing the value of the career by marketing high quality products in high quality
way
43
Egypt
Healthy competition, expenditure will be for the sake of physicians education and
patients and to express the social commitment of the pharmaceutical companies
towards the society
3.3 H3 -The majority of Physicians aware of PharmaCode and

its importance
Recently, a lot of pharmaceutical companies operating in Egypt are

applying PharmaCode; do you think that Physicians are aware about
the PharmaCode and its importance?

Egypt.
The Majority Know a lot about the PharmaCode KOL, GP`s and specialists

operating in Egypt.
Fully aware and it depends on the efforts of the Pharmaceutical companies to increase
that awareness, but there are some minorities I mean Physicians they might be aware
but they try to be blind to ignore the fact of PharmaCode

Now in Egypt the pharmaceutical companies revolutionize the PharmaCode so I guess
there is high percentage of physicians aware and with the alliance between the
companies the percentage will grow high and higher
4) Chief Executive office of local Egyptian Pharmaceutical company Egypt.

I don’t think that the whole medical community including physicians may be aware of
any kind of conduct‘s codes.
44
Not all Physicians are aware of PharmaCode, the pharmaceutical companies list do
not contain all physicians but we can say that high percentage of physicians are aware

Egypt
We can say that high percentage of the physicians are aware of the PharmaCode but
small percentage are aware of its importance and that is the more important because
the physicians can not realize the message behind the code
3.4 H4 The application of PharmaCode Reallocate the

Marketing Expenditure / Budget
Describe Marketing Budget under PharmaCode?

Egypt.
National sponsorship on single basis
International Sponsorship on single basis
PR
Market Research programs
Scientific meetings
Educational programs
operating in Egypt.
National & International Sponsorship on single basis
Donations
Educational programs for physicians held by the companies directly
Educational programs for physicians and patients held through third party like
universities
45
Pharmaceutical Company Support for Third-Party Educational or Professional
Meetings
Continuous Medical Education
Speaker Programs and Speaker Training Meetings
Scholarships and Educational Funds

We had decided on the code & started its implementation since Q3 2008. It consists of
several chapters related to all possible activity the company may perform. A new code
enforcement officer had assigned to follow its implementation. Training sessions had
been held for our staff to make sure that it is well understood thereafter follow up
sessions will be held to make sure that it is correctly implemented.

National and international sponsorship within the PharmaCode frame
Education programs for physicians and patients
Charity donation that not related to business

Egypt
Patient education
Continuous Medical Education
Donations
Sponsorship (national and for less extent international)
-MOH and Public Opinion Believe that MNC`S using aggressive
marketing practices (Please specify ………, what is the impact of

application of PharmaCode on that concern?
46
Egypt.
Aggressive Marketing practices like running PR activities , extensive repeated
scientific activities in short period of time, outstanding launch that is specially for new
drugs to increase the awareness and acquire higher percentage of market share in
shorter time , but if that activities does not breech the code so no one can blame the
company.
operating in Egypt.
If that aggressive Marketing Practices within the Legal frame of the code it will be ok
if not the company did this either local or Multinational should be punished.

The physicians who prescribe the drug not the pharmaceutical companies and
pharmaceutical companies either local or multinational spend a lot of money on
patient and physician education programs to ensure the right and appropriate method
for using the medication

N/A

Some extensive PR activities, high cost launch, huge budget to promote the drugs the
code described what is legal and what is illegal(breeching)

Egypt
Increasing the sales force, sales calls, increasing marketing budget, speaker led
meeting. But code describes what to do and what not to do and how you can things
right as well
3.5 H5- The physicians and pharmaceutical sales representatives

react positively with PharmaCode
47
How the Physicians reacting when they find certain benefits they
have become accustomed are no longer available?

Egypt.
Now it's as difficult as the physicians think that is cost cutting strategy and the
companies want to increase the profit, but for sure on the long term they will realize
The ethical benefits of the PharmaCode and we met large number of doctors specially
the KOL (Key Opinion Leaders) agree with us on the application of PharmaCode.

operating in Egypt.
It is like On/Off switch program, look if any group of people get used to receive some
benefits and surprisingly you stop that benefit what will be the reaction, it also depend
on for how long they receive these benefits? But I can say there are a lot of positive
sign especially from KOL.
Few physicians criticize the situation they are disappointed as they lost gifts, pizza
and expenses paid conferences at resorts. I met many physicians they embrace the
presence of PharmaCode
4) Chief Executive office of local Egyptian Pharmaceutical company Egypt

Definitely at beginning there will be sort of resistance, however, when realizing its
add value Drs will appreciate its importance.

It will affect the business on the short term, but in the future they will comply to the
PharmaCode

Egypt
48
I do not think it will harm the business, business will go on and physicians will react
positively but there will be few groups will be against the code. And the majority will
comply with the code
How the Pharmaceutical Representatives Reacting when certain

resources they used in the past are no longer available?

Egypt.
When our company started application of PharmaCode, they began to ask why our
company not the others and that will definitely affect our business but through
Training and with wider application of PharmaCode among all companies operating
in Egypt, this will convince them by the application of PharmaCode

operating in Egypt.
Everything by the time ill change and pharmaceutical representatives will accept that
as everything in the start is difficult but at the end they will comply with PharmaCode

Many pharmaceutical representatives are relieved after code affirmation of their
important role in physician education, only few people dislike it and they need extra
training

Probably this may happen in companies with inappropriate expenditure, for us we use
to follow the ethical & legal approaches hence this is effect is very minimal to our
reps.
49
They wonder at the beginning and ask what the reason behind the code is, but they
reacting positively as every sales rep receive training on PharmaCode

Egypt
I do not think that pharmaceutical representative have chance to just think about it, If
anyone in the organization not only the pharmaceutical representative could not
comply with pharmaceutical industry code of conduct he netter leaves the industry
What is the gain for pharmaceutical companies that applying

PharmaCode? And what will they lose if they do not apply the
PharmaCode?

Egypt.
- Image.
- Respect
More share holders will invest in the company
And the companies did not apply the code will lose the reputation and will be exposed
to penalties which will cost the companies millions of Dollars

operating in Egypt.
The companies that applying the code will gain image and good reputation, the others
will get penalties and bad image as well

The PharmaCode had significant role in organizing marketing practices and the
pharmaceutical companies exert a lot of effort to adhere to the PharmaCode for the
sake of industry image and ethical business environment, companies breeching the
PharmaCode must be penalized
50
Company gains include:
- Good image.
- More scientific & clinical researches.
- Superiority of truly good brands.
- Reduction of costs.
- Economic prices.
If a Company did not implement the code it may loss its reputation in the market
which is a pivotal issue. Later there must be a declaration for those who did not abide.

The companies that applying the code will gain good reputation, the companies which
did not apply the code will gain bad reputation and may be receive penalties

Egypt
Its all about image and reputation companies will apply will gain respect and image
and for companies ignore PharmaCode they will lose everything and there is
something else for companies ignore PharmaCode they will oblige to apply
PharmaCode in the future and that will make them late comers and adaptation to code
will be hard and harder
Who should receive training on PharmaCode?

Egypt.
All employees in the organization must receive training on PharmaCode

operating in Egypt.
All employees, vendors and distributors in the industry must receive training on
PharmaCode
51

- Industry members, including; Pharma Cos. Distribution Cos. Etc … … …
- Government members & the society.
- Medical Community, including; Drs, paramedical staff, hospital administration, etc


Egypt
What is/are aspect(S) can be discussed in the future versions of

PharmaCode?
Egypt.
More penalties for companies breeching the code and create programs for patient
awareness on the PharmaCode

operating in Egypt.
Breeching cases must be discussed, analyzed and converted to actions that must be
transmitted in the new version of PharmaCode

The code must be more strict against companies who breeching the PharmaCode

- What is to be done with Co. who did not implement it.
- Breach’s of the code.
- How to deal with its drawbacks.
52
Extra penalties for companies that breeching the PharmaCode, and the transmission of
PharmaCode to patients using the products of the pharmaceutical companies

Egypt
Cooperation between companies for promotion of PharmaCode and more penalties for
companies that breech the code
Who should supervise the application of PharmaCode?

Egypt.
Compliance Manager and finance department as well

operating in Egypt.
Legal Compliance Officer

Legal office, sales and marketing managers, a team must be formed to act as internal
auditor for applying the code

Each company should assign the code enforcement function to one of its key
manager.
Legal Compliance Officer, medical directors and all managerial level
53
Egypt
Compliance officer, medical director and every company shall form compliance
committee represents all departments in the company
54
Chapter 4
Research Conclusions
& Recommendations
55
Research Results
About Application of PharmaCode
There is a revolution in the application of PharmaCode application among the

Multinational companies operating in Egypt in the last three years as they are obliged
to apply PharmaCode, if there is minor breeching the penalty will hurt the company
financially so they are strongly committed to strict application of PharmaCode,
surprisingly the national companies operating in Egypt who did not sign agreement
for application of PharmaCode started recently to apply regulations that is quiet
similar to PhRMA , and they are developing their own copy of PharmaCode
Physicians awareness of PharmaCode
Now in Egypt high percentage of physicians' especially Key opinion leaders,

specialists even General Practitioners have strong awareness about PharmaCode, but
not all the medical society aware, pharmacists, distributors, feedback from market
tells us that some physicians are aware but they tend to be blind to get the benefits
they get used to take it in the past before PharmaCode application.
Awareness can be increased via media, local medical/pharmaceutical society's
conferences, Ministry of Health and its syndicates like general syndicates of
Pharmacists and Physicians can play an important role in increasing awareness of
PharmaCode.
Marketing Expenditure under PharmaCode
Multinational and National companies have quiet similar definition of marketing

activities under PharmaCode
Sponsorship of many scientific activities such as
National medical society's congress sponsorship

International congress outside the country, but due to the high cost of international
sponsorship, the multinational companies invest more than the national companies
56
Market research programs
Public relation
Educational medical programs
Audiovisual scientific meetings/Speaker programs and speaker training meetings
Charity donations that is not related to business
Patient education programs
Scholarships and educational funds
Motives behind PharmaCode application
Healthy competition, expenditure will be for the sake of physician and patient
education and the companies can express its social commitment to the society
Image is important motive for PharmaCode application; sure the PharmaCode
improves the industry image
Right allocation of resources is one of the major aspects of PharmaCode application
Effect of PharmaCode on Industry image
Definitely PharmaCode will have positive effect on the pharmaceutical industry not
only in Egypt but also in pharmaceutical global market
In recent study run by group of US market research centers declared that Tobacco
industry has better image than pharmaceutical industry which was shock for all
employees working in the pharmaceutical industry
Currently the pharmaceutical companies strictly applying the pharmaceutical code of
conduct in addition to extensive training programs to the employees working in the
pharmaceutical industry
The companies that applying PharmaCode will acquire respect, image and high
reputation
And shareholders will run to invest their resources in business running on ethical way
And the industry will attract high quality qualified employees who only work in
industries running its business on ethical way
57
Effect of PharmaCode on Physicians and Pharmaceutical Representative
While some physicians may be disappointed at no longer receiving gifts such as

resorts, entertainment or not being invited to attend expenses-paid conferences at
resorts the feedback received from many physicians and physicians organizations that
on the short term it will have negative impact on business and physicians would resist
the PharmaCode application but in the long term physicians will react positively and
will comply with PharmaCode
On the other side Pharmaceutical Representatives and as physicians they would not
comply at the beginning but they will comply as they will feel the important role in
the physician education
The challenge is to inform all physicians of the code and encourage them to consider
the upside of not continuing to receive benefits they have accustomed.
On the long term most physicians will embrace the PharmaCode and few physicians
will criticize it.
The effect of PharmaCode on reallocation of marketing budget
Resurgence within the pharmaceutical industry of innovative thinking regarding

effective strategies to inform physicians about the benefits of pharmaceuticals and
redirecting marketing funds previously allocated to food, travel and entertainment
A wide variety of CME continuous medical education approaches are available such
as advertising on professional journals, Support for Third-Party Educational or
Professional Meetings, Speaker Programs and Speaker Training Meetings, Develop
Clinical Practice Guidelines and sponsorship of organized CME activities,
Scholarships and Educational Funds.
Other aspects on PharmaCode application

Training
All employees in the pharmaceutical industry must receive vigorous training on
PharmaCode in their initial training and must pass exam as well.
Not only shall the employees, the consumers (patients) be informed on the basis of
PharmaCode and its benefits
58
Training and educational programs must run to inform physicians about PharmaCode
and its impact on the whole industry as the research described that physicians might
know PharmaCode but they do not know the benefits.
Future aspects on PharmaCode

Future versions of PharmaCode would discuss transmission of PharmaCode directly
to patients, moreover may ask pharmaceutical companies to provide any information
about the composition and allocation of its marketing budget. Companies found to
have breached the Code of Conduct can be fined up with more expensive penalties.
59
4.1 Research Conclusion
1-Not all the Pharmaceutical companies operating in Egypt apply the pharmaceutical
code of conduct. The Multinational companies signed the PhRMA Code of conduct
while the Local national companies struggling to apply a form that regulate their
business that resembles the PharmaCode
2-All the interviewers pretty knows what is meant by the PharmaCode, moreover,
they do believe in concept, as PharmaCode became a fact of life. Hence, the art is
how to deal with it by minimizing its negatives and making the best utilization of its
positives.
3-PharmaCode finger prints are going to reach most of the pharmaceutical

organizations in Egypt. Bearing in mind that the impact’s degree depends on the
extent to which the organization is prepared to handle the PharmaCode obligation
4-A wide majority of the physicians are aware of the PharmaCode but really not high
percentage consider its importance, some of them see that it’s a way for the
pharmaceutical companies to reduce their marketing budget rather than its ethical
value
5-At the start of application industry members will resist application of PharmaCode
like physicians and pharmaceutical representatives, but in the long term they will
value the benefits of PharmaCode a lot.
6-Marketing budget will be reallocated under the umbrella of PharmaCode and
instead of entertainment, food and meeting in resorts the budget will be directed to
CME programs, scientific meetings, donations and patient/physician education
programs. That will have great impact on quality of life of patients and business as
well
7-The PharmaCode will improve the pharmaceutical industry image, indeed attract
more employers to work in it, and more shareholders to invest in and create healthy
environment for clean competition
8-All employees in the industry must receive training on PharmaCode in their initial
training and pass exam as well testing their knowledge on PharmaCode
9-The PharmaCode application is the responsibility of every employee in the
company and must be supervised by Legal compliance officer and medical directors.
60
10-Each pharmaceutical company has its own strategy, but the common
manufacturers’ strategy is to:
Focus on the application of PharmaCode in short and midterm and keep an eye on its
marketing budget, as well as the development and training of all employees.
Support the Egyptian patients and the government by securing the availability of the
pharmaceutical products in general and new products in specific at affordable prices.
11-As the Egyptian Market grows to be very attractive in terms of revenue and profit
as well, the pharmaceutical companies operating in Egypt should serve the Egyptian
community by funding charity programs
12- The Medical syndicate function is criticized by all manufacturers whom asking
for a change in its performance mechanism, where the syndicate instead of focusing
on the development of its members, applying the code of ethics in cooperation of the
pharmaceutical companies, fighting against the malpractices of its members; On the
opposite, Syndicate used to have a political role with the government and its leader
have conflict of interest where most of them owns pharmaceutical companies in
addition to their positions as Medical syndicates leaders
13-There is a substantial debate regarding the competitive advantages status could be

provided to the pharmaceutical industry in Egypt; between the Multinational
companies and Local manufacturing companies operating in Egypt as the
Multinational companies using some aggressive marketing practices like very
expensive launch, PR activities, speaker led meetings, international sponsorship and
other activities especially for newly high priced drugs, but at the end if all that
aggressive marketing activities are within the PharmaCode so its allowed.
61
4.2. Research Recommendation
1. The government needs to:

1- Work very close to the drug manufacturers in Egypt to support the drug
availability at affordable prices.
2- Create untraditional resources to support the Governmental health sector.
3- Upgrade the Health Insurance sector using the international expertise in
this field.
4- Cooperate with the Multinationals through access programs for the new
products.
5- Develop new programs to increase the patient’s education that’s with
cooperation the pharmaceutical companies operating in Egypt
6- The government declared to public, through its official ministers (MOH
&Industry), that the PharmaCode agreements will be strictly implemented
and any international agreements signed by the Egyptian Government will
be respected.
7-The government must issue legislations to punish any breeching violated by any
company.
The government is doing so because any violation occurred in the international

agreements will negatively affect the foreign investment in Egypt as well as the
government credit and image worldwide, which will affect the undertakings of
Egyptian Economy Vitalization Plan.
For Pharmaceutical Companies operating in Egypt either Multinational/local

1-Strong and vigorous training must be conducted to all industry members sponsored
by the pharmaceutical companies including industry employees like pharmaceutical
representative's distributors and vendors.
2- The PharmaCode must be studied during university degree, in faculties of
Pharmacy, Medicines and all faculties and institutions related to healthcare
professional
3-The Media and MOH must exerts more effort to inform the industry members about
the importance of PharmaCode
62
4-The Pharmaceutical companies working in Egypt either Local or Multinational must
increase its sponsorship of CME programs, Patient education programs and other
scientific activities that not based on entertainment.
5-Alliance of all Pharmaceutical corporations operating in Egypt for supporting the
application of PharmaCode
7-Rewards and presents must be introduced for individual & companies applying the
PharmaCode
8- To change their mindset in marketing and promotional activities as follows:
9- To be well prepared in order to successfully face prospective aggressive
competition expected to take place by the Multinational Generic Companies.
10-To invest in conducting continuous training programmes for the sake of people
development and training. Vis a Vis, attracting qualified candidates through attractive
packages, especially, in the vital functions i.e. sales, marketing, and Finance.
11- To follow the implementation of the PharmaCode agreement in view of
government collaboration..
12- To work very closely with the Ministry of health in upgrading the education
programs for physicians, pharmacist and patients.
13-To support the communities they are operating in by participating in the social and
health projects i.e. the New Paediatrics Oncology centre.
63
Research References
1- August 2002 Medscape interview John.kelly vice president of PhRMA
2. AstraZeneca pharmaceutical code of conduct version 2 November 2007.
3. Dunning, J. H. (1993). Multinational enterprises and the global economy.
Wokingham, England ; Reading, Mass, Addison-Wesley .
4. Dunning, J. H., B. Kogut and M. Blomstrom (1990). Globalization of firms and the
competitiveness of nations. Lund, Institute of Economic Research Lund University ;
Bromley : Chart well-Bratt c1990.
5. Gilpin, R. (1986) U.S. Power and the Multinational Corporation- The Political
Economy of Foreign Direct Investment. New York: Basic Books, Inc., Publishers .
6. Sanjaya Lall, Attracting Foreign Investment: New Trends, Sources and Policies,
Economic Paper 31 (Commonwealth Secretariat, 1997).
7. GOLUB, S. (2003), “Measures of restrictions on inward foreign direct investment
for OECD countries”, OECD Economics Department Working Papers, forthcoming.
8. GRAHAM, E.M. (2000), Fighting the Wrong Enemy, Institute for International
Economics, Washington.
9. Pharmaceutical code of conduct USA APRIL 2002
10. HOEKMAN, B. (1995), “Assessing the general agreement on trade in services”,
in W. Martin and L.A. Winters (eds.), The Uruguay Round and the Developing
Countries, World Bank Discussion Paper No. 307.
11. UNCTAD, World Investment Report, 2003.
12. Insight Yased ‘Letter from Chairman’, Volume 4 Issue 4, 2003.
13. Dadush, Dasgupta and Ratha, “The Role of Short Term Debt in Recent Crises,”
Finance & Development, 2000 December, Volume 37, pp.54-57.
15. OECD, ‘Technology and Productivity: The Challenge for Economic Policy’.
(Paris: OECD, 1991).
16. Agrawal ‘Economic Impact of Foreign Direct Investment in South Asia.’
(Washington DC: World Bank, 2002).
17. Goldberg and Klein, ‘Foreign Direct Investment, Trade and Real Exchange Rate
Linkages in Southeast Asia and Latin America’, NBER Working Paper No. 6344.
(Cambridge MA: National Bureau of Economic Research, 1997) and OECD ‘Open
Markets Matter: The Benefits of Trade and Investment Liberalization’. (Paris: OECD,
1998).
64
18. Australian Pharmaceutical code of conduct 2005
19. Addison and Heshmati the New determinants of FDI Flows to Developing
Countries: Importance of ICT and Democratization.” UNU/WIDER Discussion
Paper No. 2003/45, 2003.
20. Aitken, B. and A. Harrison (1999), .Do Domestic Firms Benefit from Foreign
Investment? Evidence from Venezuela, American Economic Review, Vol. 89, 605-
618.
21. Balasubramanyam, V.N. (1998), .The MAI and Foreign Direct Investment in
Developing Countries. Discussion Paper EC10/98, Lancaster University.
22. Barros. P.P. and L. Cabral (2000), .Competing for Foreign Direct Investment,
Review of International Economics, Vol. 8, 360-371.
23. Bhagwati, J. (2001), Free Trade Today, Princeton: Princeton University Press.
Black, D. and W. Hoyt (1989), .Bidding for Firms, American Economic Review, Vol.
79, 1249-1256.
24. Blomström, M., A. Kokko and M. Zejan (2000), Foreign Direct Investment. Firm
and Host Country Strategies, London: Macmillan.
25. Dimelis, S. and Louri, H. (2002), "Foreign Ownership and Production Efficiency:
A Quantile Regression Analysis", Oxford Economic Papers (forthcoming).
26. Driffield, N. (2001), .The Impact on Domestic Productivity of Inward Investment
in the UK., Manchester School, Vol. 69 (1), 103-119.
27. Easson, A. (2001), .Tax Incentives for Foreign Direct Investment Part 1: Recent
Trends and Counter trends, Bulletin for International Fiscal Documentation, Vol. 55,
266-274.
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Foreign Direct Investment: The Canadian Experience., Journal of International
Business Studies, and Vol.30 (3), 513-532.
29. Grubert, H. and J. Mutti (1991), .Taxes, Tariffs and Transfer Pricing in
Multinational Corporate Decision Making, Review of Economics and Statistics, Vol.
73, 285-293.
30. Görg, H. and E. Strobl (2000), .Multinational Companies, Technology Spillovers,
and Firm Survival: Evidence from Irish Manufacturing., GLM Research Paper
2000/18, University of Nottingham.
65
List of Tables
Table No. Title
Page
Table (1) Global Pharmaceutical Market
Table (2) Top leading corporations in
The pharmaceutical industry in Egypt
Table (3) Top leading products in the
Pharmaceutical industry in Egypt
List of Figures
Figure No.
Figure (1) the national companies' evolvement 2002 -2007

Figure (2) the national-multinational corporations
Growth evolution 2002 - 2007
Figure (3) the national-multinational corporations
Sales evolution 2002 - 2007
66

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École Supérieure Libre des Sciences

Research Project Supervised By

The Impacts of PharmaCode on the

I would like to thank Dr. Wafaa Marzouk for the effort

Chapter 2 Research Methodology.

Chapter 3 Research results and Hypothesis testing

CPP Certificate of Pharmaceutical Product

Local Governmental companies -1

TRIPS (Trade Related Agreement of Intellectual properties) and GATT (General

Alliance of all pharmaceutical companies operating in Egypt to apply the

The code will be widely distributed in the pharmaceutical industry

By 1975 the government permitted the private investment in the pharmaceutical

Ethical promotional practices by the Pharmaceutical Representatives must be founded

Currently, a majority of persons practicing as Pharmaceutical Representatives lack

The following are the key amendments to the Code:

• Level of substantiating data

Code provisions include standards for appropriate advertising, the behavior of

Areas covered by the Code of Conduct include:

• Nature and Availability of Information and Claims – false and misleading

1.2CODE OF PROMOTIONAL PRACTICES FOR PHARMACEUTICAL

1.3 THE ROLE OF THE PHARMACY BOARD IN REGULATING

A representative of manufacturing company, importer, distributor, wholesaler, etc.,

Training and Academic Qualifications

All Pharmaceutical Representatives in the field by the commencement date of these

A) Pharmaceutical Representatives with a field experience of four (4) years or more

A person requesting to be issued with a Pharmaceutical Representative Permit shall

A roll of Pharmaceutical Representatives will be kept by the Registrar, Pharmacy and

Foreign Pharmaceutical Representatives to be given temporary permits by the

1.4 CODE FOR PHARMACEUTICAL PROMOTION IN EGYPT

STANDARDS OF PROMOTIONAL INFORMATION

Accurate and not misleading

Payments for Speakers and Presenters

All Printed Promotional Material including Advertisements

Advertisement for OTC medicines

GIFTS AND ITEMS OF MEDICAL UTILITY

Promotional aids or items may be provided or offered to healthcare professionals and

1.5 ETHICAL STANDARDS

Detailed reports of infringement and complaints shall be forwarded to the Pharmacy

1.6Global Pharmaceutical Market

The Pharmaceutical Market

USA represents nearly 50% of the total world pha

NORTH AMERICA $223.3billion up 2%

1. - Cholesterol & Triglyceride regulators

The top 5 products in the 12 months to May 2008 were:

The top 5 corporations in the 12 months to May 2008 were:

1.7 Egyptian pharmaceutical market:

The following graph supports the above mentioned points

2.1.1 National Companies Evolvement

Year 2002 Year 2007

Figure (1) the national companies' evolvement from 2002 to 2007.

These data mean the followings:

Value Growth Rate % 30

Figure (2) the national-multinational corporations' growth evolution from 2002 to

1.8 Top Leading CORP YTD 2007

Rank Sept. Sept. %G %MS EV G/L

1.9 Top Leading Products YTD 2007

Rank LE.M LE.M %G %MS EV G/L

1.10 Industry Developments:

In 1950, the pharmaceuticals industry in Egypt consisted of about 50 small national

Highlights of the sector include:

In the latest developments, members of the Egyptian-Russian Business Council

The impacts of PharmaCode on the Pharmaceutical Industry in Egypt