What makes GSK the number one pharmaceutical company in Egypt?
GlaxoSmithKline (GSK) has firmly acquired the number one position in the Egyptian pharmaceutical market since 2009 and is likely to maintain the grip at least until the end of 2011. GSK’s current market share is around 9% with a nice gap separating it from the next competitor (7.7%) (IMS, YTD o8/2011).
The Egyptian pharmaceutical market is considered one of the key emerging markets after BRIC (BMI, Q4/11).
Here are some of the key success ingredients of GSK. Understanding those ingredients, will impart you the essentials of the pharmaceutical market in Egypt.
Access and pricing
GSK has understood the game of access in Egypt earlier than other companies. By buying two successful local manufacturing facilities with their generic brands, GSK has better market access than companies which depend only on their own brands.
It also acquired the primary care portfolios of Bristol-Myers Squibb (BMS) (together with its local manufacturing facility) and UCB, two lines which are driving the bulk of the growth of the company today.
GSK maintains a relatively large field force, reaching the majority of physicians in a market which is very sensitive to promotion. GSK, with its diversified portfolio, therefore reaches more physicians than any other company in the market.
“GSK maintains a relatively large field force, reaching the majority of physicians in a market which is very sensitive to promotion.”
Furthermore, GSK is well known for providing its brand products with a price in Egypt that can be a fraction of its regular price in the region. Of the top 20 multinational corporations working in Egypt, GSK has the cheapest average price per unit (second only to German pharma Boehringer Ingelheim). By providing relatively low priced drugs, many customers’ segments have access to GSK products.
Egypt has a very large population (85M) but very low purchasing power. The annual per capita pharmaceutical sales are less than US$32. Most of this spent is out of the pocket.
By providing a big portfolio of 140 products with a relative low price, GSK is winning the game of “volume” in the market. This large portfolio also gives GSK the power to push its products along the distribution chain down to the pharmacy level.
“The Egyptian market is unique as it does not follow the global trends regarding the best selling therapeutic areas.”
Playing in the right field
The Egyptian market is unique as it does not follow the global trends regarding the best selling therapeutic areas. Two therapeutic areas that sell big in Egypt are antibiotics and NSAIDs. Four of the top 5 selling products of GSK are antibiotics (Augmentin, Duricef, Ceporex and Velosef). Two of them come from BMS. By having four well established – and relatively old – antibiotic brands, GSK is securing almost one-third of its sales!
By contrast, while Seretide is the 4th best selling global brand, in the price-sensitive Egyptian market it contributes only 2% of GSK sales.
Following the revolution in Egypt (January 2011) and the following political turmoil, GSK announced two highly visible moves.
Firstly, it announced a big investment in creating a separate consumer goods unit. This solidified GSK as a “here-to-stay” company in the market.
“…GSK raised the average salary of its medical representatives to match regional standards.”
Also, in a move that created a lot of noise in the field, GSK raised the average salary of its medical representatives to match regional standards. It took the lead in this direction and it forced many other companies to revise their pay policies. Whether this will have a positive impact on field force loyalty for GSK is debatable, but certainly it created positive publicity for the company.
But GSK is not infallible. Other agile local companies and multinational companies are constantly challenging its position. What are the other companies are doing? That’s another story…
About the author:
Nader Rizkalla currently leads Business Operations in MSD Egypt. His experience in pharmaceutical business in the Middle East extends back to 1996 when he was working in product management for the Near East-East Africa in Boehringer Ingelheim.
In 2002 he joined Schering Plough and had various positions including running the company operation in Jordan (until the end of 2006), where he achieved the turnaround of SP business. He also led the Primary Care unit in Egypt from 2007-2009 and successfully integrated the newly acquired Organon Women Health Business. He has been an active member of Jordan Country Ethical Review Board (CERB) and he held the position of Vice-Chairman for PhRMA Local Working Group in Jordan.
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