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Why is Egypt’s military entering the pharmaceutical industry?

Is this another attempt on the part of the army to control the economy

Sonia Farid

Published: Updated:

The Egyptian government gave the military a license to establish a pharmaceuticals company. According to the prime mister’s decree, the National Authority for Military Production, which is affiliated to the Egyptian Armed Forces, will establish the Egyptian National Company for Pharmaceutical Products. The announcement came after President Abdel Fattah al-Sisi called upon the military to play a bigger role in major infrastructure projects and in the distribution of subsidized goods. While this step could be seen as a solution to the shortage of a large number of drugs and the soaring prices of available ones, it also heats the already-existing debate on the army’s control of the Egyptian economy.

Osama Rostom, vice president of the Pharmaceutical Chamber at the Egyptian Industrial Federation argued that the army’s establishment of a pharmaceutical company comes at a time when the Egyptian drug market is suffering from a lot of problems mainly related to drug shortage and price hikes. “The state’s involvement in the pharmaceutical industry can regulate prices to a great extent since raw materials would be imported in bigger quantities and in fewer shipments, which would in turn reduce production cost,” he said. “If this would benefit Egyptian citizens, especially poorer classes, then why not?”

A different solution

Rostom, however, added that the same result could have been reached in a different way that does not involve the military. “If the same privileges that will be given to the military are instead given to the existing 154 drug factories and the 55 under construction, this would solve the crisis and there would be no need for creating a new company.”

Mohamed Ashraf, secretary general of the Pharmaceutical Chamber at the Egyptian Industrial Federation, had previously called for the army’s intervention in the pharmaceutical sector through becoming in charge of importing raw materials. “This will protect the sector from manipulation and monopoly,” he said, specifically mentioning the Armed Forces Logistics Authority, which has always stepped in at times of shortage, as the most suitable entity for such step.

Politician and head of al-Geel Democratic Party Nagi al-Shehabi said that establishing a national company for pharmaceuticals is the only way to face the drug crisis following the devaluation of the Egyptian pound. “Medicine is a matter of national security and that is why it is important for it to be manufactured locally,” he said.

President Abdel Fattah al-Sisi and the central bank have come under rising criticism amid an acute dollar crunch which has led to a rise in prices including of medicines. (AFP)
President Abdel Fattah al-Sisi and the central bank have come under rising criticism amid an acute dollar crunch which has led to a rise in prices including of medicines. (AFP)

According to Shehabi, the army stepped in at the right time as it always does at times of crises. “This is because only the army can protect the country from different dangers and it does so even while it is facing huge domestic challenges as well as external conspiracies,” he added.

Journalist Anas Fares sees in the establishment of the pharmaceuticals company another attempt on the part of the Egyptian army to control the economy. “This is not the first time the Egyptian Armed Forces get unprecedented privileges and it’s not a coincidence but only part of an expansive investment plan that targets the monopolization of several industries,” he wrote.

For Fares, the main problem with economic activities carried out by the military is lack of transparency. “All economic institutions owned by the Egyptian military are not subject to any form of monitoring by any government entity and their financials are listed in the state budget in one single figure under one item.” Even though the Egyptian military has for decades been involved in several economic sectors, Fares argues that this increased since the coming to power of Sisi. “In December 2015, Sisi issued a decree that allows the military to establish companies with national capital or in partnership with foreign capital. This is the key to the army’s interference in investment in all sectors.”

Mohamed Hussein, founder of the Egypt Parallel Constitution initiative argued that the intervention of the army in the pharmaceutical industry does not allow for free and fair competition. “The army gets free labor through obligatory military service since conscripts work in all institutions affiliated to the army,” he said. “These institutions do not also pay taxes and do not pay for utilities such as electricity and water.”

Hussein added that this will allow the army or a few companies with strong ties with the army to monopolize the pharmaceutical industry.

Tackling shortage

Mohamed Ezz al-Arab, medical advisor at the Egyptian Center to Protect the Right for Medicine, begged to differ. “We have suffered a lot in the past few months from shortage in the most strategic drugs and many people actually died because their medicine was no longer available,” he said. “This was specifically the case with cancer drugs.”

Ezz al-Arab said that the state has to interfere in order to prevent similar crises from taking place. “The military in particular took this initiative because it is the institution that currently has the capabilities and the technology to do that. Plus, the discipline with which the military is characterized would guarantee the quality of the products,” he added.

For Ezz al-Arab, the issue is more humanitarian than political or economic since the priority is making medicine available to citizens.

A few days after the decree, Minister of Military Production General Mohamed al-Assar, announced that the ministry is working on establishing a factory that specializes in manufacturing cancer drugs. “This is part of a mega project that includes several pharmaceutical industries such as syringes and avian flu vaccines,” he said, adding that projects of that type are a matter of national security. “We cannot just be at the mercy of imports.”

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Sonia Farid, Ph.D., is an Assistant Professor of English Literature at Cairo University. She is a translator, editor, and political activist. Her social work focuses on political awareness and women’s rights and her writing interests include society, politics, and security in Egypt. She took part in a number of local and international conferences and published several academic papers. She can be reached at soniafarid@gmail.com