NDP’s Khattab says his statements are provisional
CAIRO: Minister of Investment Mahmoud Mohieddin said Thursday stakes in public pharmaceutical companies will not be offered to strategic investors, whether Egyptian or foreign, which is consistent with a 1996 government decision.
“There is absolutely no chance [public] drug companies will be sold to a strategic investor, whether Egyptian, Arab or foreign, Moheiddin said in a statement. “And if these companies are offered for sale, it will be through the Egyptian stock exchange and for stakes not exceeding 40 percent in order for the state to maintain control.
Mohieddin’s statements came a day after announcing the government aims to attract more than LE 3 billion in private sector investment into public-private partnerships (PPP) to fund health and education programs. It followed public criticism of the sale of 93 percent of Amoun Pharmaceuticals to a consortium of three American companies earlier this month.
The Alexandria-based Amoun produces international-brand medicines under license for local consumption and export to countries in Africa, Asia and the Middle East.
Despite common belief, Amoun is a private company established by the Bassily family in 1976. Company President Sarwat Bassily is now a member of parliament. The Ministry of Investment ((MOI) issued a special press statement two weeks ago making the clarification.
Mercury Pharmaceutical Manufacturing, which includes Citigroup Venture Capital, Capital International Private Equity Fund IV and Concord International Investments, paid LE 47 per share to buy its initial 93 percent stake from the Bassily family. Since then the company has bought 3.5 million of the remaining 4.2 million shares from minority shareholders.
Madiha Khattab, Pharmaceutical Holding Company (PHC) board member and head of the National Democratic Party’s Health Committee said Moheiddin’s comments were meant to address public concerns rather than set a permanent precedent.
“Today there are strong doubts about the privatization program in general, so when it touches the health sector, it becomes an increasingly sensitive issue, Khattab told The Daily Star Egypt. “I think the minister’s comments are provisional. I think they are appropriate considering the current situation. Economically, it’s not consistent with the government’s liberalization policies, but pharmaceuticals are strategic to national security and it’s crucial now for the minister to reassure the public.
Khattab predicted the government will offer public pharmaceutical companies to strategic investors within the next five years when she expects stability in the drug market and the public’s perception of privatization will be achieved.
Mohieddin attributed the government’s 1996 decision to matters of national security, much as in the case of airport privatization. Still, since early 2006, MOI has embarked on an aggressive PPP-promotion program, where the government owns project assets, but development and operation are relegated to the private sector partner under long term-lease contracts.
Since 1991, the private sector and the government have co-launched 16 projects worth $6.2 billion (LE 35.7 billion), mostly in telecommunication but also including transportation, irrigation, sewage and healthcare, according to Ministry of Finance figures. MOI points to the level of PPP achieved by other developing countries with comparable economies to Egypt such as Malaysia, which recorded 81 projects worth $38 billion over the same period, and the Philippines, which recorded 78 projects worth $32 billion.
The government now maintains 100 percent control over all public drug companies represented in subsidiaries of PHC. A MOI spokesman declined to comment on what companies, if any, the government plans to put up for partial privatization via stock market float, saying a complete list of all public companies to be put up for sale in 2007 will be presented directly to the People’s Assembly by Prime Minister Ahmed Nazif in the coming weeks.
