* Pharma companies halting imports of drugs after currencyfloat
* Govt unwilling to ease price controls, deepening shortages
* Companies say govt plan to subsidise key drugsinsufficient
* Black market springs up
By Arwa Gaballa and Eric Knecht
CAIRO, Nov 22 (Reuters) - Pharmacies across Egypt arerunning short of medicines, some of them life-savers, as aplunge in the value of the Egyptian pound coupled with strictgovernment price caps has made scores of products unprofitableto produce or import.
The shortages include some cancer treatments as well asbasic items like insulin, tetanus shots and contraceptive pills.
Unable to raise prices above levels set by the HealthMinistry but now paying roughly twice as much to import drugs oractive ingredients, pharmaceutical firms say they have beenforced to phase out certain medicine to stay in business.
"We aren't a charity. We have expenses and production costs,and if a company isn't making profit it will have to haltproduction," said Said Ibrahim, factory manager at EIPICO, oneof Egypt's largest pharmaceutical companies.
That brings no comfort to pharmacists and sick Egyptians.
Out of insulin for weeks, Ali Etman said he was recentlyforced to turn away eight diabetes patients from his Cairopharmacy in a single day.
"Patients who come looking for insulin ask me: 'What am Isupposed to do? Die?' and I don't know what to tell them. Idon't have the drugs they need," Etman said.
Egypt floated its currency on Nov. 3, abandoning a peg of8.8 pounds to the U.S. dollar and allowing the currency toroughly halve in value to about 17.50 on Tuesday.
The float helped the cash-strapped government clinch a $12billion IMF loan it hopes will unlock investment and revivegrowth that has been hampered by political uncertainty since the2011 uprising that toppled President Hosni Mubarak.
But the medicine shortages are piling pressure on thegovernment of general-turned-president Abdel Fattah al-Sisi, whohas been at pains to reassure a populace already strugglng withdouble-digit inflation and intermittent shortages that theywould be shielded from the worst effects of economic reforms.
Talk of a looming healthcare crisis has dominated popularevening chatshows, with doctors calling in nightly to reportrapidly depleting stocks and patients being turned away fromhospitals for lack of supplies.
The Health Ministry has blamed the problem on panickingEgyptians hoarding medicines and said it would not raise prices.
Drug shortages are not new to Egypt. More medicines hadalready begun disappearing from shelves early this year as asevere shortage of dollars in the banks meant pharmaceuticalfirms could not pay for the necessary imports.
Egypt has struggled to earn enough dollars since the 2011uprising scared off foreign investors and tourists and thecentral bank drained its reserves defending the currency peg.
The Health Ministry set up a Drug Shortages Directorate in2012 to minimise the impact by suggesting suitable substitutesfor missing medicines. But the situation has only worsened.
EIPICO's vice president told Reuters about 1,600 drugs hadgone short in recent months, including 35 that have noalternatives and would disappear from the market if price capswere not eased.
"Distributors are now telling pharmacies nothing imported isavailable. The problem has been going on for a while, but hasonly turned into a crisis in recent weeks," Etman said.
SITUATION WORSENING
Egypt's drugs market is 40 percent multinational - bigsuppliers include Pfizer, Novartis,GlaxoSmithKline and Sanofi - and 60 percentdomestic. Nearly all of it is in private hands, with annualsales worth a total of about 50 billion pounds before the float.
Ahmed al-Ezaby, head of the medicine industry division atFederation of Egyptian Industries, said Egypt imports about $600million in finished medicines per year and $1.8 billion inactive ingredients.
Officials at multinationals said they were concerned at theworsening situation. One industry source said companies were nowin talks with Egyptian ministries on the possibility ofrestoring some prices to pre-Nov. 3 levels, in dollar terms, toensure supplies of the most critical medicines.
The multinationals have local factories set up but 15-20percent of drugs are imported, while 80-85 percent are producedlocally. About 70 percent of all drugs in Egypt are generic anddomestic-made.
A spokesman for Sanofi said the French group was "activelyengaging local authorities to define a sustainable pricingmechanism".
Egypt's supply problems echo those in Venezuela, where alack of dollars has also created drug shortages and leftmanufacturers nursing big losses.
Before the flotation, Egypt faced a dollar shortage that sawimported goods ranging from electronic equipment to sugardisappear briefly from shelves in the past year.
The central bank rationed supplies via weekly auctions,earmarking the little it had for essential items like medicine.
Dollar supply is less of an issue since the flotation. Butthe cost of buying the greenback is because companies importactive ingredients they need to make generic medicines.
The government, which already raised prices on a slew ofmedicines this year, is under pressure to keep drugs affordablefor tens of millions of poor Egyptians.
It has blamed the crisis on hoarding and greed.
"It's an orchestrated crisis. The decision to float thepound was taken...and two hours later people began saying wehave a crisis and we don't have meds," Health Ministry spokesmanKhaled Mogahed told the Egyptian TV channel Mehwar.
"It's a way to push for a rise in medicine prices, whichwill not happen."
Mogahed did not respond to requests from Reuters forcomment.
The companies want the government to remove the price capsentirely or re-adjust them to ease their losses.
The Health Ministry met last week with drug industry leadersto discuss an emergency plan. It has offered to subsidisepharmaceutical companies to the tune of $165 million to supportimports of life-saving drugs that have no viable substitutes,including some cancer treatments.
Companies said the amount was not nearly enough whilerolling out a new subsidy programme would take time.
"There's no way of knowing how long this amount will lastbecause cancer drugs are expensive and it depends on theshortages, but the amount is not enough to solve the problem,"said Adel Abdel Maksoud, head of the pharmacy division at theCairo Chamber of Commerce.
TWITTER PHARMACY
In the meantime the companies say they have to stop offeringthe drugs which most cut into their profits. Some have alreadysent back shipments that were ordered before the float butarrived after, as selling them at the fixed prices would havecreated big losses. They all say they have to downsize and cutout certain drugs.
"We're working on a strategy to eliminate any product that'snot profitable. But companies that depend on unprofitableproducts will be forced to shut down now given the new currencyrate," said ITO Pharma's deputy general manager Mohamed Geoushy.
More life-saving drugs will soon disappear, he said.
His company is one of only two suppliers of cyclosporine, adrug used to prevent organ rejection during transplants. Itrecently stopped importing the drug, he said.
Pharmacists say patients have no choice but to resort to ablack market for once-common items like saline and glucose atprices often 10 times higher than the official caps and farbeyond the reach of most.
On Twitter, resourceful Egyptians have set up the hashtag"Twitter_Pharmacy" to swap medicines they cannot find in shops.Hospitals are using social media to advertise their needs.
"Every minister should have sat down with the governmentafter the float and discussed an emergency plan because it's acrisis if patients can't find life-saving medicines," said OsamaTahoon, general manager of medicine producer Julphar Egypt.
"We can give up sugar or tea, but we can't give upmedicine." (Additional reporting by Ben Hirschler in London, Editing byAngus MacSwan)
Glaxosmithkline (GSK)
