The Role of Environmental Compliance in Pharmaceutical Export Competitiveness: An Egyptian Case Study

What is it about?

This study takes the lens of international economics to study the determinants of growth in pharmaceutical exports in Egypt. The Egyptian pharmaceutical industry has been the regional industry leader since it was established in 1938. The industry’s barriers to entry in the global market primarily include regulatory frameworks, infrastructural disparities, and inconsistent funds. To this end, this study examines those barriers and, to some extent, the opportunities, thereby helping to document Egypt’s position in the global competitive landscape of the pharmaceutical industry.

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Why is it important?

In the assessment of the three classes of firms, significant differences were identified. Firms of Class A have strong export growth attributed to flexibility in regulatory frameworks, financial strength, and the development of new innovative products. In contrary, Class B firms have limited export growth due to financial constraints and problems pertaining to regulatory compliance. Class C firms, on the other hand, had weak institutional integration, little knowledge of export opportunities, and high risk aversion, which explains their export stagnation. Of the factors tested, regulatory compliance, R&D finance, and financing were identified as the most significant in the quantitative analysis (p < 0.05). While the strength of a firm's supply chain and export of IP were named alongside many other factors, their export performance showed no strong dependence on these variables, and were thus considered less influential. Unique Contribution to Theory, Practice and Policy: To promote innovation, the study recommends Egypt’s pharmaceutical sector to implement Egypt R&D expenditure strategies. In addition, expanding institutional financing and harmonizing domestic and international laws would be beneficial to the pharmaceutical sector. Egypt can substantially benefit in the pharmaceutical sector from these recommendations, as can industry stakeholders and policymakers. Evidence-based recommendations would be the first step in repositioning Egypt in the international market as a competitor in pharmaceutical exports.