Are Egyptian medical suppliers exploiting the COVID-19 pandemic?

Photo: AFP/Getty Images

Since the global coronavirus pandemic crossed into Egypt’s borders, a number of basic medical supplies have dramatically gone up in price, namely latex gloves, medical masks, sanitizers and medical-grade alcohol.

A quick search through the online marketplace Olx.com.eg for medical masks will reveal prices in the hundreds of Egyptian pounds. Latex gloves are also selling for above LE100 on Souq.com. Even pharmacies are selling these products at massively inflated prices.

There have been cries all over Egypt’s social media-sphere about individual online sellers, shops and pharmacies jacking up the prices of these basic medical products in the midst of a pandemic, with accusations of exploitation and calls for authorities such as the Consumer Protection Agency to step in.

While average people have been hit by the price hikes, clinics and pharmacies have reported that their suppliers have been raising the prices first.

Business Forward spoke to Ihab, a purchasing manager who works at an ophthalmology clinic in Cairo, about how the COVID-19 pandemic has affected their supplies. Before the crisis took a major grip on the world, “we used to buy a box of 50 masks for LE12.50,” he said. “Since the beginning of the crisis around three weeks to a month ago, I was shocked by how the prices were going up two-fold, four-fold, and eight-fold. The market price for the same box is now around LE160.”

A bottle of Sterillium, a German brand of hospital-grade hand disinfectants, was between LE120 to LE150 around two months ago, Ihab said. “When the government decided to close schools for two weeks, its price suddenly shot up and it now costs LE700,” adding that this surge in price happended within of the span of a week.

The same has happened with gloves, medical sanitizers and alcohol-based disinfectants. “A box of 100 gloves used to be LE45. Now they cost LE65 and I believe the price is going to continue rising,” Ihab revealed.

“All these are wholesale prices by the way,” Ihab emphasized. “As a regular consumer, if you go to a pharmacy to buy gloves, they will probably be for LE120 or LE130.”

Ihab’s supplier, who spoke to Business Forward on condition of anonymity, said that before the crisis the trade price for boxes of 50 masks were for LE10.50 each. “Now, they are for LE225,” he added, indicating a highly inflationary trend with many discrepancies in prices across the market.

The supplier went on to say that a jerrycan of 20 liters of medical alcohol used to be around LE200 and is now LE1500. He corroborated Ihab’s claims on the prices of gloves.

He further revealed that prices of masks started to rise before Egypt officially reported its first case of coronavirus. Afterwards, “as soon as the government confirmed Egypt’s first cases, the prices of all these other products skyrocketed.”

The supplier’s own second tier suppliers are a combination of importers who ship in finished products from abroad and local manufacturers who import some of the raw materials they need. According to the supplier, his own suppliers have said the prices of imported products and materials have themselves gone up, forcing local prices to increase to make up for the added costs.

He adds that local manufacturers and importers are also anxious about the near future, scared that there might be a period of significantly low business activity and income, and are marking up their prices to pre-emptively make up for projected lower revenues.

Another excuse that has been given is that January and February tend to be slow months, justifying current price hikes as compensating for lost revenue. Local manufacturers normally stock up enough raw materials to last them a year, the supplier said, yet he revealed that on the day Business Forward contacted him, they raised their prices by 25%, including products whose demand was unaffected by the COVID-19 pandemic.

“Because there is a crisis and a lot of people are demanding these products, and the raw materials and supplies are dwindling, so [the sellers] who have them in stock have raised their prices. This situation we are in now is entirely the exploitation of a crisis, if we are going to be fully honest,” the unnamed supplier said.

What about hospitals? Are they feeling the hit? For the moment, they are not, according to Ismail El-Kharbotly, a doctor at the National Cancer Institute who spoke to Business Forward. “We have contracts with suppliers for fixed prices for the duration of the contract,” he said. However, these contracts may come to an end prematurely if stocks run out. “They will come up and say they have run out. Then it will become a matter of negotiation, whether the companies are willing to sacrifice goodwill for short term profit [or not].”

When asked if he felt suppliers were exploiting the situation, he said: “Of course they are. Basic economics. Supply and demand.”

Angus Blair, a professor of practice at the American University in Cairo (AUC) School of Business whose areas of expertise include corporate governance and business ethics, acknowledged to Business Forward that these price hikes were consistent with the basic laws of supply and demand. However, given the situation with the COVID-19 outbreak, he said: “It seems that the sellers in this case are clearly trying to make some extra cash. They are increasing the price enormously on many of the basic goods. There is clear interference and taking advantage of the situation and it is not just supply and demand. It is price gouging.”

In normal market practice, high demand for products in limited supplies would put prices up. However, in these exceptional circumstances, “this is a health issue firstly,” Blair said, “but it also becomes an ethical issue if people who need to get rubber gloves or masks or hand sanitizers cannot get access to them, especially those who are ill or those working in medical services.”

What has been happening in Egypt has also been witnessed across the world. Medical supply shortages have not just been caused by increasing numbers of sick people but also by many people stockpiling on these products. Blair believes one of the few ways that prices can be kept down is to increase the global supply.

Still, even if manufacturers around the world up their production, it will still take time for the effects to be felt, he said. “You have to remember all of this has happened quickly and the supply-demand equation does not work in a matter of days or weeks even. You need time to gear up.”

There is little in the way that regulatory agencies can do, he said, because the recent price hikes are justified by the laws of supply and demand. The way forward, Blair believes, is for governments to encourage the private sector to contribute more of its efforts to mitigate the crisis by changing their production cycles to meet demand in times of unprecedented crisis. “Right now, you have got companies in America which are transferring production to supplies such as alcoholic hand gels, masks and ventilators. It is a bit like the second world war. When America first started producing ships, it would take three months. Then they got it down to three days. It is the same with medical supplies.”

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