The Worldfolio speaks with Hend El Sherbini about the prospects for the Egyptian healthcare industry, as well as the services offered by IDH as one of the leading private healthcare providers in the Middle East and Africa.
So, before entering into the sector and more specifically on IDH, I want to take you opinion on the macroeconomic stability of the country. Since the end of 2016, with the rise of imbalances in the economy, the government has been taking serious steps towards achieving macroeconomic stability. So 2 years after implantation of the first major round of reforms what is your current assessment of Egypt’s economy?
There was an increase in the GDP in 2018 of around 5%, and they are also projecting more than 5% this year. This is very good given what happened in the last few years. I am not an economist, but I can see there is a positive impact on the economy after the devaluation in 2016. So, all the measures taken by the government are paying off now.
So the country has achieved macroeconomic stability. The current debate now is to what extent will step back to let the private sector thrive and be the real generator of jobs and investment in the country. On that note, what do you think is the role of the private sector under these conditions?
I think the private sector has to play a very important role. The private sector is the one who is going to drive the economic growth. The government can help in legislation, in making things easier for investors, and in getting rid of bureaucracy. The driver however for economic growth in any country is the private sector. The private sector in Egypt is quite strong and has been present for a long time now. We’re a country of 100 million people, where there are a lot of talented and educated people, who have been educated in Egypt and abroad. So, you can really find a lot of talents in Egypt that are willing to work in the private sector. I think the private sector has to take a very important role in order to drive the economy for us to see real economic growth in the country.
So, last year the government launched the first stage of the universal healthcare insurance. What is your assessment first on this decision by the government, and then on the healthcare sector as a whole?
I think it’s a very important step. I mean right now the government is spending 3% of GDP on healthcare, which is very low. When you look at the country overall, you’ll see that the population is underserved in terms of healthcare. So, we really need to raise awareness of healthcare. People also must take responsibility for their health and be aware that they need to take care of themselves. If you look at it from an economical or financial point of view if you don’t have a healthy population, then you don’t have a productive one. You are going to spend more money in treating patients; therefore, I think the government should focus on preventive medicine rather than letting people get sick and then treat them because it’s more cost effective to focus on prevention. So increasing health awareness is very important. Going back to your question about the universal healthcare act, I think the fact that the government is looking at investing and increasing awareness in healthcare is very positive.
So IDH is a leading consumer healthcare company in the Middle East and Africa operating in Egypt, Jordan, Sudan, and Nigeria. If I’m correct, you have a presentation of portfolios of over 1,400 diagnostic tests. What role do you play in the Egyptian healthcare system?
We actually have two brands in Egypt in diagnostic services. One of them started in 1979, which is 40 years ago. The other brand started in 1990. These two brands have been there for some time in Egypt and are trusted by the Egyptian population. We provide diagnostic tests at an affordable price for everyone. We are the only cap accredited lab, so we are the only laboratory in Egypt which is accredited by the college of American pathologists. We were first accredited in 2010 and reaccredited every two years since then. For me, this was very important because we wanted to have the world class diagnostic service in Egypt. You might know this, but 70% of diagnosis of patients is based on lab testing. So, if you have proper lab tests and results that you can trust, then you’ll probably diagnose and treat people in the right way. We have very good and well trained pathologists. This is what we provide and aim at: the highest quality of diagnostic healthcare.
I want to know what role you specifically play within the healthcare system?
We’re in the private sector of course. We serve patients who pay out of pocket, and we also have a lot of companies like insurance companies, banks, and other corporates that get the service from us. As I mentioned, if you compare our prices to anywhere else in the world, we are very cheap. So, we try to provide the highest quality with the most affordable price. This is the role we play. We are present everywhere in Egypt. We are in Cairo and all governorates from Upper Egypt to Marsa Matrouh, so we are almost present everywhere. We try to be accessible to people. We have a website so that people can get their results online. As you said, we provide more than 1,400 types of laboratory testing; routine as well as esoteric tests.
So you’re not only present everywhere but you also have 50% of the market share, correct?
Not really because the healthcare sector in Egypt is very fragmented. If you look at the laboratory and diagnostic sector, there are more than 5,000 doctor labs, hospital labs and lab chains. Within the lab chains, we have 50% market share. Still, the market is very fragmented unlike the U.S or in Europe where you have big chains. In the U.S for example, they have Quest and Labcorp. These are the biggest ones and probably have most of the market. The problem, as you know, healthcare is an expensive service. So, in order to have high quality, you really need to spend a lot of money. I think consolidation is very important in healthcare to be able to provide a good service.
How important is it for you to have international partnerships?
We were very keen to get accredited by the college of American pathologists because this is the gold standard in accreditation for the laboratory service. This is not really a mandate from the government or the ministry of health; it’s for us to be sure that what we’re providing for the patients is of the highest quality.
So, what happens with the accreditation is you first get enrolled in a proficiency testing where the college of American pathologists send you samples for all the tests that you do, and these samples are unknown. So, they do them like the rest of our samples. We send our results through the website. They then compare our results to the rest of cap accredited labs all over the world. They send you a very comprehensive study of your results so you know where you are. You know if you have a problem with the machines or kits used in the tests.
This along with many other measures including training for individuals, the place itself, and so on, so, there are a lot of measures, and they come every two years with a specialized team that inspect our laboratory. If you’re doing fine in all aspects then they’ll give you the accreditation. This is important for us to be sure that we’re doing the right thing and giving people the highest quality lab service. This is our aim from the start. As I said, in the U.S, it’s mandatory to be accredited; otherwise, the insurance companies will not work with you. Here in Egypt, it’s not mandatory.
I’m guessing this gives you a unique competitive advantage, right?
It gives us a unique competitive advantage with physicians who understand accreditation. Also patients now understand that we have the highest quality labs with the most accurate results, and that is why they trust the labs.
Last quarter of 2018, which is the last available report that we could see, you increased your profits by 26% compared to 2017. Why do you think are the reason behind your financial success?
As I said, we have a lot of factors. First, we are accessible to everyone. We provide all tests. Our lab brands are well trusted. We are accredited. We provide services to our patients like the web results. We also send phlebotomists to people’s homes to collect samples. We work with all corporates and insurance companies. I think all this gives us an advantage. We try to also be price sensitive. So with the devaluation, we only raised the prices around 13%. Everyone else, if you look at all consumer businesses from food to retail shops, they doubled their prices. We only raised 13%. We are a sensitive sector and should be really price sensitive; otherwise people won’t afford to get tested. This is important because this is an essential service and not a luxurious one.