The Cabinet of Ministers has agreed on raising the prices of medicines selling for less than EGP30 by 20%, according to the Minister of Health and Population Ahmed Emad El Deen (Al Borsa newspaper). The Cabinet has set two conditions for allowing the price increase: the first condition requires producers to sufficiently supply the market with the products included in the government’s decision and the second condition requires the existence of numeric codes on the included products; so they can be trackable.   EIPICO’s management told us that around 50% of its drugs are under the price of EGP30 (c100 products), and that the price increase will have a positive impact on results once the decision takes effect. We highlighted previously that we expect double-digit revenue growth in 2016 to be driven by the spill-over impact from price increase in some drugs that took place in 2015 (products that saw price increase in 2015 contributes c7% of EIPICO’s revenue) and further price increase in 2016. Moreover, EIPICO expects stronger product additions, around 17 new drugs (vs. seven in 2015), of which seven were delayed from 2015 (as the Ministry of Health applied more stringent tests on new products). We believe the recent decision would have an upside to our current forecasts.   The market has been suffering a shortage of c4,000 medicines that were mostly in the lowest price range, as the hike in costs pushed their producers to halt production; thus, the new decree should end this phenomenon, as the decision will raise the producers’ ability to continue production, according to the Minster. The Minster noted that the government would enforce strict supervision on producers to avoid the misuse of the government’s decision through increasing prices at a higher rate or increasing prices for medicines that were not included in the government’s decision. (Al Borsa, Tarek El Shawarby)   EIPICO: EGP69.04 as of 17 May 2016, Rating: Buy, FV: EGP83.00 per share, MCap: USD617 million, PHAR EY / PHAR.CA