An assessment of de-globalization’s impact on MNC pharma profitability in Egypt

Abstract

The financial implications of de-globalization are widely debated; its precise impact on multinational corporations (MNCs) in regulated, strategic sectors within emerging markets remains empirically underexplored. This study offers a novel, granular analysis of how de-globalization directly impacts the financial sustainability of foreign pharmaceutical investments, utilizing Egypt—a pivotal, volatile emerging market that prioritizes health security—as a critical case study. Moving beyond theoretical discourse, the research constructs a unique composite index to quantify de-globalization through trade, investment, and growth indicators and employs Pooled Mean Group estimation on a firm-level panel dataset (2010–2024) of eight major pharmaceutical MNCs. This methodological approach enables the isolation of short-term versus long-term financial effects on key metrics: Return on Assets (ROA), Return on Equity (ROE), and Gross Profit Margin. The results offer two primary contributions. First, they deliver robust empirical evidence that de-globalization pressures—manifested through localization mandates and protectionist policies—significantly erode MNC profitability in Egypt, with the negative impact exacerbating during periods of macroeconomic instability. Second, the paper identifies the specific transmission channels: increased operational costs, fragmented supply chains, and constrained pricing flexibility, which collectively challenge the long-term viability of foreign-led sector development. The study’s central contribution lies in framing and evidencing the core policy dilemma: the trade-off between national pharmaceutical sovereignty and a competitive investment climate. It provides stakeholders with data-driven insights, offering policymakers a framework to calibrate protectionist measures and equipping corporate strategists with evidence to build resilience in an era of geopolitical fragmentation.