Algeria – The Boom of new Pharma Plants

January 22, 2013 3:58 pm0 commentsViews: 767
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El Kendi plant near Algiers

To double local manufacturing by 2014. This is the objective of the Algerian Governement.

Since then, announcements of the creation of new pharmaceutical plants multiply in Algeria. Good news for the government, which hopes to reduce drug imports. Saidal North Africa Manufacturing Holding will start producing in 2014. This new plant for cancer medicines that will cost 30 million USD is on track, whith the announcement in October 2012 of the agreement between the two shareholders, the Algerian (SAIDAL) and a Kuwaiti investor.

For Algeria, it’s one more among many partnerships in the field of pharmaceutical industry. In April 2012, the n°1 private manufacturer Biopharm and AstraZeneca UK had started a Joint-Venture to build a manufacturing plant treatment for cardiovascular diseases, neurological and oncological. Cost : 53 millions USD). The following month, the first stone was set for the new 33 millions USD factory of the Emirati Julphar in partnership with the Algerian Central Hospital’s Pharmacy.

For local authorities wishing to promote production in Algeria, these initiatives are expected to reduce the heavy bill related to the importation of drugs. During the first half of 2012 alone, Algeria has paid the equivalent of 930 million euros of pharmaceuticals, a figure up to one third compared to the first half of 2011. Last year, the annual cost was 2 billions USD, despite the incentives for local production implemented in the five-year plan 2009-2014. Among the explanations for this phenomenon: the prices of some products still under patent and drug shortages that the country suffered last year.

Protectionism

If the development of pharmaceutical industry in partnership with foreign laboratories is one of the preferred ways to address the situation, Algeria has also implemented protectionist measures in the first place, the ban on import for 800 drugs in 2012, corresponding to locally produced medicines.

Problem: the level of domestic production did not meet the needs, resulting in frequent stock-outs. Despite progress, the bureaucracy (as the slow drug registration) remain barriers for laboratories operating in the country. The lock of importation encourages domestic production but has not yet provided relevant results, says Nouha Aissat, responsible for the strategic management and corporate governance in the laboratory El Kendi: “There is a desire to develop local pharmaceutical, but we expect that all declarations of intent are reflected in practice”. The government is optimistic, and according to the National Union of Pharmaceutical Operators (UNOP) and the Forum of Entrepreneurs (CFE), the country could potentially double its production by 2015 – from 35% to 70%.

Complaints

But in a report on the Algerian pharmaceutical strategy released in May 2012, the consulting firm Deloitte was much more circumspect. The study pointed the “lack of transparency in the procedures of investment and installation”, “political instability”, “the regulation imposing 51% Algerian-owned shares in any foreign investment”, “the slowness of the Algerian banking system, which inhibits investment ” and “the absence of a long-term strategy to ensure stability of industrial activities.” To these complaints was added the lack of regional thinking.

The problem being that in North Africa each country is working alone and to have a well-developed industry, it takes a minimum market of 100 million people according to Lamrani Sharif, President of the Inter-College of Pharmacists in Maghreb. “Today we have money: we can afford to buy expensive products. But tomorrow maybe, it won’t be anymore the case” says Nabil Mellah, Secretary General of UNOP. “We have before us a decade to develop our industry and position ourselves as a Hub for Africa, particularly in the Biotech field”.

In Algeria, the clock is ticking.

[by Fanny Rey - http://economie.jeuneafrique.com]

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