Newcomers to Algeria’s fledgling, but increasingly vibrant pharmaceuticals sector are immediately struck by the sense of liveliness pervading the industry. Indeed, as growth patterns in developed markets continue to flatten, and the protagonists of ‘big pharma’ pivot towards securing new revenue sources in emergent economies, Algeria must surely constitute one of the more exciting African prospects.

What may formerly have been considered a healthcare backwater, today ranks as the second largest pharmaceuticals market on the continent worth some USD 3 billion. Add to that a population of 38 million, a double-digit sectoral growth rate and a GDP per capita projection of USD 5,694 and the investment worthiness of the Algeria’s healthcare and life sciences becomes starkly apparent.

For many pharma companies, of course, the true appeal in Africa lies not so much in its size per se – the continent accounts for just 3 percent of the global economy – but rather in the dynamics that drive sustained growth and mounting demand for novel treatment. For Algeria, though, the signs again look encouraging.

This is because the Maghreb remains locked in the midst of a demographic transition in which the proportion of adolescent and elderly populations are simultaneously increasing heralding escalating healthcare demand on dual fronts.  Together, they are forecast to account for an incredible combined 42 percent of a 100 million strong by 2020. This is further compounded by a shift in epidemiological profile from infectious disease to chronic, non-transmissible “lifestyle” illness requiring evermore complex and costly treatments.

Even when compared to its illustrious North African peers, the Algerian market would seem to enjoy a decisive edge. As neighbouring healthcare systems confront a future characterised by fragmented health coverage, runaway costs and overburdened infrastructure, the Algerian model, with its unique brand of state reimbursement, guaranteed patient coverage of over 85 percent, bulging state coffers from hydrocarbon rent and wholesome public infrastructure expenditure offers an altogether more robust proposition. Algerian pharma thus represents, to quote IPEMED’s Professor Farid Chaoui, “the sleeping giant that is slowly awakening”.

Leadership Prowess

Equally noteworthy is the nation’s efforts at dominance with an avalanche of state sponsored initiatives underway aimed at securing regional leadership across the life sciences arena.  Not only has the incumbent Bouteflika administration set itself the ambitious target of ensuring that 70 percent of pharmaceuticals consumed are manufactured domestically, but a hefty public infrastructure programme  is being rolled out that will create no less than nine new University Hospitals and an additional 18,400 beds.

Plans are even afoot to render the country’s nascent technology park of Sidi Abdullah a MENA-wide biotech ecosystem, hub and centre of excellence to rival those of Singapore and Boston with MOUs already signed with the top-tier multinationals. As  Health Minister Abdelmalek Boudiaf, proudly proclaims, “Algeria now offers unique attributes that no other countries in the region can match: a stable political environment and tax exemptions for the first five years of operations combined with a strategic location at the very gates of Europe, Africa and the Middle East”.

Dreams and Drama

Like all frontier markets, however, the country certainly possesses its fair share of eccentricities and associated risks. “This may well be a market of dreams, but it’s a hard one to crack because the rules of the game are eternally unpredictable,” cautions Propharmal’s Malik Ait Said. Take, for example, the lack of a centralised distribution channel that transfers the logistical burden of distributing to thousands of pharmacies directly onto manufacturers. Or consider the swathes of regulation and byzantine bureaucracy that render a pharma export market virtually impossible.  Even worse, and a deal breaker for many, are the inflexible joint venture rules that restrict foreign ownership to a maximum 49 percent share creating what Deloitte’s Arnaud de Rincquesen brands a “lopsided and distorted market” in which an entire strata of international SMEs is absent.  “While big pharma can leverage their influence in other ways, the very SMEs usually tasked with pioneering innovation find themselves unable to relinquish that amount of control so are effectively locked out of the market” he observes.

Cultural quirks, creative solutions

Overall, though, the mood remains upbeat with foreign players successfully adopting improvised and experimental solutions to address the cultural and market idiosyncrasies that they encounter. Novo Nordisk, for example, has won plaudits for leveraging local religious communities to communicate awareness of diabetes in the run up to Ramadan. Roche, meanwhile, has deployed its acclaimed “mammobile” to far flung Wilayas to surmount market access obstacles. AstraZeneca has demonstrated effectiveness in mobilising all-women ambassadorial teams to widen understanding of sensitive woman-centric illnesses such as breast-cancer. Faderco has made inroads into overcoming the taboo of elderly incontinence by smart product placement of its adult nappies in local supermarkets and corner shop groceries as a high visible complement to the usual distribution channels. This multitude of mini-narratives and sub-plots demonstrates that Algeria pharma, though perhaps not for the faint-hearted, is most certainly brimming with opportunities for the taking. “Algerians are renowned for being a persistent and audacious people and we are making this happen…the local industry is coming of age, it is very much the moment to be here,” exclaims Sandoz’s Cherif Benguerba.