Economic Update

Published 16 Apr 2021

En Français


At the beginning of 2020, the Algerian Government announced the creation of the Ministry of Pharmaceutical Industry, headed by Lotfi Benbahmed. The objective behind the creation of this Ministry was to promote the local production of pharmaceutical products, in view of bringing Algeria at the forefront of production and positioning itself as a regional hub in the sector. As the former president of Algeria’s Pharmaceutical Council, Minister Benbahmed is more than familiar with both the opportunities and the challenges that the sector faces in the North-African country and discussed with OBG some of the key topics regarding the Ministry’s development, especially in the middle of a global pandemic. The main objectives for the Ministry’s creation, the role for private investment in the Algerian pharmaceutical sector and the regulatory framework for R&D are some of the topics discussed with Minister Benbahmed during this vidcast. Algeria benefits a strategic location that can allow the country to further export pharmaceutical products to Sub-Saharan Africa, taking advantage of its installed production capacity, historical know-how and availability of a young talent pool. This will also improve the attractiveness for foreign investment in the sector, a key component to enhance the sector as a whole, as well as developing local R&D, an area open to international collaboration. ‘’The purpose of the creation of the Ministry of Pharmaceutical Industry is to build a sector that creates wealth and, above all, that defines pharmaceutical policies that are both coherent from a regulatory and economic perspective’’ mentioned Lotfi Benbahmed during this talk.

See below English translation of the audio:

Bernardo: My name is Bernardo Bruzzone and I’m Oxford Business Group’s Regional Editor for Africa. Today I’ll be speaking with Mr. Lotfi Benbahmed, minister of pharmaceutical industry of Algeria. Minister, thank you very much for being with us today, first of all I would like to know what are the priorities of this ministry of pharmaceutical industry of which you are in charge.

Minister: The objective is for pharmaceutical products not to be considered simply as a burden for health systems, but rather a sector that can be a lever of growth for the country, a creator of wealth. Not only by creating added value through production but also through a pharmaceutical policy that is genuinely assertive with clear objectives, with a legal and regulatory arsenal. So a policy that is both coherent from a regulatory and economic point of view that would enable the creation of the necessary ingredients in Algeria.

The objective is not only to create a sector that responds to the availability, accessibility and quality of pharmaceutical products but also, to be a lever of growth for the country, a sector creator of wealth, of added value, of economic growth and an exports sector.

It is not an original model, but one that already exists around the world, it was South Korea’s choice fifteen years ago, and it’s a model that has had spectacular acceptance. We’ve also seen this model in the Anglo-Saxon systems where very often, the pharmaceutical sector and health care sector are separated.

There’s of course, a totally different approach, an approach that is more integrated. In our organisation, when the pharmaceutical sector was managed by the health sector it was managed by a direction. Today we have a full-time ministry with six technical directorates, and two administrative directors.

We are talking not only about regulation as we did before, but also about strategic planning, industrial development, clinical trials, export, digitisation, etc. Therefore, a plan of action had been proposed in July, in view of creating this ministry, which was adopted by the Council of Ministers. Then there was an amendment to the health law that transferred all the prerogatives related to pharmaceutical products at all levels from the ministry of health to the ministry of pharmaceutical industry.

We deal with the product, the ministry of health is in charge of medical attention, so, everything regarding patients, such as procedures related to the health card, pharmacies, hospital training, and medical laboratories.

On the other hand, everything regarding the medication circuit such as its registration, its expertise, its quality, clinical trials, production, distribution and importation depends exclusively on the ministry of pharmaceutical industry, to which we have added beyond the prerogatives of the ministry of health, some of the prerogatives of the ministry of industry and trade, such as pricing policy and the pharmaceutical industrial strategy. Thus, the objective is to create a sector that generates wealth, and above all, to define a pharmaceutical policy that is both regulatory and economic coherent.

Bernardo: What role can foreign investors play in the development of the pharmaceutical sector in Algeria?

Minister: We were in a system that, effectively promoted production for several years by protecting national production as products that were manufactured locally and that were available were not always imported, so this allowed foreign investors to ensure significant market shares when they produced locally. But beyond that, today our objective is to create an industry, as I said earlier, that creates added value, it is not simply a matter of doing industrial real estate at a given time.

At one point we were multiplying industrial units without having an analysis of the added value that was created and we could draw the parallel with the automobile industry at a time when certain cars that were assembled in Algeria were more expensive than the cars that had been previously brought into the country.

Hence, today the concern of our government is that for all the industries, the industry corresponds to the real creation of added value and that it’s not just a dogmatic policy, but something that brings added value. So, we acted quickly we a legal arsenal to regulate pharmaceutical sector in Algeria, as the previous one was obsolete because it existed since the law of 85, so for more than 30 years. Thus, in the first place it was necessary to set up the national agency for pharmaceutical products, to set up the accreditation and registration decrees, the intersectoral price committee, in which we put in place the main lines of action for the accelerated registration of products that interested us, such as oncology products with high added economic or health value.

This also included the possibility of registering products for export. We have created the conditions for Algeria to become export paradise for pharmaceuticals, and we are working both at the level of price fixing for exports, as well as for the ease of registration and producing medicines for export.

Decrees that included the framework that regulates pharmaceutical activities, were issued and later adopted. Hence, a new definition of the pharmaceutical establishment has been put into place, containing new specifications of charges for the import, export and distribution of products. As for the external actors, they will now find a clear and transparent regulatory framework that will fully digitised by the end of the year, where they can find out exactly what they can do, how they can do it, as the rules of the game are completely transparent and clear.

Our main objective is to create wealth in Algeria, so we want to have win-win relations with the laboratories and since our prerogatives were given in October, and since the first months through the regulation that we implemented we realised that indeed, in terms of import or production, there were important flaws: products that were imported and expired in Algeria, products that were insufficiently imported when we needed them.

Thus, we put in place through the new regulation, a real pharmaceutical responsibility as it exists in many development countries parts of the world, with an agency, where pharmaceutical products are handled by the establishment in terms of quality, regulation, availability of pharmaceutical products. Regarding, added value what’s important, is that we have set up a system that allows to promote what is created in Algeria because at one point we had companies that would produce in Algeria but that would sell us their raw materials 300 times more expensive than other competitors. This means that the value added was extrernalised to the country of origin and Algeria wouldn’t benefit from it. Even if the products even if they were not sold, they could expired on Algerian territory, and at 300 times the price, so we were in an outward-looking economy.

Bernardo: Finally, can you tell us a little bit about Algeria’s place as a regional and international actor in the pharmaceutical industry?

Minister: We have some compelling strengths, first of all, in terms of the relocation of production, which at the time of the pandemic was cruelly felt by Europe. We have the proximity to Europe which would allowed them to localise a certain amount of production, as we have perhaps the cheapest in energy the world, accessible human resources that are very well-trained in pharmacy, and we have 12 universities that have pharmaceutical programmes.

Algeria is now known for exporting its medical staff throughout Europe and the world, so we have a high academic level, which has allowed us to create this industry and we also have the biggest market in Africa of €4bn between import and production. Therefore, between this market, and setting up of platforms for production, which before meant the creation of a production unit, but tomorrow it could be research and development, it could be the nature of manufacturing, it could be licensing with local operators who do the processing.

We are open to everything, as we have seen with vaccination in the world it’s often a start-up or a well-known laboratory that subcontracts the manufacturing of these products. The gateway to a country is the registration of local products and we don’t longer calculate the out-of factory price. What we do is we take a look the integration rate, we take out the imported inputs and divide it by the cost price and then multiply by 100 and you obtain the integration rate of a product. It is a government policy which is already used by the ministry of industry. At the ministry of the pharmaceutical industry we are using this formula and we have added the export rate, that is to say that registration decisions will be renewed according to the rate of integration and so our local producers will tend to produce more.

We are creating a movement that will lead them to increase their integration rates. As for certain classic products we’re going from a high of 80/90% and then we’ll stagnate. For some products that we don’t we don’t master, we’ll start at perhaps 30% and it will increase as we go along. But this integration rate has been included into the price-fixing regulation of the inter-sectoral, and inter-ministerial committees.

We have now have the task of setting up the pricing and economic policy, so the integration rate is completely integrated. Regarding raw materials, there is an interest in producing certain materials and a lesser interest in producing others. It depends on the cost of the raw material, of inputs, and it may be possible to locally produce some inputs because we have mineral resources, carbonates or some minerals that could be transformed in Algeria.

In any case, we are working on this, it’s a fundamental axis. This is an opportunity for many industries in the world as the pharmaceutical industry is not just the product, it’s all the inputs, what goes with it the industry, and we are in the process of creating a whole industry that makes inputs, to make the sterile vials used for injectables.

We’ve found it ridiculous that we had a great number of print shops in Algeria, and many, due to ignorance of the local market, continued to import cases, when they could have been manufactured locally as these products were also being exported.

We were part of a system that was not integrated at all, so the whole point of having created this ministry is to have a complete, a global economic vision that not puts first, the interest of protecting the public because the creation of the ministry emanates from the health law. There can be several ministries in a state that protect and are there to protect emanate from the health law.

In Algeria, these ministries are the ministry of health and the ministry of pharmaceutical industry, and for our part, we remain on this logic of protecting public health with a vision of economic coherence and development of the country. Look, we are the leading producers in the region, it doesn’t seem like much, but you could see in value and number of boxes and you will see that Algeria’s production exceeds Morocco and Tunisia combined, by far. Also, in number of industrial units as well, that follow international standards.

This recent industrial fabric that abides to international standards is the first market in Africa, the first producer in the region by far, which allows us to have us to have the legitimate ambition to be a local reference. It was quite paradoxical to be the leading producer and to have production units whose registration was blocked under the old system.

Currently, there are hundreds of products that will greatly increase our range, those for therapeutic use, such as sterile injectables, insulin and oncology products that will be on the market in 2021 and 2022.

This will enable us to reach the target of 70% of our priority needs, we will achieve this, but beyond this we have the ambition to be only country to have these industrial capacities. Our territory and our market will become too narrow for our industrialists and they project themselves naturally.

As I said, we have strengths such as our strategic location, the cost of our energy, our human resources and our legislation. If a learned society made a comparison between our pharmaceutical field and what exists in other countries, you would see that there is innovation, openness and that we offer possibilities.