Supportive government policies and years of increased production are moving Algeria closer towards becoming a key pharmaceuticals exporter, with manufacturer Sanofi set to open its largest regional plant in the country.
The Sidi Abdallah production centre, located on a 6.6-ha plot in Algeria’s north-western Zeralda region, is now 90% complete, say officials, who expect the plant to be fully operational by the end of the year. Once finished, the €85m facility will have a production capacity of 100,000 units per year and employ more than 300 people.
The plant, designed to produce both liquid and dry medical drugs, will account for around 80% of Sanofi’s trade volume in Algeria, making it the manufacturer’s top production centre in Africa and the Middle East. It is the company’s third factory in Algeria, alongside one in Oued Smar specialising in dry pharmaceuticals and one in Aïn Benian focused on liquid drugs.
In a sign of potential further expansion, Haissam Chraiteh, president and director-general of Sanofi Algeria, said last month the company was interested in moving into production of insulin and auto-injecting insulin pens in Algeria.
Sanofi’s investment in Sidi Abdallah aligns with government efforts to expand the market for Algeria-made products and curb imports.
In February Algerian pharmaceuticals laboratory HUP Pharma signed a deal with Saudi health group Jamjoom Pharma to open a plant producing ophthalmic pharmaceuticals.
Investment in the $130m (€116m) plant – to be built in Constantine, 400 km east of the capital, Algiers – will be split on a 51/49 basis, with HUP Pharma taking on the majority share in line with Algeria’s foreign ownership law.
Once operational, the companies say it will have the capacity to produce 250m eye-drop bottles per year, as well as 15 different ophthalmic products currently produced abroad by Jamjoom and imported.
Road to self-sufficiency
Local production of pharmaceuticals has expanded five-fold over the past five years, while imports have fallen by 14.5%, according to Hamou Hafed, pharmacy director at the Ministry of Health, Population and Hospital Reform.
Algeria is currently capable of producing 60% of the medical drugs it needs locally, nearing a government goal of 70% self-sufficiency and creating conditions to expand exports. According to Hafed, by the end of 2015 some 246 projects were being carried out by public and private entities in the pharmaceuticals sector, of which 183 were directed at medical drug production.
This increase in activity is part of a broader expansion that has seen local drug production rise from meeting 45% of domestic consumption in 2015 to 60% today. While the value of pharmaceuticals imports increased from $1.87bn (€1.67bn) in 2015 to $2bn (€1.79bn) last year, their volume fell by 12.3% – a function of domestic production growth and depreciation of the local currency.
Investment opportunity
Expansion in Algeria’s pharmaceuticals market – which rose by 22% to a value of €3.3bn in 2016 and is now the largest on the continent after South Africa’s – has gained the interest of many investors, who see the country as an attractive investment destination and base for exporting to other African nations.
The sector’s growth has been fuelled in part by government policies, such as a ban on imports of drugs that could be produced locally and the creation of the National Laboratory for Pharmaceuticals Products Control.
An improvement in living conditions for many Algerians in recent years has also shifted the focus of health care from infectious diseases to lifestyle-related conditions that require more expensive treatments and further sector investment.
A market of more than 40m, Algeria has seen demand for medical drugs rise by double digits in recent years, due to increasing numbers of people in need of them – including children and the elderly – and a universal health care system that ensures a broad-based market for such products.
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Source of article OxfordBusinessGroup
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