The Oxford Business Group reports on Algeria’s ambitious plans to diversify its economy by aiming to become a major exporter of pharma products. The results are promising. Algeria has a comparative advantage due to the strong domestic demand for pharmaceuticals, constructive government policy and the presence of many established drug manufacturers in the country.
Demography in Focus
Algeria’s growing population, with many adolescents and elderly, is attractive to pharmaceutical companies. This in combination with the rising standard of living has led to demand for more and more complex drugs. Demand is further boosted by Algeria’s generous public health system.
Government Policy and Local Production
Government regulations prohibiting the import of drugs that are already produced locally have helped support this industry from its infancy. As a result domestic production has been flourishing, increasing with 41% last year produced in 132 local factories, soon to be in the 300s if current projections are correct.
The government is putting pressure on manufacturers to further boost their output. This has prompted many firms to expand their capital expenditure budgets, among these AstraZeneca, the Anglo-Swedish pharmaceutical firm, and Sanofi, a French pharmaceutical company. Now there is growing interest from non-European firms who seek to establish themselves in this region.
The Road Ahead
To encourage this push in production and facilitate innovation the government has encouraged firms to set up operations in industrial parks to benefit from the positive spill over effects. There are currently about 30 drug manufacturers operating in the local market, but the OBG expects even more in the near future.