Algeria health sector market profile

The health system: in Algeria has achieved an improvement in health indicators thanks to an increasing share of the state budget devoted to health sector that represents 5.2% of GDP. The government allocated US $ 28 billion over the past decade, including US $ 3 billion in the 2020 state budget and the population continues to benefit from free public healthcare and social security scheme. However, like other middle-income countries, Algeria faces a number of challenges, including growing inequalities in access to healthcare and increasing economic and social vulnerabilities. Despite major expenditures, the public health system suffers from lack of management, poor quality of services, disorganization, and heavy bureaucracy. The sanitary crisis unveiled disruptions in the system and led the government to further engage into various reforms to modernize the sector.

The health system is organized around the ministry of health, population, and hospital reforms (MSPRH) and has five Regional Health Councils, Regional Health Observatories and 48 Health and Population Directorate (one direction per wilaya) across the country. According to health ministry, Algeria has 586 public health care facilities including 15 University Hospital Centers (CHU) and 83 specialized hospitals (EHS).

Algeria is experiencing an epidemiological transition and chronic diseases associated with a lifestyle, such as diabetes, cancer and hypertension requiring more complex and costly treatment that have replaced infectious diseases. Life expectancy has increased to 76.5 years and the population is expected to reach 50 million by 2030, from 44.7 million in January 2021.

The Government passed a new Health Act that reinforces the free health care principal in the constitution, modernizes the legal framework and introduces a new dynamic in the sector. The law implements new measures including the promotion of e-health and adoption of new technologies including computerized medical file in the national system.

The Algerian government launched an ambition program of building five big hospitals (CHU) nationwide in partnership with foreign companies. However, due to economic crisis, the projects are currently frozen. In 2019, the government achieved 34 small hospitals, is planning to launch 26 others and create 27 000 new jobs as part of the 2021 budget. It will continue the renovation/modernization/new equipment acquisition for 304 existing public hospitals especially with the pandemic that unveiled major deficiencies in the sector.

The private sector is investing in the health care to respond to increasing demand and deficiencies in the public sector. Algeria accounts 208 private clinics from 53 in 1993 in almost all specialties where 4 to 5 new clinics open every year in addition to doctor’s offices.

Pharmaceutical market: The second-largest market on the African continent after South Africa, Algeria’s pharmaceutical market registered double-digit growth during the last decade (17%) and is estimated to US $ 4 billion, according to the Algerian minister of pharmaceutical industry. The import bill of pharmaceutical products registered US $ 2 billion in 2019, of which $600 million are drugs for cancer treatment and $400 million of insulin for diabetics. Canadian pharmaceutical product exports to Algeria increased from US $ 4.4 million in 2016 to US $ 11 million USD in 2017. In 2018, they registered more than US $ 24 million, according to Algerian customs.

Algeria is particularly attractive for major international pharmaceutical groups that have established drug-manufacturing plants with the French dominating the market. Leading companies include Sanofi, Novo Nordisk, Pfizer, El Kendi, Hikma, GSK, and local companies; groupe Saidal, Merinal Laboratories and Biopharm.

During the June’s 2020 cabinet reshuffle, a new Ministry of Pharmaceutical Industry was created as a strong signal to boost the sector. It oversees the regulatory aspects governing the pharmaceutical industry and medical device market and ensures accessibility, availability, registration, importation and price control of drugs. The newly created National Drug Agency will be reinforced to simplify and streamline registration process. Moreover, a new minister delegate in charge of hospitals reforms was appointed to accelerate the reform process, in particular the digitization of healthcare.

Algerian government's policy aims to gradually reduce imports and boost local production, especially in generics to reach the ambitious rate of 70% of local manufacturing by 2022. The government introduced a ban on certain imported drugs that are produced locally and offers tax incentives. The market share of local drug production has increased five-fold in the last five years and is currently estimated to 52% (about US $ 2 billions USD in 2018). According to the ministry, there are 97 drug-manufacturing plants spread across 21 wilayas, including 49 for the Center region, 36 for the East and 12 for the West.

Pharmaceutical industries are qualified as a “strategic sector” in the complementary finance bill for 2020 (LFC 2020), and as such remain subject to the ceiling at 49% of the participation of any foreign investor in the capital of the Algerian company (called 51/49 rule). However, investments related to the manufacture of innovative, high value-added essential products requiring complex and protected technology, intended for the local market, and for export, are exempt from this rule

Medical devices: Algeria medical device imports reached about US $770 million in 2018, which puts Algeria in the TOP 5 on the African continent, according to Algerian customs. Despite the economic crisis in the country, this sector is still growing and 90% dependent on imports mainly from the United States (18%), China (14.5%), Germany (12.5%), France (11%) and Japan (10.5%).

The sector is depend on public tenders launched by the PCH (Pharmacie Centrale des Hopitaux) to satisfy the needs of public hospitals (about 40 %) and about 60% are for the private sector (clinics and direct purchases). There are more than 200 importers of medical devices in Algeria and 10 000+ pharmacies. Local production of devices is minimal and focuses on low-tech products but is currently emerging to cope with the new governmental policy that encourages local production. This later benefit from a 25% bonus on the price of local products compared to imported ones on all public tenders. The government imposes restrictions or sometimes the suspension of the importation of a product in case of satisfaction by local production. To contribute to the national efforts to fight the pandemic, two leading private companies; Vital Care and Salem Diagnostics launched local production of rapid diagnostic tests. Vital Care, which already produces self-monitoring blood glucose strips in Algeria, is semi manufacturing COVID-19 IgG/IgM rapid diagnostic tests with Canadian partner that registered success in the market.

Market challenges and opportunities: Despite market access challenges mainly the bureaucratic registration process, complex regulatory environment and country risks, Algeria’s large and growing health sector will continue to create multiple sales and investment opportunities over the next ten years. Favorable demographics and healthcare infrastructure projects will continue to support increasing demand for medical treatment. Algeria’s strategic geographical position and government incentives for investors will support the country’s long-term ambitious plan to become an export base toward the African market.

Successful companies in the Algerian market adopt a long-term strategy, dedicate time to develop the market, and build strong partnerships with local players that are equipped to navigate with local regulations. Promising opportunities for Canadian companies include medical devices, digital health, telemedicine, pharma, nutraceuticals and healthcare service/continued medical training. Products of interest in the medical device: medical imaging, in-vitro diagnostics, radiology, surgical, orthopedics, prosthesis, respiratory and X-ray, laboratories equipment and reagents.