Algeria’s health sector is in the midst of significant reform, with the government seeking to improve service delivery and promote local pharmaceutical manufacturing in a bid to reduce dependence on imported products.
According to the World Health Organization (WHO), Algeria spends 3.5 percent of GDP on health services. With gross domestic product estimated at $130 billion for 2008, this would put health expenditure at $4.5 billion. Similarly, the WHO estimates that 9.5 percent of Algeria’s total government expenditure goes toward the overall health sector, notably higher than neighboring Morocco’s 5.5 percent or the 6.5 percent outlay from Tunisia.
Recent years have seen a gradual shift away from a policy of state provision of all health services, as a result of the spread of private sector medical facilities — which have grown from two clinics in 1990 to more than 250 today — and the end of the government monopoly on the pharmaceutical industry.
The gradual change in the composition of the health sector is partially a result of Algeria’s changing demographic trends. According to a report published in the WHO bulletin of last November, the government needs to develop a broader strategic vision for the provision of health care to take into account the massive transformations in Algerian society over the past 30 years.
Adding urgency to health service reform is the rapidly expanding population, predicted to reach 40 million by 2025, up from the current figure of 34 million. To meet growing demand, the government has moved to increase the number of hospital beds from 52,000 in 2007 to a projected 64,500 this year. While this would give a ratio of one bed for every 527 Algerians, it would still lag behind the population curve — in 1998, for example, the WHO recorded a much-higher figure of one bed per 476 citizens.
The government also plans to open seven new hospitals and a number of other health service centers this year as part of its latest $150 billion, five-year plan. The 2005-2009 program committed $2 billion to modernizing and expanding the health care system, with 65 general hospitals, 76 polyclinics, 168 health centers and 40 treatment rooms planned. A large number of these new facilities will be built in the southern and high plateau regions, since these areas have the least access to quality health care.
Despite the increase in capital investments, the Algerian health system is grappling with more challenges than simply limited supply. In November, and again in December, health workers went on strike to pressure the government into improving conditions, including pay rises of up to 300 percent. According to local media, unions representing medical personnel say their salaries have fallen far behind those of many workers in the oil industry and that low wage levels are putting a strain on health services providers.
Pushing pharmaceuticals
One segment of the health industry that Algeria is looking to promote is the pharmaceutical industry. The provision of prescription drugs and over-the-counter (OTC) health products is big business in Algeria. According to Rachid Zaounai, the general director of the public pharmaceuticals company Saidal, the market is expected to grow five times its current size by the end of 2010, and be worth an estimated $8 billion by 2015. Considering the increase in disposable incomes and the rising awareness of health issues, expenditure on OTC healthcare products is set to grow even further.
According to Slim Belkessam, an adviser to the minister of health, domestic production meets 30 percent of Algeria’s pharmaceutical requirements, with the remaining 70 percent provided for by imports, which cost around $2 billion a year.
“We want to reduce the import bill, promote local production, create jobs and ensure transfer of technology to some specific products,” Belkessam told the local press.
As testament to the government’s support of the local pharmaceutical sector, former Health Minister Amar Tou banned in December 2007 the import of foreign-made pharmaceutical products, a measure designed to both support the local drug manufacturing industry and to reduce expenditure on pharmaceuticals. While his decree was overturned in July 2008 — as local suppliers could not meet all of the medicine needs — the Health Ministry nonetheless announced in October a list of 359 medicines produced locally that could not be imported.
Under the government’s new policy, international firms wishing to export medical products to Algeria must invest in the domestic pharmaceutical industry by setting up production or research facilities within two years of obtaining an import license. The restrictive policies have proved challenging for foreign companies hoping to enter the local market, but Algeria’s bid for WTO membership will likely loosen the regulations for domestic competition.
Though the government is committed to improving health services, revenue decline due to lower global energy prices in 2009 is expected to cut the state surplus and make it more difficult to boost expenditure beyond present levels, especially as the state raised spending on other areas such as defense, infrastructure and housing.
