The Tunisian pharmaceutical industry has expanded greatly since its liberalization more than a decade years ago. The sector is again expected to undergo major changes in 2007 as authorities are proceeding with reforms in the public healthcare system.
In the past, only a few pharmaceutical laboratories produced medicine. Today, there are 27, both public and private, and major international pharmaceutical firms such as Pfizer, Sanofi Aventis and Pierre Fabre, have set up production facilities in the country. Before the liberalization process, drugs produced locally accounted for only 7% of national consumption. Today, local production covers all kinds of medication and represents almost half of the country’s production needs in value, with TD240 million in revenue. Only more sophisticated drugs are being imported.
The market itself is relatively modest, valued at approximately $185 million per year. It is extremely fragmented, with 46 wholesalers selling to the Central Pharmacy, a public organization which functions as a buying group for the country’s network of hospitals and pharmacies.
Under the current system, healthcare coverage is ensured by two institutions, the Caisse Nationale de retraite et de Prévoyance Sociale for public servants and the Caisse Nationale de Sécurité Sociale for private sector employees. For additional coverage, patients also rely on private complementary regimes offered by mutual funds and insurance companies. According to authorities, the current system is overwhelmingly complex, costly and inefficient. Indeed, in recent years, expenses linked to public medical coverage have increased faster than the country’s GDP growth. Therefore, authorities have decided to create a new entity, the Caisse Nationale d’Assurance Maladie (CNAM), whose objective will be to simplify and rationalize the country’s public health coverage system.
By creating the CNAM, which should be operational on Jan. 1, 2007, the government aims at extending its citizens’ medical coverage, while controlling its own costs. Essentially, the cost of some drugs will be better covered under the new regime, and care will be extended to pathologies that are currently not covered. Treatments for diabetes, cancer and cardiovascular disorders will likely be among the first to be covered by the new system.
To reach both its cost-control and expanded-coverage objectives simultaneously, the government wishes to encourage the use of generic drugs. Today, over 45% of all drugs distributed through the hospital network are generic, while that figure falls to 10% for pharmacies. The government would like to see both figures increase. Price arbitration will be a major factor playing in favor of generic drugs. The referential price used to reimburse patients will be “the cost of the cheapest drug available at a given time,” said Naceur Gharbi, the president of the CNAM. In most cases, this medicine will be a generic drug. Meanwhile, customers willing to buy more expensive, branded medication, will have to absorb the extra expense.
However, industry insiders reckon that the market’s response to the reform is uncertain. According to studies, generic makers will benefit the most from the change. Some professionals think that competition on the generics market will increase as more producers will be tempted to enter the fray.
While local producers are likely to boost their presence on the generic drugs segment—which account for as much as 40% of drugs produced locally—international players are becoming aware of the potential of the Tunisian market. Indian firms have signed joint-ventures to produce anti-infectious, anti-cancerous and anti-inflammatory drugs in Tunisia.
The consequences for pharmaceutical firms are debatable. On the one hand, sales of certain medications will likely drop as they will be replaced by cheaper generic equivalents. On the other hand, certain treatments will now be refunded, paving the way for new markets and opportunities. Also, some treatments will see their level of reimbursement increase, making them more accessible.
