Table of Content
The term globalization refers to the process by which relations between nations have become interdependent and have transcended the physical and geographical boundaries that may have existed before (Al-Rodhan, et al., 2006). Investopedia defines the term Globalization as “the spread of products, technology, information, and jobs across national borders and cultures” (KOPP, 2019), otherwise, an interdependence and commonwealth of worldwide nations fostered through free trade.
In this report, I’ll discuss how the key elements of Globalization like cost, competitive, market and government drivers are affecting the pharmaceutical industry in Algeria, then I’ll describe how unbearable inequalities between and within countries have been impacted by Globalization as well as the main challenges those companies might be facing overseeing the activities of their employees in various locations around the world.
Keywords : Drivers of Globalization, Algeria, Pharmaceutical Industry, Inequalities, Expatriation.
Algeria has made significant progress in terms of economic openness. Over the last two decades, it has developed many business relationships with several friendly and neighboring countries through the conclusion of many free trade agreements which link it to more than 55 international strategic businesses and give it access to a market of more than one billion consumers (commerce.gov.dz, 2005).
The opening of the Algerian economy to its global, Euro-Mediterranean, Arab and African environment is already well underway. In terms of Free Trade Agreements (FTAs), Algeria is a champion. These agreements constitute an opportunity for Algeria to improve its exports by reducing reliance on crude oil as a major source of national income and conquering new markets they aim to remove exchange barriers and boundries at all levels, facilitate cross-border trade in goods and services, and increase investment opportunities for foreign companies. Furthermore, it is also a way for domestic companies to become more competitive and open to the rest of the world.
Kairos and Exigency
However, the impact of globalization on the Algerian economy has recently resulted in a number of serious issues that have significantly affected the drug manufacturing business environment, consequently, local companies specializing in biotechnology and pharmaceutics, have reported a rapid decrease in domestic production and exportation accompanied by an increase in importation of pharmaceuticals and a significant rise in prices and expenditures, an issue of huge concern for SAIDAL one of the biggest national pharmaceutics manufacturers.
Audience and Stakeholders
Politicians, competent authorities, as well as pioneering industrial actors (including my company leaders), are called upon to take action in regards to the negative effects of globalization on the local economy in order to rapidly restore stability and trade equilibrium.
In my opinion, finding ways to solve the issue globally, long-term is the most likely convenient solution. Many published resources could be used as references to analyze in-depth the situation and elaborate clear approaches including:
- Open Access Research Resources
- The University of Algiers e-Library (books and articles)
- Authority websites (e.g. the government’s official websites)
- Online inquiries
The potential impact of globalization on the pharmaceutical industry
Health is becoming one of the major challenges of globalization: millions of people in the least developed countries do not have access to healthcare services. The pharmaceutical industry seems to be flourishing more than ever, posting more record profits than ever before, while health needs continue to grow, which still promise good prospects in the future.
Such a paradox between the misery of countries deprived of healthcare and the unbridled industry development seems to overwhelm the economy. But to what extent can the pharmaceutical industry really be held responsible for this situation?
The future of drug manufacturing in Africa is most likely promising in view of the exiting potentials at all levels. The pharmaceutical sector which is the central component of healthcare is growing by more than 10% a year and is expected to reach 33 billion Euros by 2020, according to an estimate by IQVIA Health as local production continues growing. Ghana, for example, manufactures 25% of its generics consumption. On the Asian side, China is increasingly dominating the market of raw materials and India finished products (IQVIA, 2019).
This raises the question of integrating good practices into the manufacturing process. In 2007, the United Nations Industrial Development Organization, the WHO and the African Union thus inaugurated a “Pharmaceutical Manufacturing Plan for Africa”. However, in 2013, as the operational phase begins, logistical and regulatory obstacles remain. A sign that GMPs, unlike the market, are not yet globalized!
Inserting Algeria in the world economy is, first of all, knowing the globalization game rules. This strategic renewal must necessarily go hand in hand with a global re-engineering which will rely on several levers, mainly:
- The knowledge of the culture of international business,
- Managing the reform process,
- The implementation of an economic information and technology monitoring system.
Foreign Direct Investment (FDI) is one of the main driving forces of globalization and an important element in the process of restructuring, modernization and possible reorientation of the world economy. But contrary to a widely held idea, more than 75% of FDI is concentrated in the North of Algeria, 25% in the South, with China capturing more than 50%, leaving the rest of the South with only 25% being taken by emerging countries such as India, Brazil, Turkey, Russia, Mexico, and other Asian countries such as Malaysia and South Korea (andi.dz, 2012). From this point of view, Algeria has a lack of attractiveness for FDI and, in general, for investment other than hydrocarbons, which can be partly explained by the presence of several structural constraints:
- Governance and transparency issues;
- The lack of coherence and visibility in the economic policy approach;
- Unstable legal framework
- Sclerotic financial system
- Training that is poorly adapted to the new changes that have focused on quantity instead of quality.
- An underdeveloped tertiary sector
- And finally the narrowness of local markets.
In the last decade, most developing countries have been engaged in an acute competition to attract multinational groups, the traditional vehicle of FDI, and at the same time promote a win-win partnership. The few successful experiences carried out by SAILDAL SPA (Algerian pharmaceutical group created in 1982 and local leader in the production of medicines) must be analyzed and evaluated in-depth, to serve as “references” for future forms of partnerships. It is urgent for Algeria now to go global in terms of business strategy with the following objectives:
- Stabilize and modernize the economy
- Access to advanced technologies
- Learning the market and targeting non-hydrocarbon exports (Oil and gas export earnings made up more than 97% of total exports) (export.gov, 2019)
- Stimulate competition and the global competitiveness
- Consider FDI as a resource for privatization.
|Company||Country||Investment in USD||Rank|
|Hikma Pharma||Jordan||165 Million||#2|
|GSK||United Kingdom||142 Million||#4|
|Pfizer||United States||111 Million||#6|
|Novo Nordisk||Denmark||85 Million||#7|
|MSD||United States||85 Million||#8|
|Roche diagnostics||France||85 Million||#9|
Table 1. The most important investments in the pharmaceutical sector in Algeria (Ghebbi, 2010)
In terms of guarantee and protection of patents and intellectual properties, it is more important to focus on enacting laws and policies for the implementation of national and international commitments in compliance with the relevant agreement between Algeria and the European Union of 01 September 2005 and the Algiers declaration of march 2006 of the European international movement.
The table 1 shows clearly that the French Sanofi-Aventis dominated the market with a market share value of 25% more than twice that of SAIDAL that possessed only 12% in 2010 (mdipi.gov.dz, 2010).
Globalization creates business opportunities through, among other things, access to new resources such as traditional medicines and pharmacopeias from Europe, Asia, and North America. It also allows the employment of talents from all over the world, which encourages “scientific cross-fertilization” which is highly beneficial for research.
On the other hand, despite the government’s objective-oriented strategy that consists of developing and promoting the local industry to reduce the import bill and thus become a platform for the development of local pharmaceutical production of generics, a large part of the market is based on imports. The importation of pharmaceutical products has significantly increased between 2001 – 2009 (+365,65%) (Figure. 2).
Table 2. Pharmaceutical imports from 2001 to the first half of 2010 in millions of USD. Under the Ministerial Order of 30 October 2008 establishing technical conditions for the importation of pharmaceutical products and medical devices for human medicine, the government has taken new measures, requiring pharmaceutical operators to invest obligatorily in local production. It has also banned the importation of locally produced medicines. Through these new regulations, the government wants to reduce the cost of frequently used medicines by the restriction of imports of those products. Consequently, imports of medicines fell by 23.74% from 698.34 million in the first half of 2010 (mdipi.gov.dz, 2010).
Globalization has also increased the risk of fraudulent exploitation and the spread of smuggled drugs. The enormous diversification of distribution channels has introduced less scrupulous, less controlled producers onto the market, making counterfeit medicines a global phenomenon: copied packaging, misuse of brand names or, even worse, the original active ingredient replaced by a substance that is either of no therapeutic value or harmful.
It also refers to the risks of global misinformation, including the dissemination of false rumors for instance, by publicizing a potential side effect, the image of a product under development can be permanently affected in the eyes of consumers.
The major challenges facing the global pharmaceutical industry
In my personal point of view, the most beautiful industry is an industry whose reason of existing is to improve and promote the health of citizens. Should an industry worth more than US1 a day, increased by 16 million between 1987 and 1990 to reach 1.25 billion, but their share of the world population fell from 24% to 20% (figure 5). They live mainly in Africa, as well as in rural India and China. In contrast, urban areas in India and China have been growing rapidly in recent years. As in the 19th century, the recent increase in global inequality is largely due to the growth of developed countries and the catching-up of emerging countries (World Bank, 2019).
Figure 5. The number of the poorest, who live on less than 311,000 per year (MacLachlan, 2018).
Why International Mobility should contribute to the development of corporate talent
On a purely financial level, it is relevant for companies to ensure that they have properly prepared and accompanied their employees before, during and after their expatriation assignment.
Companies that send their employees to work abroad have a moral responsibility as well as a duty of care to ensure that they understand the laws and cultural differences of the country to which they are going.
The following services are among the essential services that should be provided to any expatriate sent on an international assignment:
- A medical examination prior to departure in order to determine whether the employee is fit to carry out the assignment.
- Intercultural training for the whole family
- Extremely comprehensive travel and health insurance
- Access to Employee Assistance Programs (EAP) throughout the mission
Prepare the employees for a mission abroad
Preparation is a key phase without which the success of an international mission cannot be achieved. It should be possible to provide unfailing support to the expatriate throughout the project. International Human Recourses Managers are responsible for:
Careful selection of employees
The success of an expatriation depends largely on the choice of the right candidate, and therefore on recruitment. But to be efficient, one can accompany this “best candidate” with specific training.
An employee who is successful in his or her home country does not always achieve the same results abroad. It is important to take soft skills into consideration, such as flexibility, autonomy, tolerance, ability to manage change and ambiguity. These qualities play a major role in increasing expatriate’s chances of success in the new environment.
Prepare them well for departure
Companies rarely take the time to deploy an intercultural and language training programme upstream of the project, whereas it is essential that this support is developed and financed by the organisation.
The fact that the company is proactive and provides unconditional support to the employee while reacting effectively to his or her requests can significantly increase the success rate of expatriation assignments. This is why this type of support should be an integral part of the program.
Preparing them well for the return
This aspect is very often neglected, although it is crucial to the success or failure of an international mission. Expatriates, like their families, need sufficient time to prepare for the new environment that awaits them back home.
Learning a new language, one of the biggest challenges of expatriation!
For many expatriates, living in a foreign country implies a change in lifestyle, eating habits or even clothing. It is often useful to learn the language of the host country in order to better communicate with the local population and, above all, to facilitate their integration.
Why is English not enough?
After Mandarin, Spanish is one of the most widely used languages in the world, well ahead of English, which is spoken daily by 322 million people (ethnologue.com, 2019). Expatriates are therefore more likely to live within a Spanish, Portuguese, or Arabic-speaking population than within an English or French-speaking one. In many cases, therefore, it is not enough to know English to be able to communicate with others, it is important to become familiar with the local language.
It is clear that integration often involves learning the language of the country of expatriation. There are several ways for an expatriate to learn a new language, watching television, listening to the radio or reading newspapers in the local language is one of the best ways to progress.
Additionally, new technologies could play a major role to help acquire the basics and advance in learning. Whether it’s websites or smartphone applications, these technological innovations offer the advantage of making it easier for expatriates to learn a foreign language.
The language might be the main challenge at the beginning. However, it is important to take into consideration that it is also the most efficient integration tool. Moreover, the mastery of the host country’s language is an essential factor for integration and therefore for the success of the expatriation process.
Speaking the language of the host country is also an excellent way to reduce feelings of isolation and frustration. It is an opportunity for expatriates to increase their autonomy in everyday life.
The local culture is also considered as a major challenge to overcome for almost half of the expatriates. Recent survey notes that there is considerable geographic variation in these results: expatriates have far greater managerial difficulties in North America or Western Europe than North Africa and the Middle East (Price Waterhouse Physical, 2020).
Overall, apart from the problem of administrative procedures, the main difficulties lie in cultural adaptation on the linguistic, managerial and social levels. These difficulties can be reduced with a professional approach to cultural interactions. However, cultural adaptation issues are not necessarily an indication of a deficiency in the company’s ability to manage its expatriates, as the individual character and personal investment are fundamental to developing adaptive capacities.
Intercultural training helps expatriates become familiar with the culture of the host country. Being fully aware of the local culture and customs is of utmost importance insofar as it would make it a lot easier for them to react appropriately to a given situation, to better manage local staff, to administrate, negotiate, etc.
At SAIDAL, international mobility responds to a desire to mix cultures. Despite its increasingly localized HR policy, SAIDAL is committed to responding to all individual requests for international mobility. This principle is based on the fact that cultural mixes are positive. SAIDAL, therefore, encourages mobility, especially when it comes to positions of responsibility and strategic functions. The mobility policy at SAIDAL is to move its staff every 4 to 5 years, it essentially takes the form of secondment contracts (local employment contracts) rather than expatriation because these formulas are much more expensive and complex.
In terms of social protection, expatriate employees are covered by the local scheme and pay their contributions in the country where they work. They benefit from the provisions of the international social security instrument signed by Algeria and the country of expatriation.
However, risk coverage is often insufficient, which is why the expatriate has to seek additional coverage for both his family and himself by joining one of the voluntary insurance schemes managed by the government.
The expatriate is covered by the unemployment insurance scheme on his return to Algeria if his contract is concluded with a company located in Algeria. As for the secondee, he theoretically retains the affiliation to his original scheme for a variable period of time depending on the country. For instance, there is no social harmonization in terms of social protection in the European Union. Similarly, there is no harmonization with regard to the tax rate, so the different systems must be studied in order to offer compensation to losing employees.
For the expatriate employee, the salary paid is taxed according to the rules and in the country of the employee’s activity, while the seconded employee remains fiscally domiciled in Algeria, and his salary is subject to Algerian taxation.
Communication: maintaining contact
Once the employee or the expatriate has settled abroad, it is then essential that the company, and more specifically HR Managers maintain close contact with him. To do this, various means are proposed: internal communication, new IT like live online chat platforms and mentoring systems. Thanks to internal communication, Philips, for example, sends all its mobile executives a weekly press review of the company with job offers. In France, for example, Lafarge and AXA groups use “mentoring programs”, which allow to assign each expatriate a mentor, who must understand the context of the assignment and its difficulties, be informed of its progress and refer it to the director of the parent unit, and maintain permanent contact. He or she then becomes a “reintegration sponsor” responsible for exposing the professional development possibilities to his or her “tutor” and promoting his or her application.
With the new media tools, such as groupware solutions, which allow several people to work together on the same project, freeing them from the constraints of location and time, it can prove to be an indispensable means of communication with expatriate employees. In addition, Intranet is an interesting tool for companies to keep in touch with their employees abroad and establish a permanent link with them. At the same time, it allows expatriates to stay informed about the company’s news on a daily basis.
Expatriation and women Today
Women are 18% of the working force today (El Watan, 2018). Since the 2000s, the working population in Algeria has become mixed. There has been a shift from “housewives” to “female managers”. Women have become a driving force in the business world and have gained access to positions of responsibility formerly reserved for men. However, managerial functions are still mainly reserved for men, as only one woman in ten is a manager or exercises an intellectual profession. Looking mainly at multinationals, the share of women in senior or managerial positions is no more than 2 or even 3%. Expatriation is still a typically male phenomenon.
Indeed, women represent a very small fraction of Algerian expatriates (El Watan, 2018). Companies are finding it very difficult, if not reluctant, to abandon the traditional pattern of the expatriate working 15 hours a day while his spouse looks after the children and the home.
In fact, only 1% of men follow their wives abroad for about 93% of female spouses. Very often the obstacles to expatriation come from the organization and not from the spouse. But this is far from being the only explanation: women are reluctant to apply for these positions for fear of destabilizing the family unit.
In general, few women are willing to change jobs, or even stop working altogether to keep up with their families. “Society’s view is much harder on women who stop their careers and lose their social status than it is on men,” notes Pascale Teyssier, head of international mobility at Leroy Merlin (lexpress.fr, 1999). However, it seems that young female graduates now and in the next 10 years will reverse the trend. They are more mobile and when they leave school, they look for their first job directly abroad.
In addition, more women than men follow a long course of study, so the balance should change between male and female expatriates. Companies also seem inclined to restore parity among high-potential young executives: today, international executive search firms such as EMDS receive as many offers for men as for women and at the same time, there is a growing trend towards the creation of a gender balance.
Virtual expatriation: a new source of savings for companies
Thanks to the development of the Internet, more and more executives are carrying out international assignments from their home countries. Indeed, companies, increasingly anxious to reduce their operating costs, have just discovered a new source of savings: virtual expatriation.
This trend is widely analyzed by Price Waterhouse every two years (International Assignments-European Policy and Practice), which conducts a survey of 184 companies located in fifteen European countries and representing 6.5 million employees, including 33,000 expatriates. The study indicates an increase in the total number of physical expatriations, but this increase was reduced after the arrival on the scene of virtual expatriation: 70% of the companies that took part in the survey have executives in this situation. In 43% of the cases, these virtual expatriations replace physical expatriation (Price Waterhouse Physical, 2020).
The movement is expected to continue to grow, with 53 of the companies surveyed expecting an increase in this type of assignment in the next five years. However, the phenomenon needs to be qualified. Firstly, it is more prevalent in certain sectors than in others. Virtual secondments are more common in the banking and high-tech sectors. On the other hand, it remains less significant in heavy industry, which requires a permanent presence of production staff on building sites or in factories.
The benefits of a mission abroad
The opportunity to expand into new and existing markets through building a team of talented employees abroad would allow the company to strengthen its influence and profits on a global scale. International experience can help train employees in leadership and prepare them for future executive or managerial positions.
Moreover, if a company wishes to carry out rapid action on a foreign market, sending an employee of the parent company to the field can help to simplify operations, it can also help to import new perspectives, ideas and best practices.
Globalization has created tremendous opportunities for many businesses across the globe, at the same time, many complex geopolitical, cultural, religious and ideological challenges should to be studied before going further in order to establish strong global strategies that would benefit those companies. HRM plays a major role in establishing a work force balance across the borders, that would reliably contribute to realizing the company’s objectives of growth and prosperity.
The economic reforms have significantly contributed to connect Algeria to the world economy and consequently helped to improve growth rate and reduce poverty. Even though we made progress in trade openness and globalization, we remain a poor country, measured in terms of per capita income and other social indicators.
SAIDAL as a multinational pharmaceutical company seeking to adapt the structure of its research activities (as a key element of its development strategy) to globalization, might face a major challenge: the movement towards the internationalization of research and development activities which remains very limited and uncertain. Historically, major technology transfers have taken place from the United States to Europe through company acquisitions, alliances, and laboratory relocations. The race for innovation and the increasing confrontation between national and foreign governments policies, cultures and industrial environments might lead us to reconsider our vision towards globalization, and therefore, in my opinion, we should rather focus on acquiring knowledge, prioritize innovation and new technologies rather than importing finished products, training employees and seeking for strategic alliances and partnerships abroad in which I see the best way to be more competitive and independent in terms of technical ability and know-how in the long term.
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