MENA’s better pill to swallow

Each week Arabian Business turns the spotlight on a leading company.

Sounds like a global concern...

Actually, Planet Pharmacies will be a new chain of drugstores spread across the Middle East and North Africa (MENA). The venture will have an initial capital of US$245m, although this will rise to around US$750m.

That's a lot of pills. Who's behind it?

Kuwait-based Global Investment House (Global) has lined up two of its private equity funds to own 60% of the venture along with other investors. The remaining 40% will be owned by UAE-based Gulf Pharmaceutical Industries, also known as Julphar.

Tell me about those two, then.

Global Investment House is a fully-fledged investment company incorporated in 1998, and falls under the regulation of the Central Bank of Kuwait. Its stated aim is to meet the high expectations of local and international clients, and to enhance the investment service industry and the capital market in Kuwait and the region. Today, Global stock lists on the Kuwait, Bahrain, and Dubai Stock Exchanges, with branches and affiliates in Bahrain, Dubai and Abu Dhabi, Jordan, Qatar, and Sudan.

And Julphar?

Gulf Pharmaceutical Industries (Julphar) was established in the year 1980 under the guidance of HH Sheikh Saqar Bin Mohammed Al Qasimi, the Ruler of Ras Al Khaimah. The vision was to build a pharmaceutical company that would make UAE self-sufficient in all of its therapeutic needs, and provide quality medicine at affordable prices. Since its inception, Julphar has steadily grown into a world-class, state-of-the-art pharmaceutical manufacturing company, and it has the distinction of being the first pharmaceutical company in the UAE and one of the largest in the entire Middle East region.

That's some hefty support. So what is Planet's plan?

The company will commence its operations with 65 pharmacies and clinics and aims to spread to the entire Middle East and North Africa by 2010 with more than 2000 pharmacies, according to officials. Chairman of Planet Pharmacies Abdul Razzaq Yousef explained last week that Planet's retail basket would include a mix of prescription and over-the-counter drugs, cosmetics and other health and hygiene products.

"The chemistry between the largest pharmaceutical manufacturer in the region, Julphar and the leading private equity manager in the region, Global will bring in synergies of immense proportion and revitalise the entire healthcare industry in the MENA region,"he said.

In addition, stores will provide value-added services including skin care advice, prescription-filling services, tie-ups with insurance providers, drive-through facilities and 24-hour pharmacies. The network will also provide customer loyalty programmes, and Planet's business model includes having clinics attached to its pharmacies.

Sounds like they've thought it through...

Quite right - and there's a lot of cash to be made in the region's pharmacy game. Global estimates the pharmaceutical industry in Gulf Arab region maintained a compound annual growth rate of more than 10% in the six years to 2004, compared with 6% for the industry globally. Shailesh Dash, senior vice president and head of private equity, predicted last week that the industry will sustain "double-digit" expansion through the next five to six years on population growth and increasing healthcare infrastructure investments.