Al Mujtama Pharmacy Foresees 25% Profit Growth in 2023.. And Targeting to Open 40 New Branches Yearly

Logo of Al Mujtama Pharmacy Co.

Al Mujtama Pharmacy Co. is expected to achieve a significant increase in its financial performance in 2023. Pharmacist Abdulaziz Khoja, Managing Director of Al Mujtama Pharmacy, stated in an interview with Argaam that the company anticipates a surge in total sales to SAR 430 million, representing a 25% year-on-year (YoY) growth. Additionally, net profit is projected to reach SAR 24 million, reflecting a substantial improvement from the previous year.

To support its expansion plans, Al Mujtama Pharmacy is nearing the completion of its 21,000 square meter warehouse. The operationalization of this facility, scheduled in November 2023, will provide the company with the necessary infrastructure to expand its branch network. Khoja further revealed that Al Mujtama Pharmacy aims to open 40 new branches annually.

Ph. Khoja also outlined Al Mujtama’s expansion strategy across various districts, the company’s financial performance and its outlook for the healthcare and pharmaceuticals sector.

Here’s the full interview with Abdulaziz Khoja:

Q: How can you assess competition in the Kingdom’s pharmacy industry? What about the company’s market share?

A: The total number of community pharmacies stands at about 9,000 across the Kingdom. To date, our group owns 125 pharmacies, while at least 40 new openings will be added by the end of 2024.

On market share, there is no official figures to date. However, I can say that Al Mujtama Pharmacy currently holds a market share of 8-10% of the total prescriptions made by hospitals and primary healthcare centers via the e-prescribing platform (Wasfaty).

Q: What is the company’s expansion strategy and what are the target districts going forward?

A: The opening of new branches has been one of the company’s goals. The company has recently opened between 25 and 30 pharmacies annually. Within one month, this number is expected to increase to 40 new branch openings per annum after the main warehouse -on an area of 21,000 square meters- is fully operational.

For target districts, Al Mujtama will consider geographical distribution and tap underserved areas. Although the number of community pharmacies across the Kingdom stands at one per every 4,000 people, which is higher than the global rate of one pharmacy per every 8,000 people. However, there are still many untapped areas.

Furthermore, Almujtama Pharmacy is upon the pioneer pharmacies in operating and managing outpatient pharmacies of the government hospitals and primary healthcare centers of the Ministry of Health (three hospitals + one university hospital) upon its 125-branch network to date, where the company disburses medicines as per prescriptions generated through the “Wasfaty” platform.

Moreover, the premium services provided by Al Mujtama Pharmacy, of which many services are referential, such as offering pharmaceutical consultations, telemedicine, e-store and home delivery have raised the need for a further geographical expansion.

Q: What is the geographical distribution of Al Mujtama’s pharmacies across the Kingdom?

A: Al Mujtama’s pharmacies are distributed across the Kingdom as follows:

Al Mujtama Pharmacy is headquartered in Jeddah City, with the main warehousing situated in Phase 3 of MODON’s Industrial Zone in Jeddah.

Q: The company owns a chain of pharmacies across the Kingdom. Can you give us insight into the performance of these pharmacies in terms of revenues, net profit and growth rates?

A: The company reported revenues of about SAR 367 million and a net profit of nearly SAR 19 million in 2022. Topline and net profit grew by 21% and 144% YoY, respectively.

Al Mujtama Pharmacy’s revenues and bottom line came in at about SAR 204 million and SAR 11 million, respectively as of June 30, 2023, which translates into growth of 19% and 66% YoY, respectively.

Q: Al Mujtama Pharmacy posted net profit of SAR 11.3 million in H1 2023. What were the key drivers for profit growth? And how do you see performance in H2 2023?

A: The company’s bottom line surged 144% YoY in 2022, on the additional liquidity injected in the company by new investors and the fast pace of new openings compared to the previous years.

In light of the above, the company recorded additional growth in revenues and net profit in H1 2023. It is expected to post this year total sales of SAR 430 million and a net income of SAR 24 million this year, implying a YoY increase of 25%.

Q: What is the company's vision for the future of the healthcare industry in the Kingdom and the challenges and opportunities expected in this sector?

A: Since the announcement of the Kingdom’s plan to privatize the health care services, the private health sector has taken important steps represented by the entry of investors to establish many hospitals and specialized centers in partnership with international and local expertise with extensive experience.

In this regard, Al Mujtama Pharmacy Co. has established a warehouse on an area of 21,000 square meters equipped with the latest storage and exchange facilities to meet the growing demand for the services of its branches that are being opened and expanded into new geographical areas.

The operation of outpatient pharmacies by Al Mujtama Pharmacy for a number of hospitals affiliated to the Ministry of Health and the Ministry of Higher Education in Jeddah, Taif, Jazan and Sabya has placed on the company the responsibility to increase its absorptive and operational capacity, and to focus more on training and employing national health cadres. This is in addition to developing future plans as a leading company in implementing national transformation programs and Vision 2030 and as the first community pharmacy chain that achieved the principle of integration with government hospitals and health centers.

Knowing that the number of the Ministry of Health’s hospitals is 284 and nearly 2,300 primary care centers, it is clear that the company's direction to establish long-term partnerships with the ministry and other government health sectors is an excellent investment with a promising outlook.

Q: How horizontal and vertical expansion in the pharmaceutical sector will be reflected on the company’s future results?

A: The Pharmaceutical industry is very promising, and through the careful view of the company's management, which envisions a vast horizon for horizontal expansion by opening branches in new geographical areas, and vertical expansion by developing and introducing the latest management, accounting and inventory management systems according to international standards and training in sales skills.

The company has also set among its priorities the development and training of national health staff, achieving the required nationalization rate for the pharmacist profession and signing agreements in this regard with a number of faculties of pharmacy, in addition to developing appropriate training programs to qualify the national cadre to work in the field of community pharmacies, which contributed to raising the level of performance and reflected in the form of important jumps in the sales figure and an increase in profitability.

Therefore, it is expected that at the end of 2024, sales will exceed SAR 500 million, while net profit is expected to cross SAR 27 million.

Q: Does the company plan for transition to the main capital market?

A: Yes, definitely! Particularly as the company seeks to strengthen its position and leadership in the field of pharmaceutical services, especially in the inventory management area, supply chains and safe and rational disbursement to provide medicine and pharmaceuticals to the beneficiaries.