A look at Al Mujtama Alraida Medical Company’s Strategy& Competitive Advantages

Logo of Al Mujtama Alraida Medical Company

The Capital Market Authority (CMA) approved, on Oct. 2nd, Al Mujtama Alraida Medical Company’s request to register its shares for the purpose of direct listing on the Parallel Market (Nomu).

Aldukheil Financial Group, the financial advisor on the offering, set the listing indicative price at SAR 40 per share.

“Al Mujtama Alraida Medical Company”, or “Almujtama Pharmacy”, or “The Company” was established as a sole proprietorship under the brand name "Al Mujtama Alhadithah Pharmacy" in 2001 by the pharmacist Abdulaziz Khoja in Jeddah. Then, the company acquired a group of individual institutions and companies operating in the pharmaceutical sector in different time periods, where all of them were merged eventually under Al Mujtama Alraida Medical Company.

In August 2022, Al Mujtama Pharmacy was transformed into a closed joint stock company, and its current capital amounts to SAR 95 million, divided into 9.5 million shares, at a nominal value of SAR 10 per share.

According to the registration document, the company operates pharmacies and undertakes retail sale of medicines, pharmaceutical products, cosmetics, cosmetics, as well as medical equipment, instruments, and supplies. In addition, it provides pharmaceutical services in Saudi Arabia.

Further, the firm has a chain of 157 pharmacies, including 125 existing branches and another 32 under construction which are expected to open during the next 12 months. The company’s pharmacies are located in various regions of Saudi Arabia, especially the Western Region.

The company also owns a central warehouse in the Third Industrial City in Jeddah, spanning 21,000 square meters (sq m). The warehouse is expected to be operational in November 2023, as it is currently being equipped with the storage and Automated Sortation System.

The firm also has an online pharmacy through which sales are made online via the company’s website, which also provides a free delivery service to customers. The company has a delivery fleet of 23 transport trucks and delivery vehicles from warehouses to branches or directly to customers, which meet the required standards for transporting medicines, pharmaceuticals, cosmetics, baby food, as well as medical devices and equipment, as per the standards and requirements of the Saudi Food and Drug Authority (SFDA).

The company's pharmacies serve more than one million customers monthly and provide more than 30,000 products of medicines, pharmaceutical products, and cosmetics. It has 325 highly qualified pharmacists who are experienced in providing pharmaceutical advice and healthcare services to customers. The firm has achieved the Saudization ratio required by the Ministry of Human Resources and Social Development.

Al Mujtama Pharmacy stated that it seeks continuous growth in light of its following strategy:

According to the registration document, the company's revenues are mainly generated from retail sales that are divided by the type of customers into revenues from pharmacy visitors and medical insurance clients, as well as revenues from the Wasfaty service, and revenues from e-sales.

The pharmacies’ revenues amounted to SAR 367.10 million in 2022, a rise of 21% compared with SAR 304.50 million a year earlier. Revenues reached SAR 204.13 million during the first half of 2023, up 19% from SAR 171.80 million in H1 2022.

Accordingly, the company’s net profit leapt 66% in H1 2023 compared with the same period of 2022.

Al Mujtama Pharmacy said it aims, through its outlook, to achieve balanced financial growth and increase its revenues in the coming years by expanding through the opening of new branches, developing the quality of its services, and providing demanded products with the highest quality.

Retail revenues from pharmacy visitors and medical insurance clients constituted approximately 77% of the total revenues in the first half of 2023, while revenues from the "Wasfaty", an e-prescription service, accounted for 23% during the same period.

The following table illustrates the company's revenues by client classification during 2021, 2022, and the first half of 2023:

Apart from the robust performance of cash sales by pharmacy footfall, which constituted 76.92% of total sales, the company boasts several strengths, competitive advantages, and opportunities. These strengths have empowered the company to actively participate in government project competitions and secure multiple agreements with healthcare institutions. Key points and advantages include:

- The company has a strategic partnership with the Ministry of Health (MOH) to implement healthcare programs and initiatives of MOH’s National Transformation Program 2020 and the Kingdom's Vision 2030. The company focuses on providing medicines and products that were previously unavailable in other community pharmacies.

- Al Mujtama Pharmacy actively collaborates with the MOH, in coordination with a quasi-governmental client of the company, to dispense prescriptions issued by primary care centers and hospitals affiliated with the MOH and other government sectors through the Wasfaty program.

- The company provides integrated pharmacy services to all segments of the community and protects the community from counterfeit products and overpricing.

- The company has signed multiple agreements to operate external pharmacies for government hospitals in various regions in recent years, including Jizan General Hospital, Sabia General Hospital, King Abdulaziz Specialist Hospital in Taif, and King Abdulaziz University Hospital in Jeddah.

- Al Mujtama Pharmacy, in collaboration with the Ministry of Health, offers the service of dispensing e-prescriptions issued through the "Sehhaty" application and the unified phone number (937) through its branches.

- The company has established partnerships with the MoH and various educational institutions, including King Abdulaziz University and Taif University. These collaborations focus on delivering community services, offering training opportunities for pharmacy interns at the Faculty of Pharmacy, and actively contributing to scientific research aimed at advancing the pharmacy profession and the pharmaceutical segment.

- The company serves as a key partner with the MoH in delivering seasonal vaccination services. It actively participates in monitoring vital indicators as part of the national campaign "Know Your Numbers." This involvement is integral to the preparation for the implementation of a unified file system for all citizens, conducted in close coordination with relevant government entities.

- Under the supervision of the MoH, Al Mujtama Pharmacy provides non-urgent healthcare services within equipped clinics and utilizes telemedicine services to deliver the best healthcare services.

- Al Mujtama Pharmacy offers training opportunities to interns from the Faculty of Pharmacy during their internship stage. These initiatives are conducted in accordance with agreements established with both the MoH and the Faculty of Pharmacy at King Abdulaziz University, spanning a period of six years starting from the year 1439 H.

- The company operates and manages pharmacies in the outpatient clinics of various MOH hospitals, as well as in other facilities within their premises.

- In addition, Al Mujtama Pharmacy plays a significant role in the advancement of the track-and-trace system, known as "RSD," actively contributing to its development. The company is also involved in building integration between the group's system and the Saudi Food and Drug Authority (SFDA).

- Participating effectively in the "Vigilance" program, Al Mujtama Pharmacy reports on therapeutic medicines that are essential for availability in its pharmacies but were previously unavailable.

- The company goes further by proposing alternatives and identifying their sources, thereby enhancing the availability rate and reducing dependence on specific brand names.