SPIMACO holds 6% of market, seeks 12% revenue growth

Saudi Pharmaceutical Industries and Medical Appliances Corp.’s (SPIMACO) market share dipped to 6% due to a decline in government sales, CEO Jerome Cabannes told Argaam.

SPIMACO is working to strengthen its foothold by focusing on key pharmaceutical specialties and profitable sales, he added.

Cabannes attributed Q2 2024 strong earnings to a focus on high-yield operations, in addition to reviewing the company's contracts and improving the manufacturing efficiency—from purchasing up to product delivery.

For more exclusive interviews 

The second-quarter revenues fell on a steep decline in government contract sales compared to last year, due to the transition between old and new contracts and a focus on more profitable contracts after reorganizing sales operations.

Government sales saw a slump during Q2 2024 from record sales in Q2 2023, making it difficult to maintain the level this year.

Yet, the company managed to boost its sales as private sector sales grew during the second quarter compared to the same period last year.

The private sector represents the largest part of sales in Saudi Arabia, covering patients’ daily consumption of products, said Cabannes, noting that the company closely monitors its performance in various product categories, including retail products and prescription pharmaceuticals.

The pharmaceutical sector is dynamic and constantly evolving, making it a competitive environment full of opportunities. This dynamism means there is a continuous increase in demand, which in turn enhances growth opportunities.

Further, SPIMACO maintains its leadership in certain key pharmaceutical specialties, such as the neurology, anti-inflammatory drugs, and respiratory system medications, the CEO said.

SPIMACO is also investing heavily in research and development as part of its long-term plan, with a focus on innovation and product development, while enhancing local manufacturing in collaboration with foreign partners.

Saudi Food and Drug Authority (SFDA) plays a pivotal role in ensuring the quality of pharmaceutical products, which helps in exports to the GCC countries.

Regarding the impact of higher interest rates, Cabannes said SPIMACO places great importance on maintaining strong relationships with banks by ensuring that banks are fully aware of its financing needs to support its efforts in financing, development, and providing cash liquidity.

This strong relationship is essential to ensure continued growth and achieve long-term financial goals, despite currently high interest rates.

SPIMACO aims to achieve 10-12% revenue growth driven by a continued focus on profitable sales and operational efficiency, in addition to ongoing investments in product development, new partnerships, and the stability of its core operations alongside with innovation.

The company is committed to supporting government initiatives and the national technology strategy by enhancing local manufacturing and contributing to increasing local content, as it seeks to go beyond its traditional role and focus on creating value for local products.

According to data available on Argaam, SPIMACO's H1 2024 profit rose by 21% to SAR 73.9 million (before deducting minority interest), compared to profits of SAR 60.9 million in a year-earlier period. The second-quarter profit stood at SAR 34 million.