Julphar and Global Investment House to establish Dhs900m MENA pharmacy chain

Planet, a holding company being established in Dubai, UAE, aims to become the largest healthcare products retailer in the MENA region through organic and inorganic growth strategies.

In a joint press conference held at the Fairmont Hotel in Dubai, Mr. Abdul Razzaq Yousef, the Chairman of Planet Pharmacies and Mr. Omar El-Quqa, Executive Vice President at Global and Vice Chairman of Planet Pharmacies made the announcement.

Yousef said that 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 revitalize the entire healthcare industry in the MENA region.

He added that the formation of the company will bring order to the fragmented and unorganized industry of retail pharmaceutical industry as well as, improve the standards of services to public at large and generate employment to the Arab professionals.

The company will bring in the industry experts from all across the globe who will in-turn assist Planet in its ambition and vision of improving the standards of the Pharmaceutical Sector in advanced countries of Europe and America.

'The company will commence its operations with 65 pharmacies and clinics and aims to spread to the entire MENA by 2010 with more than 2000 pharmacies.'

From his side, El-Quqa expressed his pleasure and shared his vision of making Planet a leading force and provider of quality medicine across Middle East and North Africa (MENA).

Speaking to the press on the newly formed company, he said 'Planet Pharmacies will be the leader in the pharmaceutical retail business and allied services. Its goal is to have strong presence in the entire MENA region, bringing in the best medicine and leading brands to the end users.'

The company, will be formed with a capital of Dhs900m ($245.03m) and eventually to be increased to Dhs3bn; and will have Julphar and the private equity funds managed by Global as its founders having 40% and 60% shareholding respectively.

Yousef followed by saying that the company could be a reliable partner to insurance service providers and provide a very large network of pharmacies, identical in service and standards, throughout the region.

The Chairman of the new company explained that Planet's retail basket shall include a mix of prescription and over the counter drugs, cosmetics and other health and hygiene products. That also would be an opportunity to develop in-house brands across select product lines.

In addition, stores would provide value added services like 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 programs, benefiting the end users/customers. Planets business model will also include having clinics attached to its pharmacies.

El-Quqa further said, 'This transaction is one of the several private equity milestone transactions that we have done for our clients and the funds we manage. We are proud to do this transaction with one of the leading companies in the pharmaceuticals industries in the region; I believe that we have the right formulation for success.'

'Global will be investing in the holding company on behalf of its recently launched Global Buyout Fund, Global Opportunistic Fund II and co-investors.'

Global Buyout Fund has recently announced an initial closing exceeding $500m and has been granted the 'Fund of the Year' award by Terrapin.

Commenting on the market trends, Mr. Shailesh Dash, Senior Vice President- Head of Private Equity at Global and Member of the Board of Planet, said, 'The pharmaceuticals industry in GCC has grown at a CAGR of over 10% from 1999 through 2004 as against 6% globally.'

'Double digit growth in this sector is expected to remain through the next 5 to 6 years with the key growth drivers for the sector being fast growing population (with near 3.5% p.a. increase in GCC countries); increasing healthcare infrastructure investments by GCC governments; and growing health, hygiene and well being consciousness,'

Dash stated.

He added that Planet's growth strategy would involve both establishment and acquisition of stores. Planet has already identified potential acquisition targets in different GCC countries, Egypt and Jordan.

Moreover, Dash informed that Planet had already identified international consulting majors to advise the company in its strategy for IT systems, human resource management, logistics, procurement and store formats. This would ensure that the company has the right DNA to not only grow but also have efficient and sustainable operations over numerous countries.

El-Quqa ended by saying that Planet's focus would be to primarily grow in the MENA region and then the South Asian region. He indicated that the stores would be implementing the latest trends in the international pharmacy business while adapting to local requirements.

It is worth mentioning that Planet business model would be aligned to customer interests to ensure cost effectiveness and a satisfying buying experience. The establishment of Planet is at a very opportune time due to the growth in the pharmaceutical industry in the region, increase income levels in the region and expected liberalization of markets like Saudi Arabia.