Julphar, which operates across the Middle East, Africa and Asia, has been growing its regional reach while streamlining operations. Photo: Julphar
Julphar, which operates across the Middle East, Africa and Asia, has been growing its regional reach while streamlining operations. Photo: Julphar
Julphar, which operates across the Middle East, Africa and Asia, has been growing its regional reach while streamlining operations. Photo: Julphar
Julphar, which operates across the Middle East, Africa and Asia, has been growing its regional reach while streamlining operations. Photo: Julphar

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Julphar reports net loss despite surge in sales last year

Company's revenue jumped to more than $436m in 2022, a yearly rise of 41.8%

Alkesh Sharma
Alkesh Sharma

February 15, 2023

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Gulf Pharmaceutical Industries, known as Julphar, one of the biggest drug manufacturers in the Middle East and Africa, reported a net loss in the 2022 full fiscal year, despite double-digit revenue growth.

The company swung to a net loss of Dh11.7 million ($3.1 million) in the January-December period, from a net profit of Dh59.4 million in 2021, it said in a preliminary earnings statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Its revenue jumped to more than Dh1.6 billion in 2022, a yearly rise of 41.8 per cent.

“The strong revenue growth was generated from continued market share increase in the company’s key markets including the UAE, Saudi Arabia and several North African markets,” Julphar said.

Based in Ras Al Khaimah, Julphar manufactures largely generic drugs including insulin for diabetics and a range of personal care products. Photo: Julphar
Based in Ras Al Khaimah, Julphar manufactures largely generic drugs including insulin for diabetics and a range of personal care products. Photo: Julphar

Julphar’s earnings before interest, taxes, depreciation and amortisation stood at Dh156.6 million, nearly 9.7 per cent of its net sales, while its net operating profit dropped 58 per cent on an annual basis to Dh26.8 million.

Last year, the company made “significant progress in its efforts to invest in the product pipelines in its core business areas”, Julphar said.

Based in Ras Al Khaimah, Julphar manufactures largely generic drugs including insulin for diabetics and a range of personal care products. The company, which operates across the Middle East, Africa and Asia, has been growing its regional reach while streamlining operations.

Julphar's total assets dipped an annual 1.8 per cent to nearly Dh2.4 billion at the end of 2022, while earnings per share rose to Dh0.80.

In July 2021, it acquired 100 per cent of Dubai-based pharmaceuticals distribution company Planet Pharmacies, in which it previously held a 40 per cent stake.

Last year, Julphar unveiled a strategy to achieve sustainable business growth and triple revenue by 2030.

The strategy is built around six pillars, including maximising revenue from its current product portfolio, the launch of products, geographical expansion, strategic business initiatives, advanced speciality products initiatives and inorganic growth initiatives.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: February 15, 2023, 3:45 PM
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