On The Pulse
Ayman Maamoun Tamer, Chairman of Tamer Group, talks success, strategy, and Saudi Arabia as the company approaches its 100th anniversary.
Tamer Group has been benchmarking healthcare in Saudi Arabia for over 90 years. What is behind your success?
Following our true values and working towards our purpose with genuine commitment are the biggest ingredients behind our success. The talent, persistence, and dedication of our people have been instrumental too. Now, moving forward, our aim is to operate to the highest standards in health, beauty, personal care, and nutrition, and to provide the latest innovations and technological solutions to patients and consumers. We use our local facilities to manufacture generic drugs as well as the latest products from our Japanese partners, and we have recently completed the revamp of our manufacturing facility in Egypt.
How do you envision Tamer Group evolving over the coming years? What I envision is that Tamer Group will continue its journey towards genuine digital transformation and that it will become a leading provider to the community through all channels, including home delivery.
Tamer Group is a dynamic organization and we see tremendous opportunities in our focused sectors. Healthcare fundamentals are changing and we are reinvigorating our business model with more focus on services and customer experience. We believe the size of the opportunities is enormous, given the local healthcare transformation initiatives that Saudi Arabia is pursuing, and we are crafting a new strategy, which we plan to implement in 2022, the 100-year anniversary of the group.
The healthcare sector has played a huge role in tackling the unforeseen situation created by COVID-19. How has your organization contributed to this important role?
During COVID-19, Saudi Arabia has proven to be resilient and the healthcare sector has been integral to this success. In the early days, the supply chain was interrupted, but the Saudi Food and Drug Authority rolled out a bold strategy to ensure availability of essential supplies. It intervened, when necessary, to facilitate imports and maintain a sufficient inventory of Covid-related and chronic pharmaceutical products.
During this time, we referred back to the original mission of our company —to introduce medicine in the Arabian Peninsula—and we worked to ensure an uninterrupted supply of essential food and medical products in the market. On the business side, we deferred a few projects, accelerated a new digital channel, and, most importantly, managed our cash flow. However, our first and foremost focus was the welfare of our employees.
What is Tamer Group’s strategy where diversification is concerned? In particular, how important are digital services and e-commerce to your future plans?
E-commerce is a very important part of our future development, and our business model is now designed to embrace the digital world. The Mumzworld acquisition is a key step in building our capabilities and readiness in this domain. With a strong talent pool and proven track record spanning more than 10 years, Mumzworld will help accelerate our third wave of digital development, and will become our group’s digital innovation center.
The pandemic has also accelerated the pace of digitalization, so digital health and telemedicine are among the highest growth opportunities. We also believe that new verticals will emerge in areas such as home healthcare, rehabilitation, behavioral medicine, and specialty hospitals.
What role has the Saudi Vision 2030 played in shaping your organization, your strategies, and your investment plans?
I started fighting for inclusiveness and for ‘Saudization’ long before the government created awareness about these issues, because I have always felt that my country should be run by its own people. When I joined the firm in 1985, we had very few Saudi employees, but today we are ‘Platinum’ ranked in terms of Saudization. Additionally, we have increased the number of women in management positions, including senior management, from 4% to 14%. This is quite a significant leap for a Saudi company and I foresee even greater female participation in the future.
Furthermore, His Royal Highness Mohammed bin Salman’s push for liberalization and equality has set free the thinking of the Saudi people. This can be seen in the people we hire; their success has sky rocketed because of their self-conviction, selfbelief, and ability to think freely.
In terms of sectors, Tamer Group has a strong presence in healthcare and logistics, and through the 2030 vision, these sectors are set to grow. With this in mind, we are preparing for growth and expanding our presence in the Middle East and Africa (MEA), particularly through SAJA Pharmaceuticals, a joint venture (JV) with our Japanese partners that has a strong presence in Egypt. We are potentially opening a plant in Algeria too, and our sales and marketing teams are working across all the MEA markets.
Tamer Group partners with many world-leading companies. Do you plan to enter into more partnerships in the near future? Tamer Group is always keen to develop new relationships, especially with companies that fit with the rapidly changing market landscape. The group plans to expand its manufacturing footprint to include medical devices through a new JV with Molnlycke, which will be established in Jeddah. This potentially disruptive investment will come through the group’s JV with Swedish firm (Mölnlycke) to produce sterilized trays used in operating rooms. We are already importing such trays, but the move to produce them locally will lead to quicker turnaround times and savings on shipping costs.
How can public-private partnerships be leveraged to benefit the healthcare sector? The current healthcare transformation is unprecedented, and while it stems from financial sustainability needs, Saudi could become the regional hub for healthcare and biotechnology. Through incentives such as tax exemptions and long-term offtake agreements, the government is encouraging international manufacturers to set up their own operations or partner with local manufacturers in order to localize technology transfer. The foreign investment in this domain is high and will have a major impact on the industry.
“When I joined the firm in 1985, we had very few Saudi employees, but today we are ‘Platinum’ ranked.”
What are the key themes for investment in Saudi Arabia?
Saudi Arabia is seeing a profound economic transformation, with the goals of diversifying the economy and improving the efficiency of government spending. This transformation creates opportunities for investors as regulations and incentives change, and as businesses consolidate. Here, healthcare and retail companies, such as Mouwasat, Extra, and Aldrees, are key beneficiaries. A fresh emphasis on home-building and infrastructure benefits cement producers and other industrials like Saudi Ceramics, while the leveraging up of the economy is driving strong growth for the banks. Meanwhile, the renewed global commodity boom favors leading materials companies such as Maaden and SABIC.
How has emerging market status changed the Saudi stock market? Capital market development has been a priority for Saudi Arabia over the past five years. After several waves of reform, Saudi Arabia was upgraded to the FTSE and MSCI Emerging Markets (EM) indices in several stages during 2019-20. We estimate that the market—now with a weight of 3.1% in the MSCI EM Index— has seen net inflows of $22 billion from funds that passively track EM indices.
Active global emerging market (GEM) investors are also paying more attention to the Saudi market, which has outperformed peers by a wide margin in 2021. We estimate that foreigners (net) bought $3.5 billion in the first seven months of 2021, most of which would have come from active investors.
Moreover, Saudi Arabia is one of the largest and most liquid emerging markets, and regulators continue to improve access for foreign investors. This has led to rising participation from algorithm-driven investors and other hedge funds. However, Saudi retail investors remain the most important investor group. Their activity drove the massive increase in turnover after the 2020 COVID-19 lockdown, and 2021 turnover has averaged at $2.8 billion a day.
How can EFG Hermes help investors in Saudi Arabia?
EFG Hermes has had a presence in Saudi Arabia since 2007. Our research team currently has nine primary analysts who are covering 68 Saudi stocks that represent 94% of market cap (78% excluding Saudi Aramco). Meanwhile, our macro and strategy teams follow the key trends that drive market performance.
Our extensive experience in GCC markets allowed us to advise market participants in the lead up to the EM upgrades. We were the only regional investment bank on the landmark IPO of Saudi Aramco in 2019, and we participated in four IPOs in Saudi Arabia worth $ 1.7 billion between January 2020 to July 2021.