Tabuk: On Pharma’s Frontline

By boldly overhauling its management structure and expanding its range of medicines over recent years, Tabuk Pharmaceuticals has cemented it position as one of the region’s leading drug companies.

By Elisa Oddone

Boasting a steady annual growth of 25 percent for the past four years, Jordanian-founded pharmaceutical company Tabuk has managed to navigate through the changing business environment in the wake of the Arab Spring, expanding throughout the region and recently striking a deal with America’s largest drug-manufacturer.

Tabuk was established by the Masri and Sukhtian Jordanian business families in Saudi Arabia in 1994, before later becoming a fully-owned subsidiary of the giant Astra Industries conglomerate. From its Riyadh headquarters, Tabuk’s reach now spans the entire MENA region and it generates annual revenues in the $400-500 million range.

From his office in Amman, the firm’s CEO Ismail Bel-Bachir told Venture that starting in 2010, the company’s management team has undertaken a “comprehensive” and “aggressive” transformation.

Clarifying and implementing the company’s new strategic direction, and creating more structured management processes has brought Tabuk to a new business level.

“2010 marked a turning point for Tabuk. The company’s portfolio of antibiotics, painkillers, and anti-inflammatory medicine grew its coverage of chronic conditions affecting the cardio-vascular and central nervous system significantly,” Bel-Bachir said.

“Four years ago, Tabuk reached the limit of a small family business driven by extraordinary entrepreneurship. And it never needed to ask itself fundamental strategic questions as it successfully grew into a $100-million-sized firm,” the former McKinsey’s strategist said.

In 2010, Bel-Bachir became the company’s CEO, carrying out those management strategies that enabled the top team to run Tabuk as if it were already a $500 million business. “You have to run a company the way it is supposed to become, not the way it is at present. This would allow you to grow bigger. Tabuk’s program has been widely successful in terms of putting the firm on the map of the Arab world,” Bel-Bachir said.

Today, the firm is present in over 20 markets and employs about 1,500 people.

Bel-Bachir said his teamwork strategy draws inspiration from successful examples like the World-Cup-winning German national soccer team, where there’s no superstar and the players all work together to reach a common goal. Similarly, he believes that the top team at Tabuk manages business in a more collective way, which is not always the norm in the region. “There is no boss at Tabuk. There is only a management team. We sit and transparently talk to each other,” he explained.

Three new factories are under construction in Saudi Arabia, Egypt, and Sudan. The firm’s financial perspectives are very promising, with more products and expansion underway. Still, Bel-Bachir looks cautiously at the future of his business in the region as clouds of political instability mount.

Arab Spring

Though Tabuk became one of the fastest growing companies in the MENA region, the firm was caught by surprise when turmoil started to rock the region in 2010.

The regime changes, security crises, and civil wars that characterized the Arab Spring came as a bolt from the blue, the 38-year-old CEO said from the high-rise Amman office where he directs the company’s business development branch.

“Few could foresee the Syrian crisis, the very quick regime changes in Egypt, or other major happenings like South Sudan’s secession from Sudan. This made and makes our plans less predictable,” Bel-Bachir said. “We needed to build factories, expand warehouses, and implement new IT systems, but we suddenly found ourselves in the middle of a storm and we needed to keep our ship steady and navigate difficult waters.”

But geopolitical challenges also made Tabuk more organized, agile, and better-structured, according to the CEO, especially in light of expectations that the chance of political and economic instability will remain high in the near future. “Since our main focus is the MENA region, we are forced to plan for different contingencies, while remaining flexible. We have also learned to be patient, which is not something that belongs to our business DNA,” he said.

With this in mind, Bel-Bachir noted that any future plans in the region would require trading “the hit-and-run business approach” for a long-game strategy. “If you take a 10 or 20 year perspective, there will be ups and downs, but over the course of this time one could really build a sustainable business and this is what Tabuk is doing.”

As one of the top three players in the KSA, which is also the company’s largest market ahead of Jordan, Lebanon, Iraq, Egypt, Sudan, and North Africa, Bel-Bachir sees Tabuk as a fully pan-Arab company.

However, Jordan remains the firm’s headquarters for research and business development, as well as technical operation due the country’s impressive pool of pharmacists, chemists, and engineers.

Jordan’s investment history in developing healthcare-related scientific, medical, and technical skills has helped position it as a regional leader a few paces ahead of other players in the pharmaceutical industry, according to Bel-Bachir. The sector is currently one of the main contributors to the local economy.

Pfizer Deal

A September deal with New York-based drug-manufacturer Pfizer, one of the world’s largest pharmaceutical companies by revenues, has further boosted Tabuk’s ambitions.

The agreement involves a product swap that gives Tabuk the rights to manufacture, distribute, and commercialize select Pfizer’s medicines in Saudi Arabia’s $5 billion pharmaceutical market, in return for Pfizer’s sale of generic medicines from its partner’s portfolio.

“Pfizer felt that some of our products were very attractive to them and vice versa. This partnership shows what Tabuk is capable of doing, entering deals with very sophisticated and recognized international players as a result of its diverse portfolio,” Bel-Bachir said. “We are looking forward to becoming a go-to partner in the region. If an international pharmaceutical company comes to the Middle East, it might decide to have a conversation with us. It may not end up in a deal but we are a company that can offer the professionalism, financing capability, and sophistication to handle complex deals at a regional level.”

Bel-Bechir believes Tabuk is set for future growth. However, as he gears up to transform a half-a-billion dollar company to a billion-dollar one, Bel-Bachir said there’s still a lot of work to be done. Tabuk’s business culture is focused on forging now the goal that the company wants to achieve in the future. “It is a never ending process,” he said.

To reach this goal, the backing of Astra Industries will be as fundamental as it has proven in the past when the conglomerate provided Tabuk with $100 million.

Access to solid funding triggers faster growth, thus putting the company one step ahead of its competitors in the region, said the CEO.

But competition is on the rise, with MENA countries catching up on expertise and many international players eyeing the region as an alluring hub for business and investment. “We are already starting witnessing a heated competition that we did not experience before. This will drive prices and margins down so we must be able to compete without sacrificing ourselves financially too much,” Bel-Bachir said.

The pharmaceutical industry is a sector that’s constantly evolving, according to the CEO, as products have a life cycle based on the flare-up of new diseases and viruses, pushing companies to update and invest accordingly. “Growing will naturally become harder. Therefore, we need to be creative and find ways to continue. We will not be necessarily accelerating at the same pace recorded so far, but we understand the importance of building scale in our industry,” he said.

Though overseas expansion is in Bel-Bachir’s mind, plans for the near future will see Tabuk focus exclusively on the MENA region. “We look at opportunities to expand into new markets on a regular basis, but we are still not where we want to be in the MENA region as even by 2025, we don’t expect to be covering this region adequately,” he said.