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Saudi Arabia Report
Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsJune 02, 2015
Tamer Group Discusses Pharmaceutical Industry, Economy and Doing Business
Ayman M. Tamer, Chairman and Managing Partner of Tamer Group
- Written by Peter Matay
- Published: June 02, 2015
Ayman Maamoun Tamer is a Chairman and Managing Partner of Tamer Group. He is also a Board Member of Saudi Arabian Japanese Pharmaceutical Manufacturing Co., International Medical Center, Arab Company for Pharmaceutical Products Ltd., Gulf General Cooperative Insurance Co. He is a member of the World Economic Forum, health industry, Pharma Committee at Jeddah Chamber of Commerce and Industry and Pharma Coordination Committee at Ministry of Health. Ayman holds a B.S. in Marketing from University of Southern California.
Interview with Ayman M. Tamer, Chairman and Managing Partner of Tamer Group
How would you characterize the market for consumer goods in Saudi Arabia? What is the outlook for the economy and for the sector you are currently involved in?
As Chairman of the Tamer Group, I am very happy to be with you today.
The Tamer Group is engaged in the healthcare and fast moving consumer goods sectors. In healthcare, we cover both; pharmaceuticals in chemical/biological forms as well as medical supplies and consumables.
The outlook for the economy and for the sector is promising. This market is consumer led and we have a growing population with increasing income and education. So per capita expenditure on healthcare and consumer goods will increase and we will enjoy a growing market as we see our population grows with maturity. At the same time we will see more competitive landscape, especially since Saudi is an important growth emerging market for the global economy.
What about the pharmaceutical market?
The pharmaceutical industry is driven by rise in population, improved healthcare technology, research, new treatments and delivery systems that improves the overall effectiveness of the product. There is a compounded annual growth of around 10% in the private market and a little higher in the government sector.
Recently Saudi society became affluent and with it came increase in Lifestyle Diseases (NCD): Changing in lifestyle – unhealthy diets and sedentary lifestyles coupled with a culture of smoking and limited public health awareness – is leading to a high prevalence of non-communicable diseases such as obesity, diabetes, heart disease and smoking-related cancers.
In addition, according to Ninth Development Plan by Ministry of Economic & Planning, increasing life expectancy (74 years) which is leading to an ageing population in need for specific and costly health services (> 60 years are growing from 4% to 7% in 2020).
It is one of the most exciting sectors in the Saudi economy as the government is placing a lot of emphasis on the healthcare sector.
Yes, it is an exciting sector. But at the same time, the market dynamics and landscape is becoming very competitive and you are having new entrants into the market while at the same time, due to diminishing marginal returns in the value chain, we are witnessing further consolidation of the industry.
How are you dealing with the competition from the global players who are entering your space?
Competition is healthy for the consumer. Today many multinational players would like to have their flagship companies in Saudi Arabia, as it is a growth/emerging market. Saudi Arabia, today, is one of the largest emerging markets in the world after China, India, and Brazil. With the situation in Brazil & Russia, Saudi Arabia is looking more and more attractive.
I see the coming of multinational companies as more of an opportunity rather than a threat. The fact is, they will require additional services; and will create more employment opportunities while adhering to local regulations and developing the Saudi economy and its indigenous human resources capital.
How do you view the competition from Tamer’s perspective? Do you see it as a threat?
I believe that competition is healthy. I see it as more of an opportunity. The business models develop, adapt, and change according to the needs of the market. The Tamer Group is now rendering additional services to cater to these new players who are entering the market. We have started Tamer Logistics Co., which helps international companies that wish to enter the market without making large capital expenditures in infrastructure.
Infrastructure is something of a theme now. Saudi Arabia is building port facilities and it is upgrading the existing infrastructure. Soon it will be competitive to transport goods from the Red Sea to the interior areas of the Gulf quickly.
We have challenges at the Jeddah Islamic Port. No matter how much the infrastructure is improved there is an ever-growing demand of materials coming in with the construction boom, the growing healthcare sector, and other industries.
However, with the King Abdullah Economic City and the development of the Jeddah port, there will be more competitive services that will enable us to serve not just the Saudi market but also the North Africa region. As we see more development in infrastructure and streamline in regulations, there will be more re-export from Saudi as a main hub for the North Africa region as well.
Regarding consumer goods and the retail sector in Saudi Arabia, it’s a booming sector. The purchasing power of the people in Saudi Arabia is probably the highest in the GCC region. What is the outlook for the sector? How are you grasping the available opportunities?
The consumer goods sector is growing driven by population growth and disposable income. Even with the slowdown in our revenues this year, it is still doing well, because of the healthy policies put in place by our Finance Ministry. They are tapping into reserves and keeping expenditure slightly above where it was last year.
That will keep the mega projects sustainable, the main contractors engaged and keep the economic cycle moving and developing positively. Coming into 2016, we might see a slowdown in our growth, but it will still be a healthy, steady growth.
How are you preparing for these possible market events?
Today the group is looking more at business transformation, optimization, and efficiency. We have witnessed tremendous growth over the last 5 years. Growth has been in the double digits, year on year. This type of growth is healthy but exhausting. It’s the human capital resource part that is exhausting. We have limited human resources.
We have to develop and retain our human capital resources so they can succeed and be productive. The keywords today are business transformation, efficiency and optimization and human capital development. We have to focus on cutting unnecessary costs and spend more on developing the Saudi workforce, which is our most important asset for the future.
Tamer Group is a well-established family business. How do you see the progress of family businesses in Saudi Arabia in the future? What is the outlook for these businesses?
Family businesses here are like family businesses anywhere else. I have joined the World Economic Forum’s Family Business Community. I have been fortunate to spend time with other family business owners from other parts of the world. Basically we all face the same issues, responsibilities and challenges. A family business should cover human resource development, corporate social responsibility, managing the wealth and assets of the family, managing the operations efficiently and finally succession planning, which is the biggest challenge.Accordingly to the World Economic Forum, Family businesses are major contributors to the global economy, creating an estimated 70-90% of global GDP. As such, the family business sector’s ability to grow and thrive is vital to the long-term health of the global economy.
By 2025, 7,000 new companies of significant size will have been created. 80% of these will in emerging markets, to include India, Brazil, China, Saudi Arabia etc, and 80% of those will be family businesses.
That figure illustrates the importance of family businesses. And they all face the same challenge, in succession planning.
How are you addressing this challenge at the Tamer Group?
Good question. I understand that succession planning at a family company is very different from that in a corporate entity. You have to identify those that are competent, interested, passionate and ready to make the effort towards the family business success.
Those members of the family whose interests may be different from the area of the family business, should not feel obliged to participate and should pursue their own interests instead. The family business succession planning must take into account both the members active in the business and those who are not actively participating: that is to take interests of all into consideration.
Have you sought consultancy on succession planning?
All the time! The family business of Tamer started in 1922, when my grandfather Mohammed Said Tamer, opened the first pharmacy in Saudi Arabia in downtown Jeddah. He had 6 children, 2 of them boys. My uncle Farouk and my father Maamoun then took over the company. Fortunately, they were competent. Farouk was a pharmacist and Maamoun was a graduate of finance. They built the business until the third generation joined in. I joined the business in 1985. At that time it was a medium sized company with about 210 employees. It was a very well-run company with a very good reputation in the market. I joined the company not as the eldest but as the one most interested in the business, the one most willing to put in the effort.
That was 30 years ago. I am now 50 years old. I am lucky that 2 of my younger cousins, Mohammed Tamer and Faisal Tamer joined the company. Mohammed is the CEO today and Faisal is the Chairman of our manufacturing facilities Saudi Arabian Japanese Pharmaceuticals Co. (SAJA). We work very well together. It’s up to us to decide who will be the fourth generation. We have decided it will be a non-Tamer family member who will be the CEO.
I was the CEO. Mohammed took over in January 2015. We are setting the profile requirements, authority matrix and goals for that position over the next 3 years. Then, accordingly, we will find the right person to fit that job. That person’s responsibility will include running the operating company and identifying the family member who will join the company as the next generation of the Tamer family to be come on board. We need to ensure the continuation of the family business, regardless of whether the person at the helm is a family member or not.
What is your business strategy for the coming years? Which business unit would you like to develop further and what would you like to cut back on?
The Tamer group has been successful in the healthcare sector, importing and manufacturing pharmaceuticals. We have also had success in medical supplies, from instruments to consumables and reagents, and also fast moving consumer goods and prestige. Strategically I see our expansion in the same fields. We may look at other fields that add benefit to the Group, like energy conservation or education. We will also look at expansion in geographical terms, moving into the Middle East and North Africa region.
Being a pharmaceutical company producing both generic and research products, we will have to expand into the region. The MENA region is a one-language (Arabic) region and even the healthcare regulations are becoming harmonized. This market of about 300 million customers is an attractive market to service. It will allow us a bigger base to work from. I look forward to the Group becoming a strategic regional player.
Many other players are looking at the same market. How does your company stand out and in what areas do you differentiate your company from the competition? What is your edge?
I think every company has its strengths and weaknesses. I wouldn’t say the Tamer Group has advantages over other companies. What makes us different is the way we do business. The business model must have good values. Good business values make the company objective and the mission has a positive outcome. The execution should also be effective. The staff must be efficient, and we must spend on our staff, whether Saudi or others. We must make sure they are able to deliver and serve the clients. It’s about execution, passion and the will to do it better every time. We are in constant competition with ourselves. Every time we do something, we challenge ourselves to see if we can do it better the next time.
As for strategy, today, leadership requires running the business efficiently with values, code of ethics and as well ensuring that we are engaging diligently and wholeheartedly in Corporate Social Responsibility.
Sa’aid, Tamer Group’s CSR department has several arms: Education Arm, Philanthropy Arm, Art & Culture Arm, Environment Conservation Arm, Workplace Wellness Arm and Women Empowerment Arm.
Tamer Academies: We are committed to the Nationalization of the work force and to meet and exceed the „Nitaqat“ program as a platinum member. We are working with Human Resource Development Fund and have built academies to develop the talent of young Saudis. We have been fortune and successful with our academies in developing and retaining the Saudi talent.
Qaderoon: Tamer is a part of Qaderoon network, which is a new initiative launched in partnership with the Ministry of Labor and leading companies in Saudi Arabia to empower people with special needs to succeed in the work environment. So far we have recruited more than 75 employees since 2012, and we are working on increasing the number to 100.
Women Empowerment: Hiring and training women is a priority for Tamer Group, as it aims to increase the number of female employees from 100 at the moment to 300, and to encourage them to access leadership positions in the organization. There are many competent women who are ready to take up the jobs and join Tamer as a career. We have a little difficulty in retention of female employees because some of the women we recruited left to join the government’s scholarship program. We had selected some very competent women from the universities who then went into the scholarship program. I’m happy to report that some of them who came back to the country did join back the Tamer Group after finishing their post graduate degrees.
Now I’d like to go back to your question of how we stand apart from our competition. In today’s ever competitive market digitization, optimization, efficiency, excellence and having high standards and code of ethics is the way forward. The Tamer Group has witnessed a healthy growth over the past ten years. Today our main motto is business transformation, efficiency and optimization. This is led by our Chief Innovation and Information officer whose primary goal is to digitize our services and ensure that every step of the service is handled effectively and professionally to end with customer satisfaction and delight.
Perhaps we could end our interview with your views on the ease of doing business in Saudi Arabia.
Business in every part of the world is challenging. Saudi Arabia is ranked 24 in The Global Competitive Index prepared by the World Economic Forum, next to Australia and France.
I am very proud to see the keen efforts to improve the overall business support in the region from both public and private sectors. Recently, Saudi Arabia introduced many legislations facilitating doing business. In the Saudi businessmen council formed by the Advisor to the King and Governor of Makkah region HRH Prince Khaled Al Faisal, he announced that he will be setting up a committee under the Governerate‘s supervision whose primary goal is to adopt and/or nurture and/or support in facilitating execution of such projects. Therefore, it will become more interesting to invest locally, develop the infrastructure and services in the region and I believe we could see better returns in the area. The businessmen may obtain better profit here than abroad while serving their country.
