Pharmaceuticals in Jordan
|Monday, 08 November 2010 17:16|
Interview with Mazen Tantash, Chairman of Tantash Group
According to the Minister of Finance, in Jordan, last year’s growth rate was 2.8% but should not be less than 4% in 2010. Do you think the predicted growth next year is based on solid fundamentals in view of the global economic situation ?
I think every country in the world has experienced the negative impact of the global financial crisis. In Jordan, FDIs and exports have run down in 2009 and the budget deficit has widened. I don't think Jordan has suffered as severely as other countries in the region or in the world. I think we have one of the most solid and sound banking sectors in the region; they were not as affected by the toxic financial instruments and loans as other institutions in the region. You will find that despite the financial crisis in 2009, most of our local banks are profitable and I think that the fundamentals of the banking sector will give our economy a solid base when we need to move forward in a better, normal economic situation.
How is your group going to participate if there is growth in the future economy?
I think it is really difficult to predict the future. Our group now is mostly active in the sector of pharmaceuticals, travel, and tourism. We think that those two areas will continue to grow and continue to preform above average. In the pharmaceuticals, I think Jordan is renowned in the area regionally for having a very solid and trusted industry in that sector.
If you look at this sector in particular, last year pharmaceutical exports increased by 15%, although the total exports of Jordan went down. As for the travel and tourism sector, I think we will continue to see growth in that sector. We have just seen the commencement of construction and the expansion of Queen Alia International Airport, expected to increase the capacity of the airport. I think this increase in supply will be much needed to cope with the demand created by our unique world-renowned attractions such as Petra and the Dead Sea. We have launched the first low-cost carrier in Jordan and the second scheduled airline in partnership with Air Arabia, which is the first low cost carrier in the Middle East and a very well renowned company.
This partnership is aimed at increasing the capacity of seats to bring more people in-bound to Jordan as well as give the Jordanians more options for their travels abroad. At Tantash group, we have an innovative approach. The key to innovation is really a well-thought out idea, comprehensive planning, dedication of people and talent in implementing that idea. We look at opportunities that will give us the chance to be pioneers in that sector rather than copying something or tapping into a successful sector.
The key is keeping your eye on what is important to you as an investment and as an individual and trying to react ahead of time and be lenient in these kinds of situations because there isn't really a solid plan, you have to keep reacting to the changes that are taking place.
What is the key to success ?
The key to success is learning from your mistakes, because you are bound to make mistakes. We really put a lot of emphasis on talented people; in Jordan we don't have a lot of natural resources but we have a wealth of human resources. Jordanians in general are young, they are very well-educated and are hard workers.
You want to promote people to work on their ideas, take initiative, get somewhere with them, either within the structure of their companies or on an entrepreneurial level. You might have heard about the maktoob.com deal, in which local Jordanian people managed to build a company that was acquired later by Yahoo in a $164,000,000 deal. I think in the future, the growth of Jordan and our company will come from the ideas of the young people and having the right channels for them to be able to materialize.
How do you define your biggest challenge ?
Currently, I think that all the sectors and all the countries are feeling the shortage of financial tools and access to cash. You have to reinstate trust in people at the lowest level for the economy to start the cycle again. In Jordan we have a lot of deposits ; it is shocking that in 2009, all banks turned in profit although the credit facilities declined compared to the years before. I think we are making that up in the interest rate or the interest gap between borrowing and depositing.
What are you doing to influence the pharmaceutical industry and what are the challenges in that area?
Mainly in this area we are generic pharmaceutical companies. What that means is that we don't create new molecules but we give a cheaper alternative for regional drugs when they come off patentcy. Our company is called Midpharma ; we have 16 offices, we operate in the Near East area, North Africa and the Middle East, we employ close to 500 people. We have around 255 different types of medicine, varying from antibiotics, aspirin, to general, to medicated. We export around 80% of our production, and 20% of our production is for the local market. We export to around 16 markets abroad.
The barrier to entry in this industry is very high so it is somewhat to our advantage. At the same time, the biggest challenge is the regulation change. The countries where we operate in keep updating the regulations trying to get to the highest FDA or European level, and applying them to your existing product and your existing documentations makes it a time consuming issue.
I am very honored to say that we have a very strong regulatory body in Jordan which eased our penetration of the export markets because of the high level of regulation and supervision that resulted in a very high quality product ; we do not have any problem penetrating new markets and meeting the regulations and requirements that they ask for.
It is within our 5 year plan to become regional manufacturers , not regional exporters, and to have another facility outside Jordan. We always welcome added value from strategic partners ; we do not just look for people with cash. We look for people who can give added value and help us more in penetrating that market and in our product portfolio.
We are looking at this based on geographical access and market sizes. Our Jordan facility can service and cover the areas close to it, so we are looking at somewhere maybe in North Africa, something in the CIS countries, something that will open a new market for us. Some markets still have regulations to protect their local industries which becomes a barrier of entry to us as exporters to that country, so sometimes you are forced to solve that situation by resorting to a local facility.
Can you discuss your tourism project ; what areas you are active in? What are your needs in the tourism sector, and what new investments are you making?
We own one of the biggest tour operators in Jordan which brings in people and sends people out of Jordan ; it is called TTA, and within that sector we also have the biggest touristic bus transportation company in Jordan. The name of this company is Jordan Investment and Tourism Transport but it goes by Alpha for short. We really don't have any natural resources in Jordan ; our wealth is in our people, so service sectors and industries that are specific and have difficult barrier entries is where we have our interest.
As for investment, we have initiated the aviation project which is a $50 million dollar company that is 51% owned by Tantash Group. We always look for people that can come in and give us a know how, open markets, and give us access to something new. We are not simply looking for people with cash, we are not looking for FDIs unless they are with added value and are strategic.
What is the key message you would like to address to our audience, viewers and readers?
Jordan, although a small country, and not many resources, has a very enthusiastic king, and we have a government that is trying actively to listen to investors, attract them, and facilitate anything that is needed to further implement their investment in Jordan. We have a very smooth and good political system ; from a security point of view very solid. We can be considered a gateway to the neighboring countries that people might not want to be in for certain reasons.