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Jamjoom Pharma

Pharmaceuticals: Healthcare JAMJOOMP AB:

Investment Thesis
Saudi Arabia (January 26, 2024) Jamjoom pharma is one of the top pharmaceutical companies in the kingdom of Saudi
Arabia to benefit from the growing healthcare care not just only operating in Saudi
Arabia but also in middle east and North Africa, with a large portfolio of 118 brands
Figure 3: JP’s largest TA to drive significant growth

across 8 therapeutic segments.

1. strong leadership position was created by a potent sales team .
2. Outstanding R&D team that reflects the healthy product pipeline.
3. art of timing in expansion
4. being ready for signing the public tender contracts.
5. discipline and commitment in paying the dividends and capital allocation.
Business Model:
General Medicine GIT Dermatology
Consumer Health Ophthalmology In the realm of pharmaceuticals, the company is dedicated to the comprehensive
cycle of development, manufacturing, and strategic marketing of a diverse spectrum
of high-quality branded generic pharmaceutical products. The market outreach
extends across 36 countries in the Middle East, Africa, and the Commonwealth of
Others
10%
Independent States, with Saudi Arabia, Egypt, Iraq, and the GCC countries serving
as primary arenas of significant operations and sales.
Core operations:
635 the company specializes in producing pharmaceutical products encompassing
Employees therapeutic categories such as Ophthalmology, Dermatology, General Medicine,
Gastrointestinal (GIT), Cardiovascular (CVS), Central Nervous System (CNS), Over
the Counter (OTC), and Nutraceuticals/Consumer Health. Operating with a broad
product range, stringent quality controls are maintained to garner and sustain the trust

Figure 4 Commercial team headcount by of valued customers (see Appendix G1).

country strategic vision:
A pivotal component of the strategic vision revolves around contributing to national
and regional self-sufficiency. This commitment takes tangible form through the
optimization of new product launches, exemplified by the ongoing development of a
suite of high-quality diabetes management products slated for market introduction
between 2022G and 2024 G.
Operational capabilities are fortified by a state-of-the-art manufacturing facility in
Jeddah, accompanied by a new sterile facility in Jeddah scheduled to open in the
latter half of 2023G. Expanding the geographic footprint, a manufacturing facility in
Egypt has been established, also scheduled to commence operations during the
second half of 2023G.
At the heart of innovation lies a robust R&D department, boasting over 91
professionals with the capacity to develop 12 to 15 products annually (see Appendix
B1). These new additions complement existing therapeutic categories, introducing
essential products such as anti-diabetic medications to address crucial needs in the
markets served.
Figure 5: innovation stages Revenue generation hinges on the strategic sale of pharmaceutical products to

Figure 8 Key products market share across respective TA

distributors, who play a crucial role in distributing products downstream to hospitals,
57%
pharmacies, doctors, and various healthcare providers.
45%

In categorizing multifaceted operations, a distinction is made between “technical”

29%

17%
operations, focusing on product development and manufacturing, and “commercial”
13%

operations, centering on the strategic marketing, sales, and distribution of finished

Hyfresh Elicia-M Ciproxen Zoron Omega 3
products. This comprehensive business model encapsulates a commitment to
0
Jamjoom Pharma

innovation, quality assurance, and a robust market presence.

Figure 6 JP’s largest TA to drive significant growth Figure 7 Revenue by category – FY21

55 31%
5%
43 14%
39 39 4%
4% 4% 13%
12%
10% 12% 19%
11% 11% 14%
11% 16% 17% 17%
12% 12%
13%

60% 53%
64% 61%

2019 2020 2021 2026

Other Consumer Health
Ophthalmology Dermatology General
Medicine

Source: Company Data, Al Rajhi Capital Source: Company Data, Al Rajhi Capital

US$2.221bn 43.65% US$69.75mn

Market Cap Free Float Avg. Daily Volume

Target price 94.26 1.71 Jamjoom Pharma

Sell

Existing rating Jamjoom Pharma is in a good position to gain from the expanding healthcare
Performance (Rebased to 100)
industry in the Kingdom of Saudi Arabia and other MEA nations. With a broad
240
portfolio of 118 brands spanning 8 therapeutic segments and leadership positions
190
in ophthalmology (#1 player) and dermatology (#2 player), it presently operates
140
in about 36 countries. Its margin profile is the best in its class and superior to that
90 of the more experienced generic players found worldwide. Over the next five
40 years, the stock has potential for 24% FCF growth and 15% bottom-line growth.
19- Jun-23
20- Jun-23
21- Jun-23
22- Jun-23
23- Jun-23
24- Jun-23
25- Jun-23
26- Jun-23
27- Jun-23
28- Jun-23
29- Jun-23
30- Jun-23
1- Jul-23
2- Jul-23
3- Jul-23
4- Jul-23

With no debt, the business has plenty of space to expand through acquisitions,
raise its payout ratio, and raise ROE levels. The strong margins and return ratios
indicate
Jamjoom TASI the quality of the management as well as the moats of the business. The
company’s high capex (2019-2022) phase is behind us, thus going forward it will
Earnings witness a period of high cash flow generation. These parameters meet all the
(SAR mn) 2022 2023E 2024E criteria of a company that has attributes of both quality and growth, which we have
Revenue 917 1,074 1,235 noticed only in a few other stocks in the KSA.
YoY % 24.6% 17.1% 15.0%
Leadership position in niche TAs: JP concentrates on specialized treatment
Gross Profit 594 695 800
GM Margin % 64.8% 64.8% 64.8%
fields like Consumer Health, Derma, and Optha. In the KSA, it has a high ranking
YoY % 25.1% 17.1% 15.0% in the fields of consumer health, dermatology, and ophthalmology. These regions
EBITDA 260 292 336 account for more than 50% of its sales, and it has a top-three market share there.
EBITDA Margin 28.3% 27.2% 27.2% With the aid of technology and a capable sales force, JP has increased its market
Net Income 171 246 284 share significantly. Notably, it now holds the top spot in the GIT segment and
Net Income Margin % 18.7% 22.9% 23.0% leads the categories for vitamin D3, Optha and Derma in Iraq, and Vitamin D3.
YoY % 0.4% 43.7% 15.4%

DPS 2.13 2.11 2.43

0
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Strong R&D team and healthy product pipeline: JP invests significantly more in
R&D than its competitors do; over the past three years, it has averaged 4.3% of sales
in this area. The company boasts one of the biggest R&D teams in the

area, capable of handling everything from bio equivalency studies to patent filing and
literature reviews. It has a 94% success rate in studies pertaining to bio equivalency.
Its robust pipeline of products reflects this. Seventy-two products were pending
approval at different stages as of June 2022. Sixty-four percent of this pipeline has
been de-risked.

New capacities are state-of-the-art facilities: JP will increase its capacity by nearly
70% with the opening of its two new facilities in Jeddah (25 million units per year) and
Egypt (52 million units per year). Commercial batches of a few products are now being
produced by JP at its manufacturing facility in Egypt, and exhibit/test batches are being
produced at its Jeddah Sterile facility. It is anticipated that commercial production will
start in H2 2023. JP is unique among its peers because of its advanced technological
manufacturing capabilities. It is a leader in the Kingdom of Saudi Arabia in several
areas, such as unit dosage ophthalmic product production.
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Company Overview
Figure 1: worldwide pharmaceutical sector
Jamjoom Pharma, originating as a branch of Abdullatif Mohammed Salah Jamjoom and Brothers
Company in Jeddah, KSA, since its inception on September 22, 1994, stands out as a significant
contender in the pharmaceutical sector. With a core emphasis on the development, production,
and global distribution of a diverse range of generic pharmaceuticals, cosmetics, and consumer
healthcare products, the company has cultivated a robust presence across more than 36
countries, encompassing the GCC, Levant, North Africa, and other regions. Dedicated to
furnishing high-quality products, Jamjoom Pharma’s expansive product portfolio and extensive
distribution network position it as a leading figure in the industry, ensuring that customers
worldwide have access to a broad spectrum of top-quality pharmaceuticals and healthcare
solutions.

Source: Company data, Al Rajhi Capital Note: 1. According to IQVIA 2019-2021 ranking,
calculated as total export revenue in the main Jamjoom Pharma markets for each company
on the aggregate basis over 2019-2021; 2. #1 player in all therapeutic sub-categories where
Jamjoom Pharma operates in KSA, according to YTD May 2022 IQVIA ranking

Appendix G2: Board of Directors

 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Appendix G3:

Industry and competitive landscape:

The overall pharmaceutical sector was valued at SAR30.5 billion (or US$8.1 billion) in
2021G, having grown at a CAGR of 6.3% since 2019G (see Appendix B2). Pharmaceutical
product growth over the review period is attributed to positive macroeconomic drivers such
as population expansion, an ageing population, rising levels of noncommunicable diseases
and strong Government funding to expand public healthcare. Value sales of several
pharmaceutical products in the Kingdom benefitted from rising consumer awareness of
maintaining a healthy and responsive immune system as a result of the COVID-19
outbreak. The Kingdom is heavily reliant on pharmaceutical imports, with a majority of its
products still coming in from the US, Europe, China and India. One of the core objectives
of Vision 2030 is a Government push towards pharmaceutical security, which aims to
increase local production to account for at least 40% of total pharmaceutical product
consumption.

The key pharmaceutical categories that the company are working on are Ophthalmology,
Dermatology, general medicines, Gastrointestinal Products, Nutraceuticals. in
ophthalmology Jamjoom pharma has a 20.6% market share in this industry and they
ranked 1 in that industry. In dermatology Jamjoom ranked second after Avalon Pharma
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Pvt Ltd with 6.7% market share with an impressive growth space (see Appendix B3). Also
in the general medicine industry their market share is 2.1% and they are so far in that
industry which make it hard to compete in it. in Gastrointestinal Products the company
came fourth with 5.5% on market share and they came after AstraZeneca and other
companies that focuses in that industry. Least but not lastly Nutraceuticals industry.
Jamjoom came third with 5% on market share and they came behind bayer ag and
Vitabiotics Ltd . And we can conclude that jamjoom focuses on one main industry which is
ophthalmology and they didn’t drop the other industries but they maintained focusing on
one sector which might affect them in the long run if the industry been crashed.

Figure 9 64% of the pipeline de-risked Figure 10 Product pipeline (mention number of products)

Others; 1
Optha; 12
Anti Diabetes; 17

General
Medicine; 7

CNS; 1
Dermatology; 2

CVD; 12

Consumer
Health; 15
GIT; 5

Source: Company Data, Al Rajhi CapitalSource: Company Data, Al Rajhi Capital

Figure 11 R&D Team

Other R&D
8%

P
h Masters Degree
80%
91
Emp
Source: Company Data, Al Rajhi Capital

Political exposure:

Figure 12 Current and Upcoming

Facilities (units in million)

The company has a huge political exposure. The company exports their product to countries
that faces a huge political risks. Iraq, north Africa and Algeria is the main exposure they have.
And slightly lower exposure in Egypt and turkey. 9.2% of the total company sales in 2022 were
in Iraq. That portion of sales is in huge exposure and might vanish in any time. On the other
hand Iraq is expected to grow the fastest at a CAGR of 5.9% to reach SAR9.2 billion (or US$2.5
billion) driven by the Government’s push to increase investments and accessibility. And that
gives a huge potential to grow their net income. North Africa also have these political issues
but they have a huge gap in the industry so it worth the risks that they are taking.

Economic exposure:

Figure 13 Current and Upcoming

 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024
Facilities (units in million)
Figure 14:
exposure of Jamjoom
Figure 15: Jamjoom pharma product
The main economic issue in the countries that they sell in is the inflation. Inflation can affect
that currency and also can affect the currency exchange to SAR. Turkey inflation rate in 2022
was 72.3% and the currency dropped almost 30% to USD and that makes it hard to move the
money with that amount of loss. Egypt also had the same currency issue when they depleted
their reserves instead of counting on the USD. And the money supply last two years were very
high that also affected the currency and makes it difficult to move the money to other
currencies.
Environmental, Social, Governance
The Company plans to continue to build on introducing operational efficiencies to meet the
CMA regulations and the global standers to the environment, implementation of efficient
governance management solutions, and improvement in local content scores. The Company
expects that these actions will help to enhance collaboration and cohesive working by the
manufacturing and commercial teams as well as refine the production and reallocation of
resources. As a result, the Company will be able to increase both, volumes and margins, for
key products through improved cost efficiency and economies of scale. In addition, the
Company plans to expand its manufacturing footprint viathe Egypt facility to serve the North
African markets which supports its strategy of selectively expanding market presence.
Environmental
JP Committed with the standers of Environment, Health, Social, through all their operations
and they responsible to deal with emissions, effluent and solid waste at the source to ensure
that there is minimum impact on environment.
Social
The company committed in the responsible and ethical management of EHS Elements in all
its activities to safe the employees and visitors and contractors. And they committed to the
global standers of ISO 14001 and ISO 45001 certified, To avoid any injury, ill-health. The EHS
function implements an hard training plan to ensure that staff have the required skills based on
their training needs assessment, to carry out routine inspections and audits to ensure EHS
compliance. Employment, the Company and its subsidiaries had 1,255 employees out of
which, 401 are Saudi nationals. The Saudization rate of the Company is
45.7%,
Governance
The company committed to the standers that is requirements by the CMA, Governance Regulations
issued by the Capital Market Authority, to manage the relationship between the Board of Directors,
executive directors, And shareholders.
Board of directors
The Board of Directors shall be responsible for managing the Company and doing everything
to uphold the Company’s interests, and develop and maximize its value. the Board be vested
with the broadest powers to manage the Company and in order to achieve its objectives inside
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

and outside of the Kingdom. The Board of Directors has overall responsibility for establishment
and oversight of the Group’s risk management framework. The executive management team
is responsible for developing and monitoring the Group’s risk management policies. The team
regularly meets and any changes and compliance issues are reported to the Board of Directors
(See Appendix G2).

Figure 16: Jamjoom Management

Executive management
The Executive Committee shall exercise all the powers vested therein, submit its reports to the
Board, and keep direct channels of communication open therewith.
The Executive Committee consists of three (3) to five (5) members appointed by the Board of
Directors for a period equal to the membership term of the Board.
The Board shall take the necessary measures to enable the Executive Committee to carry out
its functions, including informing the Executive Committee, without any restrictions, of all data,
information (See Appendix G2).

Figure 17 Advanced technological capabilities differentiating it in the MEA region

Blow fill and seal Soft-gel capsule Glatt granulation Automated dermatology fi
technology technology system equip

1st in KSA to produce 1st in KSA to produce VMS 1st in KSA to use full contain
ophthalmicproducts in unit dose productsin soft-gel capsules vertical granulation

Advanced aseptic manufacturing Enhances bioavailability for p Tender Market Size:

inone continuous system soluble molecule SAR 21bn

Figure 18 Top 10 companies in Tender Market (Market share)

10% 8%
9% 9%
9% 7%

6%
8%
5% 5%
7%

6% 4% 4%
5% 3%
4%

3%
1%
2%

1%
0%

Jamjoom Organon Roche GSK Novartis Novo Nordisk Pfize Tabuk SPIMACO Sanofi
Source: IQVIA MAT June 2022, Al Rajhi Capital

Figure 19 Capex as % sales

Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Figure 20 Dividends to
remain stable

18.4%
16.7% 87%

66%
60% 60%
55%
9.6% 9.4%
44%

4.8% 4.7%

2019 2020 2021 2022 2023E 2024E 2019 2020 2021 2022 2023E 2024E

Source: Company Data, Al Rajhi Capital Source: Company Data, Al Rajhi Capital

Swot analysis
Strengths Weaknesses
1. Human intervention is limited in
modern factories
2. Decline in the Egyptian currency 1. Their reliance on
3. Strength in research, development tenders in KSA
and health production line
4. Large financial profile with a
sustained growth rate
5. Strong position in Saudi Arabian
domestic market
6. No debt
7. 118 brand
8. therapeutic sectors

Opportunities Threats
1. Business development strategy 1. Changes in
2. Present in 36 countries exchange rate
3. High level in targeting key markets 2. Spimaco a very
to accelerate and prioritize growth strong competitor
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Porter’s five model

Threat of new entrants
It need a large capital in terms of the cost of production, high technologies used in
industry, and government approvals that are difficult to obtain .
Power of supp
The company has factories, so it does not have many suppliers, except for some raw
materials so they rely on long term contracts with suppliers.
Power of buyers
The number of buyers is very high because it is a drug company located in 36 countries,
so it is not possible to negotiate prices and payment dates .
Competitive rivalry
Jamjoom faces fierce competition in the inner range of (Spimaco and Tabuk).
Spimaco is the largest pharmaceutical manufacturing company, with a production
capacity of approximately 2.4 billion units annually and a 14% market share in the general
medicine category. Its market share for government tenders is 9%, while Jamjoom has a
market share of 1%. However, Spimaco's lower profit margins are attributed to its lower
investments in research and development expenses. In the last 5 years, it allocated only
2% of its revenues to research and development, while Jamjoom allocates 5%. Including
in its portfolio there are strong brands such as Vivadol and sapofen .
Tabuk is the second largest pharmaceutical factory in the Kingdom, with a production
capacity equal to 2 billion units annually. Its market share in government tenders is
approximately 8%. Tabuk focuses on manufacturing generic formulas for patented brands
such as Nexium.

pany presentation Source: Company presentation

Assumptions and Valuations

Figure 20 R&D and Capex as % of Sales
Since 2022, JP did 7% of it’s total sales in Egypt due to there net currency exposure that
happens there, while Egypt faced a hundred percent depreciation in there Egyptian pound.
However, they took a loan of 57 m USD to build their facility, and invest it in egypt around this
number, after that the currency risk will depend on the sales that will come from the local
market, egypt, and other subsidiaries, once the facility starts selling the product. Furthermore,
it results from the accounting team because they converted the loan into subordinated
perpetual instrument in the fourth quarter of 2022(see Appendix D1).
Jamjoom faces fierce competition in the inner range of (Spimaco and Tabuk).
Spimaco is the largest pharmaceutical manufacturing company, with a production capacity of
approximately 2.4 billion units annually and a 14% market share in the general medicine
category. Its market share for government tenders is 9%, while Jamjoom has a market share
of 1%. However, Spimaco's lower profit margins are attributed to its lower investments in
research and development expenses. In the last 5 years, it allocated only 2% of its revenues
to research and development, while Jamjoom allocates 5%. Including in its portfolio there are
strong brands such as Vivadol and Sapofen (see Appendix D2).
Figure 21 Revenue mix by geography
over the years
Tabuk is the second largest pharmaceutical factory in the Kingdom, with a production
capacity equal to 2 billion units annually. Its market share in government tenders is
approximately 8%. Tabuk focuses on manufacturing generic formulas for patented brands such
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

as Nexium. Jamjoom Pharma finds itself strategically positioned within a burgeoning market
landscape, primarily driven by the nation’s deliberate strategy to bolster its citizenry. This
demographic surge offers a promising backdrop for pharmaceutical companies, with increased
demand for healthcare products and services. Recognizing the pivotal markets within the
region, Jamjoom Pharma has prioritized its efforts to amplify production capabilities, particularly
in Saudi Arabia and Egypt.
These countries, given their expanding populations and evolving healthcare needs, present
lucrative opportunities for the company to solidify its market presence and cater to growing
demands effectively. The first six months of 2023 marked a pivotal period for Jamjoom Pharma,
witnessing a robust growth trajectory in revenue by a notable 24.52%(see Appendix E1). Such
a substantial uptick underscores the company’s strategic initiatives, market positioning, and
the effectiveness of its product offerings in meeting consumer demands.
As the year progresses, the company is poised for further expansion and growth. The imminent
establishment of two cutting-edge manufacturing facilities in the latter half of the year signifies
a significant leap. With an anticipated surge in production capacity by nearly 67%, Jamjoom
Pharma is gearing up to capitalize on this enhanced capability. This expansion not only
positions the company to cater to escalating market demands but also aims to optimize
resource utilization, driving revenues and fostering sustained growth.

Appendix G1: Business Model

Appendix A: Capacity and utilization:

Fiscal Year 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P

Segmental Revenue

Pharmaceutical Products 805 736 917 1,086 1,382 1,491 1,593 1,627

Total 805 736 917 1,086 1,382 1,491 1,593 1,627

YoY% Growth (8.6%) 24.6% 18.5% 27.2% 7.9% 6.8% 2.2%

Overall Capacity (mn Units) 113 113 113 190 190 150 190 190

Current Facility (Old Jeddah) Capacity 113 113 113 113 113 113 113 113

New Facility (New Jeddah) Capacity 25 25 25 25 25

New Facility (Egypt) Capacity 52 52 52 52 52

 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Current Facility (Old Jeddah) Utilization 83% 87% 87% 92% 95% 97% 98% 98%

New Facility (New Jeddah) Utilization 50% 70% 75% 85% 90%

New Facility (Egypt) Utilization 0% 50% 75% 90% 95%

Utilization Rate% 83% 87% 94% 68% 83% 88% 93% 95%

Utilization 94 98 98 116 152 167 179 183

YoY% Utilization 5% 18% 30% 10% 7% 2%

Pharmaceutical Products

Revenue 805 736 917 1,086 1,382 1,491 1,593 1,627

Units Sold 94 98 98 116 152 167 179 183

Average Price per Unit Sold 8.6 7.5 9.3 9.3 9.1 8.9 8.9 8.9

YoY% Growth -13% 25% 0.0% -25% -2.0% 0.0% 0.0%

Appendix B1: Income statement:

Revenue 805 736 917 1,086 1,382 1491 1,593 1,627

Cost of sales (enter as -) (292) (261) (323) (391) (S04) (544) (S89) (602)
Gross Profit $13 475 594 695 877 947 1,004 1,025
Research & development (36) (37) (33) (38) (48) (52) (56) (57)
(enter as -) (237) (253) (328) (375) (477) (507) (534) (537)
Selling, general & 240 185 233 282 352 388 414 431
administrative (enter as -) 2 2 0 0 0 0 0 0
Operating profit (EBIT) 0 (4) (1) (1) (1) (1) (1) (1)
Interest income (10) (1) (51) (1) (1) (1) (1) (1)
Interest expense (enter as -) 1 7 5 5 S 5 5 5
Other expense (enter as -) (1) (0) (0) (0) (0) (0) (0) (0)
Other Income 232 188 186 286 356 391 418 435
Income From Associates (25) (17) (15) (23) (28) (31) (33) (35)
Pretax profit 207 171 171 263 327 360 384 400
Taxes (enter expense as -)
Net income
Basic shares outstanding 70 70 70 70 SAR 70 SAR 70 70 70
Impact of dilutive securities 0 0 0 0 SAR 0 0 0 0
Diluted shares outstanding 70 70 70 70 70 70 70 70
Basic EPS SAR 2.96 SAR 2.44 SAR 2.45 SAR 4.67 SAR SAR5.49 SARS.71
Diluted EPS SAR 2.96 SAR 2.44 SAR 2.45 3.75 4.67 5.14 SAR SAR 5.71
25.5% SAR 25.5% 5.14 5.49 26.5%
3.75 26.0% 26.0%
26.0%
Revenue growth NA (8.6%) 24.6% 18.5% 27.2% 7.9% 6.8% 2.2%
Gross profit as % of sales 63.7% 64.5% 64.8% 64.0% 63.5% 63.5% 63.0% 63.0%
R&D margin 4.5% 5.0% 3.6% 3.5% 3.5% 3.5% 3.5% 3.5%
SG&A margin 29.4% 34.4% 35.8% 34.5% 34.5% 34.0% 33.5% 33.0%
Tax rate 10.7% 9.2% 8.1% 8.0% 8.0% 8.0% 8.0% 8.0%
Depreciation & amortization 42 24 25 28 33 44 47 48
Stock based compensation 0 0 0 0 0 0 0 0
EBITDA 283 209 258 310 385 432 461 479

Appendix B2: Market share and Revenue portions: (top down)

Revenue 2020 2021 2022 2023 2024 2025 2026 2027
Saudi Arabia 539 466 587 655 803 842 899 978
Gulf 52 73 109 155 161 167 176 184
Iraq 52 65 91 96 101 109 116 122
Egypt 59 67 64 123 131 140 151 163
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

North africa and other 104 65 66 66 66 66 66 66

Total 805 736 917 1,095 1,261 1,324 1,407 1,513
%of total
Saudi Arabia 67% 63% 64% 60% 64% 64% 64% 65%
Gulf 6% 10% 12% 14% 13% 13% 12% 12%
Iraq 6% 9% 10% 9% 8% 8% 8% 8%
Egypt and north africa 7% 9% 7% 11% 10% 11% 11% 11%
Market Share
2019 2020 2021 2022 2023 2024 2025 2026 2027
1-KSA
Total 15,800 15,700 16,700 17,500 18,200 19,110 20,058 20,900 21,736
Pharmaceutical mi
YOY % -1% 6% 5% 4% 5% 5% 4% 4%
Jamjoom 539 466 587 655 803 842 899 978
Revenues
Jamjoom Market 3.4% 2.8% 3.4% 3.6% 4.2% 4.2% 4.3% 4.5%
Share
2-Gulf
Total 7,400 6,800 7,700 7,900 8,177 8,463 8,804 9,245 9,707
Pharmaceutical mi
YOY % -8% 13% 3% 4% 4% 4% 5% 5%
Jamjoom 52 73 109 155 161 167 176 184
Revenues
Jamjoom Market 0.8% 1.0% 1.4% 1.9% 1.9% 1.9% 1.9% 1.9%
Share
2-Iraq
Total 4,300 3,900 4,200 4,400 4,620 4,897 5,240 5,600 5,880
Pharmaceutical mi
YOY % -9% 8% 5% 5% 6% 7% 7% 5%
Jamjoom 52 65 91 96 101 109 116 122
Revenues
Jamjoom Market 1.3% 1.5% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1%
Share
2-Egypt and north
africa
Total 11,100 12,500 14,500 14,700 15,435 16,361 17,506 18,900 20,412
Pharmaceutical mi
YOY % 13% 16% 1% 5% 6% 7% 8% 8%
Jamjoom 59 67 64 123 131 140 151 163
Revenues
Jamjoom Market 0.5% 0.5% 0.4% 0.8% 0.8% 0.8% 0.8% 0.8%
Share

Appendix B3: Balance sheet:

x BALANCESHEET
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Cash & equivalents ST & LT market. securities 113 146 159 109 191 303 432
Accounts receivable 367 352 424 535 574 610 618
Inventory 135 132 176 222 226 242 241
Deferred tax assets 0 0 t) 0 0 0 0
Other current assets (inc. non-trade receivables) 0 0 tt) 0 0 0 0
Property, plant & equipment 714 705 734 772 790 809 828
Acquired intangible assets (inc. Goodwill) 15 14 15 15 15 16 16
Investment in Associates 4 0.3 0 0 0 0 i?)
Other assets 85 63 61 64 68 72 77
Total assets 1,432 1,413 1,568 1,717 1,865 2,051 2,212
Accounts payable 118 109 154 166 163 189 181
Accrued expenses & def rev. (current & non-current) 0 0 0 0 0 0 0
Revolver 0 0 0 0 0 0 ...
Long term debt 2 3 2 2 2 2 2
Other non-current liabilities 80 80 85 91 98 106 11S
Total liabilities 201 192 241 260 263 296 297
Common stock / additional paid in capital 100 700 700 700 700 700 700
Treasury stock 0 0 0 0 0 0 0
Retained eamings / accumulated deficit 1,120 524 629 760 904 1,058 1,218
Other comprehensive income / (loss) (4) (37) (37) (37) (37) (37) (37)
Other 12 (8) (8) (8) (8) (8) (8)
Total equity 1,227 1,179 1,284 1,415 1,559 1,713 1,873
Balance check 4 42 42 42 42 42 42
Ratios (144) (156) (107) (189) (301) (430)
Net debt (111) 0.65x 0.69x 0.80x 0.80x 0.78x 0.74x
Asset tumover (Revenue / Total assets) 0,51x 18.7% 24.2% 23.7% 24.1% 24.1% 24.6%
Net profit margin 23.2% 12.1% 16.8% 19.1% 19.3% 18.7% 18.1%
Return on assets (ROA) 11.9%
Appendix C1: Intangible assets and PP&E:

INTANGIBLE ASSETS (INC.

GOODWILL)
Fiscal year 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P
Fiscal year end date 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27
Beginning of period 0 15 15 14 15 15 15 16
Plus: Purchases of intangible (0) 0 2 2 2 2 3 3
assets (2) (2) (2) (2) (2) (2) (2)
Less: Amortization 14 15 15 15 16 16
End of period 2 2 2 2 3 3
Purchases of intangible assets (2) (2) (2) (2) (2) (2)
(enter as +)
Amortization (enter as -)
PROPERTY, PLANT &
EQUIPMENT
Fiscal year 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P
Fiscal year end date 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27
Beginning of period 714 705 734 773 791 810
Plus: Capital expenditures 13 54 69 60 64 65
Plus: Capital expenditures(Lease (18) 0 0 0 0 0
Assets) (0.3) (26) (30) (42) (45) (46)
Less: Depreciation 705 734 773 791 810 829
End of period 714
Capex (enter as +) 149 123 13 54 69 60 64 65
Capital expenditures as % of 18.4% 16.7% 1.4% 5.0% 5.0% 4.0% 4.0% 4.0%
revenue (42) (22) (18) (26) (30) (42) (45) (46)
Depreciation (enter as -) 28.1% 18.2% 139.3% 47.0% 44.0% 70.0% 70.0% 70.0%
Depreciation as a % of capital 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
expenditures 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Capex (enter as +) (ROU) (0.3) (0.3) (0.3) 0.0 0.0 0.0 0.0 0.0
Capital expenditures as % of
revenue
Depreciation (enter as -) (ROU)

Appendix C2: Working capital

Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

:
Metric 2021A 2022A 2023P 2024P 2025P 2026P 2027P
Fiscal Year End Date 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27
Accounts Receivable 367 424 535 574 610 618 618
AR Increase/(Decrease) - 71 111 39 36 8 -
End of Period AR 367 424 535 574 610 618 618
AR as % of Sales 49.9% 38.4% 39.0% 38.7% 38.5% 38.3% 38.0%
DSO (Days) 182 140 142 141 141 140 139
Inventory 135 176 222 226 242 241 241
Inventory Increase/(Decrease) - 44 46 4 16 (1) (1)
End of Period Inventory 135 176 222 226 242 241 240
Inventory as % of COGS 51.8% 40.9% 45.0% 44.0% 41.5% 41.0% 40.0%
Inventory Turnover 1.9x 2.4x 2.2x 2.3x 2.4x 2.4x 2.5x
Accounts Payable 118 154 166 163 189 181 181
AP Increase/(Decrease) - 45 12 (3) 25 (8) (8)
End of Period AP 118 154 166 163 189 181 173
AP as % of COGS 45.4% 33.8% 39.4% 33.0% 30.0% 32.0% 30.0%
DPO (Days) 166 123 144 120 110 117 110

Appendix C3: Retained earnings and OCI:

Metric 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P
Fiscal Year End Date 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27
Retained Earnings
- Beginning of Period 524 629 760 904 1058
- Plus: Net Income 263 327 360 384 400
- Less: Common Dividends (158) (196) (216) (230) (240)
- End of Period 1,120 524 629 760 904 1,058 1,218
Net Income 207 171 171 263 327 360 384 400
Dividend Payout Ratio 43.7% 66.4% 86.8% 60.0% 60.0% 60.0% 60.0% 60.0%
Common Dividends (91) (113) (149) (158) (196) (216) (230) (240)
OA: Other Comprehensive Income/(Loss)
- Beginning of Period (37) (37) (37) (37) (37)
- Plus: Income/(Loss) 0 0 0 0 0
- End of Period (4) (37) (37) (37) (37) (37) (37) (37)

Appendix D1: Perpetuity and exit EBITDA multiple approaches:

Metric Value
Normalized FCF in Last Forecast Period (t) 366
Normalized FCF +1 380
Long Term Growth Rate (g) 4.000%
Terminal Value 6,700
Present Value of Terminal Value 4,620
Present Value of Stage 1 Cash Flows 1,051
Enterprise Value 5,672
Implied TV Exit EBITDA Multiple 13.979x
Exit EBITDA Multiple Approach 18.047x
Terminal Year EBITDA 8,650
Terminal Value EBITDA Multiple 4.000%
Terminal Value 5,965
Present Value of Terminal Value 1,051
Present Value of Stage 1 Cash Flows 479
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Metric Value
Enterprise Value 7,017
Implied TV Perpetual Growth Rate 5.027%

ppendix D2: Cost of capital (WACC):

Metric Value
Cost of Debt 7.0%
Tax Rate 8.0%
After Tax Cost of Debt 6.4%
Risk-Free Rate 4.0%
Beta 1.00
Market Risk Premium 5.6%
Cost of Equity 9.6%
Capital Weights Amount
Market Value of Equity $9,772.0
% of Total 101.5%
Net Debt ($143.7)
% of Total (1.5%)
Cost of Capital (WACC) 9.7%

Appendix E1: Beta:

Share Market Tax

Company Observed Beta Price Cap Cash Debt Rate Delivered Beta
MSFT 0.68 $44.83 $8,260.0 $370,296 $103,217 23,473 18.0% 0.83
GOOD 1.14 $589.47 $675.9 $398,423 $65,375 8396 10.9% 1.31
AMZN 0.77 $359.76 $460.2 $165,551 $8,666 3,147 31.8% 0.79
XYZ 1.00 $105.60 $70,000 $7,392 $146 3 8.0% 1.02
Industry Average
Delivered Beta 0.99 - - - - - -

Appendix F1: Free cash flow buildup:

Fiscal Year 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P
EBITDA 283 209 258 310 385 432 461 479
EBIT 240 185 233 282 352 388 414 431
Tax Rate 10.7% 9.2% 8.1% 8.0% 8.0% 8.0% 8.0% 8.0%
EBIAT (NOPAT) 215 168 215 260 324 357 381 397
Depreciation and Amortization 28 33 44 47 48
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Fiscal Year 2020A 2021A 2022A 2023P 2024P 2025P 2026P 2027P
Stock-Based Compensation 0 0 0 0 0
Accounts Receivable (71) (111) (39) (36) (8)
Inventory (44) (46) (4) (16) 1
Accounts Payable 45 12 (3) 25 (8)
Accrued Expenses & Def Revenues 0 0 0 0 0
Other Current Assets (Inc. Non-Trade Rec.) 0 0 0 0 0
Deferred Tax Assets (DTAs) 0 0 0 0 0
Other Assets 1 (3) (4) (4) (5)
Other Non-Current Liabilities 5 6 7 8 9
Unlevered CFO 223 215 357 406 433
Less: Capex (54) (69) (60) (64) (65)
Less: Purchases of Intangible Assets (2) (2) (2) (3) (3)
Unlevered FCF 167 144 295 339 366
% Growth -14.1% 105.6% 14.9% 7.8% 34%
Discount Factor 2% 102% 202% 302% 402%
Midperiod Adjustment Factor 0.02 1.0 1.0 1.0 1.0
Present Value of Unlevered FCF 167 131 245 257 252

Appendix F3: Perpetuity and exit EBITDA

Weights

P/E 125.26 15.0% 18.79

EV/EBITDA 70.59 15.0% 10.59
DCF_Perpetuity 83.08 35.0% 29.08
DCF_EBITDA Exit 102.29 35.0% 35.8
94.26

139.6

Figure 25 Margin profile over the years Key Risks

Risk relating to the company’s supply chain:
To make medicines, a company needs specific ingredients called APIs and other raw
materials. These ingredients must come from approved sources regulated by health
authorities. Among all the materials needed, APIs are the most important.
In the medicine industry, there aren't many suppliers for some of these key ingredients.
Sometimes, a company has to depend on just one or a few suppliers for these essential
ingredients. The company tries to have more than one reliable supplier for most products,
but it's not always possible because there aren't many suppliers available in the industry.
Risks related to the complexity of manufacturing the Company's products:
The company works hard to make really good medicines for its customers. Making these
medicines is tough because there are strict rules the company has to follow. They use
complicated machines and computer systems to help them make the medicines and talk
to others about getting the right stuff, checking the quality, and sending the medicines out.
Sometimes, things can go wrong when making these medicines. It could be because the
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

machines break, rules aren't followed correctly, the materials used aren't good, or other
problems like bad weather. If the problems are serious, the company might have to stop
making some or all of its medicines until they fix the issues.

Risk related to cross border sales of products in foreign countries:

A large number of sales related to medicines occur outside Saudi Arabia, and this is
considered one of the company’s plans and strategies, and the company may expand
further in selling in African countries, which it will expand sales and purchases across
different countries will likely happen. But when a company operates in different countries,
there are risks involved, including, but not limited to:
• Currency exchange rate fluctuations or imposition of foreign exchange controls.
• Increased difficulty in collecting unpaid accounts.
• Differing local product preferences and product requirements.
• Differing tax regimes.
• Risk of loss at sea or other delays in delivering the products caused by transportation
problems.
Any of these points could affect the company’s operating results.

Political and economic risk:

The majority of the Company primarily operates in Saudi Arabia, and its financial
performance depends on the prevailing economic and political conditions in Saudi Arabia,
as well as global economic conditions that impact Saudi Arabia's economy.
Saudi Arabia's economy relies heavily on the oil sector, which contributes significantly to
the GDP. Fluctuations in oil prices could have a negative impact on the economy of Saudi
Arabia. In addition, the country is facing high levels of population growth. Together, these
circumstances pose a significant risk to the Company's business, financial position,
operating results and future prospects.
The Company's performance is also influenced by various economic factors, such as the
availability of consumer credit, interest rates, unemployment rates, wage levels, tax rates,
costs associated with water and electricity consumption, and the potential removal of
government subsidies for certain materials. Changes in these factors can affect consumer
spending and demand for the Company's products. Failure to adapt to market changes
can have a negative and substantial impact on the Company's business, financial position,
operating results, and prospects.
Moreover, many countries in the Middle East, including Saudi Arabia, are currently
experiencing political and security instability. The Company's oprations can be adversely
affected by negative diplomatic relations, economic and political conditions, or other factors
in these countries or other nations. Such factors can also impact the overall economy,
foreign direct investment, and financial markets in Saudi Arabia, further affecting the
Company's business, operating results, financial position, and prospects.
Any unexpected significant changes in the political, economic, or legal environment in
Saudi Arabia, other Middle Eastern countries, or countries from which the Company
sources its products, including market fluctuations, recessions, insolvency, employment
weakness, technological shifts, or other developments, can also have an adverse effect
 Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

on the Company.
Additionally, substantial changes in tax or trade policies, tariffs, or trade relations between
Saudi Arabia and other countries, as well as alterations in local policies such as the
imposition of unilateral tariffs on imported products or negative sentiments towards Saudi
Arabia due to increased import tariffs and changes in trade regulations, can result in
increased costs for the Company, limited access to suppliers, and reduced economic
activity.
If any of the aforementioned factors occur, they will significantly and unfavorably impact
the Company's business, operating results, financial condition, and future prospects.
Figure 22: Revenue mix over the years by TA

Risk related to VAT:

The Company has fulfilled its obligation to submit all of its VAT declarations since its
registration (starting from January 2018 until the present time of this Prospectus), all within
the legally required timeframes. Additionally, the Company has promptly settled all
outstanding liabilities owed to the Zakat, Tax, and Customs Authority within the legally
established deadlines.
Confirmation from the Zakat, Tax, and Customs Authority has been obtained,
acknowledging the acceptance of all VAT returns submitted from the inception of the
Company up to September 2022. As per the existing Tax/Zakat regulations in KSA, if the
Tax/Zakat returns are submitted within the statutory deadline, the statute of limitations for
any potential penalties is set at five (5) years from the date of filing the declaration.
Analysis:
Anticipated to commence production in the latter half of 2023, Jamjoom is
expanding its production capabilities. The company, with an efficient primary facility in
Jeddah operating at 85% utilization (as of June 2022), is constructing two additional
facilities. One, situated in Egypt, boasts an annual production capacity of 52 million, while
the other, a sterile facility in Jeddah, has an annual production capacity of 25 million (see
Appendix A1). This expansion is set to elevate the total annual production capacity to 190
million by the end of this year. Additionally, with the introduction of these new factories, we
are increasing our growth expectations, positioning ourselves to meet rising demand and
efficiently export products to North African markets.
As of COGS JP sees that they won’t need more human force in their two new facilities. So
because of that we expect COGS to remain with the same growth rate and we don’t expect
surprising figures in there. And by stabling COGS growth rate that will directly affect the
net income. As a prominent pharmaceutical manufacturer in Saudi Arabia, the Company
holds a noteworthy position in the market. In the ophthalmic segment (see Appendix C2),
one of the five key areas, the Company secured a market share of 20.6% in 2021G, as
highlighted in a market study report by the Market Consultant in August 2022G. Jamjoom’s
market share growth is influenced by societal and macroeconomic trends, such as the
increasing prevalence of generic medicines and the Company’s belief in the strong
performance of its products due to customer preferences. The Company’s market position
is further strengthened by
Figure 23: Active Portfolio
government-led initiatives and investments in the local healthcare and manufacturing
sectors, aligning with the Vision 2030 objectives. The demand is expected to increase due
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

to the government’s inclination to boost the population, further contributing to the

Company’s growth prospects. This national strategy aims to enhance private sector
involvement in the Kingdom of Saudi Arabia’s economy. Pharmaceutical manufacturing
holds a central role in the National Industrial Development and Logistics Program, targeting
a 40% domestic production of all pharmaceuticals consumed in the country, up from the
current approximate 30%. This governmental support serves as a significant boost for the
Company as a leading domestic manufacturer, positioning it to gain additional market
share in the coming years.
While our expectation is not for a substantial increase in the company’s market share,
there is an expectation of significant overall growth in the sector’s value. On the other hand
JP was building two factories in the same time and that will burn more cash that ever
before. Due to that we expect that the next 3 years they wont generate a lot of cash, but in
Metric Value
the long run they will have more and more than previous years. Also inventory will rise due
EBITDA 2023 2024
Enterprise Value SAR SAR 7,017 to the two new facilities and that will help delivering products fast and recognizing the
5,672
Less: Net Debt SAR 144 SAR 144 revenue faster than before. In term of payables the company sees that they don’t expect
Less: Trapped Cash SAR 0 SAR 0
Equity Value SAR SAR 7160 any surprises and they are trying to maintain these numbers without taking it further much
5,815
Diluted Shares SAR SAR more. But the receivables in 2023 were significantly higher than previous years and
70.000 70.000
Equity Value per Share SAR SAR according to the financial statements of Jamjoom, they faced an increasing in account
83.08 102.29
Market 68.00% 36.50%
receivable with approximately 40m SAR, due to the sales growth, seasonal variations
Premium/(Discount) to
Fair Value
which they had experience fluctuations in sales level during the year, and the finished
Appendix F2: Fair Value per Share: goods that have not yet been exported from Egypt to Saudi Arabia, which we can consider
it as a customer delays. in Perpetuity and exit EBITDA multiple approaches we used a
4.5% (see Appendix B2) risk free rate because of the expectations of deducting the interest
rates starting from Q1 2024. Beta was taken from the largest companies in the world to
have more accurate close beta that we can rely on. And the cost of debt after tax that is
because the debt was taken from Egypt and there average tax rate is 8%. The industry
average P/E ratio in 22.52 so we used that multiple in the P/E valuation. After having all of
these results and because the DCF model is more accurate to evaluate JP we gave it the
highest weights and the multiples were lower. Our target price is 94.26 SAR (see Appendix
F3) and for now the company is sell.
Jamjoom Pharma
Pharmaceuticals: Healthcare
26 Jan 2024

Financials in Charts

Revenue mix over the years by TA Active Portfolio

100% 1% 2% 4%
8% 7% 6% 6% Consumer
90% 7% Ophthalmology
7% 7% Health
12% 22%
80% 10% 12% 9%
9% 26%
70% 7% 9% 10%
10%
60% 18% 16%
20%
50% 18%
40% 18% 19%
18% 16%
30%
20% Dermatology
10% OTC 12%
0% 32% 27% 31% 26% 8%

2019 2020 2021 2022

GIT
CNS 4%
Ophthalmic Dermal General Medicine Consumer Health General
7% Cardiovascular
Medicine
GIT OTC CVD CNS 8%
13%

Source: Company Data, Al Rajhi Capital Source: Company Data, Al Rajhi Capital

Supplier Concentration Margin profile over the years

63.7% 64.5% 64.8%

70.0%

57.7%
11%
60.0%

8% 50.0%
33.8%
Top 10

40.0%
5% 29.8% 29.1% 28.3%
4% 30.0% 29.8%

4% 25.1% 25.5%
23.9%
20.0%
25.7% 23.2%
3% 21.4%
Others, 58% 3% 10.0% 18.7%
2% 0.0%
1%
2% 2019 2020 2021 2022

EBITDA Margin Gross Margin

Operating Margin Net Margin

Source: Company Data, Al Rajhi Capital Source: Company Data, Al Rajhi Capital

R&D and Capex as % of Sales Revenue mix by geography over the years

1000.0 20.0% 100%

11% 8% 9% 7%
900.0 18.4% 18.0% 90% 6% 10%
9% 9%
800.0 16.7% 916.7 16.0% 80% 7%
7% 9% 7%
700.0 805.3 14.0% 70% 12% 12%
16% 10%
701.3 731.7 735.7
600.0 12.0% 60%
500.0 50%
9.6% 9.4% 10.0%
400.0 8.0% 40%
30% 67% 63% 64%
300.0 6.7% 6.0% 57%
5.0%
20%
200.0 4.5% 3.6% 4.0%
3.4% 10%
100.0 3.3% 2.0%
0.0 0.0% 0%
2018 2019 2020 2021 2022 2019 2020 2021 2022 2022
KSA Gulf Egypt
Iraq North Africa
Jamjoom Pharma
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26 Jan 2024