Julphar
i in I I 2, . I '1 II
Gulf Pharmaceutical Industries
Discussion report and analysis of the board of directors of the listed public shareholding company
Date 10 November 2023
Name of the
Gulf Pharmaceutical Industries PSC Julphar
Listed Company
The period of
the financial
statements For Q3 2023
covered by the
report
1) Revenue in Q3’23 experience a decline of -12.0% vs. Q3’22 (-10.0% at constant
currency) to 366.0 mAED due to geopolitical and economical situations in Iraq,
Sudan, and currency devaluation in Egypt, affecting the quarter, mitigated by
continued strong revenue development in UAE and GCC region.
2) Amid the challenges, the revenue for the 9-month period remained stable, showing
a marginal decrease of 2.3% year-over-year to 1.2 billion AED (-0.2% at constant
currency), by properly balancing geographical presence.
3) During Q3, Julphar has delivered strong market performance with most of the GCC
countries growing at double digit across the geography.
4) Revenue through our pharmacy retail and whole sales operations, Planet
Pharmacies, continues to show a strong momentum, with YTD growth at 5%
compared to the same period in the PY, and reaching sales of 776.3 mAED.
5) Gross Margin development continues the positive momentum improving Quarter
over Quarter from 25.8% in Q2’23 to 27.7% thanks to focus on operational
improvement.
Overview of the
6) Julphar has recognized the impact of UAE Corporate Tax implementation amounting
main results
-5.6 mAED related to Purchase Price Allocation (PPA) adjustments carried on the
during the
Group’s consolidated statement relating to business combination undertaken in
financial period
UAE prior to 16 January 2023.
7) Reported EBITDA for 9M’23 reaches +74.7 mAED (6.1% on Net Sales), and 87.6 mAED
(7.1% of Net Sales) when adjusting from one off event related to impairment of
overdue receivables of Lebanon subsidized business and other one-time events.
8) Quarter over Quarter EBITDA, evolving from 8.2 mAED in Q2’23, to 21.2 in Q3’23, as
impact of the operational improvements, thanks to disciplined cost management,
and operational efficiencies.
9) Julphar continues making sustained progress on the following areas:
a. Delivering strong market share increase in core markets including United Arab
Emirates, GCC countries, with special emphasis in Kingdom of Saudi Arabia.
b. Continue delivering cost saving and efficiency initiatives resulting in lower cost
in G&A and S&D in relation to Sales compared to previous year when excluding
one time events.
c. Continue executing new product launches initiatives and increasing the
products pipeline.
Securities
AED nil
issued during
Page 1 of 3the financial
period
Summary of the
• Successful licensing and technology transfer agreement signed in the 1st half of
most important
the year Sunshine Lake Pharma to Pioneer Insulin Biosimilar Manufacturing in
non-financial
MENA
events and
• Strong development on our new product launches strategy, with 32 new
developments
products approved in different countries in 2023, which will be consequently
during the
launched in future periods.
financial period
• Company continues focusing on:
Summary of a. Continuous increase of the market share in core markets including United
operational Arab Emirates, Kingdom of Saudi Arabia and other GCC countries.
performance b. Continue implementing sustained cost saving initiatives.
during the c. Manufacturing excellence.
financial period d. New product launches and execution of the company’s product pipeline.
e. Implementing effective country risk mitigation plans for Sudan, Iraq Egypt
in mAED Q3’23 Q3’22 YoY Change 9M’23 9M’22 YoY Change
Summary of Net Sales 366.0 415.8 -12.0% 1225.4 1254.3 -2.3%
profit and loss Gross profit 101.2 124.7 -18.8% 344.0 399.1 -13.8%
during the
Net Income (Cont. oper.) -37.8 3.6 -1150.0% -79.9 8.9 -997.8%
financial period
EBITDA 21.2 48.0 -55.8% 74.7 132.2 -43.5%
EBITDA (% of net Sales) 5.8% 11.5% 6.1% 10.5%
Summary of • The total equity decreased to 831.40 mAED compared to 928.2 mAED (-96.8 mAED) in
financial Dec’22.
position as at • Equity decreases mainly driven by total net loss for the period of 86.2 mAED (including
the end of the discontinued operations) and the foreign currency translation reserve impact of -10.5
financial period mAED.
• Cashflow used in operating activities reached -21.4 mAED at September YTD,
Summary of
showing an improvement of 24.3 mAED vs same period last year.
cash flows
• During the current period, cashflows from financing activities reached 156.2 mAED,
during the
including the execution of the accordion rights for 150 mAED, in relation to the
financial period
existing long-term facility, as part of the plans for the Year 2023 and beyond.
• The total spending and global demand for medicines will increase over the next five
Expectations
years to approximately $1.9 trillion by 2027 (growth rate of 3-6%).
for the sector
• The highest volume growth is expected in Latin America, Asia, and Africa, driven by a
and the
mix of population growth and expanded access.
company's role
• Demand for innovative drugs will drive oncology spending almost double the current
in these
level.
expectations
Source: IQVIA Data (Jan 18, 2023)
Expectations
• UAE economy to grow by 3.5% in 2023, with the country’s non-oil economy
regarding the
projected to grow by a robust 4.5 per cent this year.
economy and
• The introduction of a 9 per cent corporate tax this year, following the adoption of a 5
its impact on
per cent value-added tax (VAT) in 2018, contributes to bolstering public finances,
the company
contributing to supporting macroeconomic stability.
and the sector
Page 2 of 3Source: GULF BUSINESS SEPTEMBER 3, 2023, UBS
The plans for growth of the Company are as follows:
1. Continued focus on the strategic areas of business.
Future plans for 2. Strengthen sales organization in core markets and increase market share with the
growth and existing portfolio.
changes in 3. New alliances and partnerships to strengthen the product portfolio of the
operations in Company.
future periods 4. Launch new products in core therapeutic areas.
5. Invest in capital expenditure new manufacturing technologies and improve
operations efficiency
The size and
The Company continues to invest in capital expenditure for achieving targeted growth
impact of
and sustained performance by:
current and
1. Expanding the product portfolio with investing in new product dossiers
projected
2. Continuing upgrading the existing production facilities, to continue keeping highest
capital
quality standard levels and efficiency.
expenditures
3. Redesigning current processes to address evolving requirements from government
on the
authorities
company
The
developments
of the
implementation
of projects,
plans and
transactions
The implementation of the following projects have been discussed in the Board of
and deals that
Directors’ meetings:
were discussed
1. Progress on divestment of non-core areas of business.
by the
company's
board of
directors in the
report for the
previous fiscal
year
The name of the
chairman of the Sheikh Saqr Humaid AlQasimi
company
Signature and Date 10 November 2023
Company’s Seal
Page 3 of 3

Sentiment: positive