Avalon Pharma CEO says geopolitical challenges ‘part’ of operating reality, impact ‘limited’

Mohamed Al Ghannam, CEO of Middle East Pharmaceutical Industries Co. (Avalon Pharma), said that the geopolitical challenges and volatility witnessed in recent years have become part of daily operations rather than short-term anomalies.

 

He further noted that the company has built its business model around resilience and preparedness rather than assuming ideal conditions.

 

In an interview with Argaam, Al Ghannam explained that, thanks to the company's proactive approach to risk management, diversification of supply sources, and efforts to enhance supply chain resilience, it has been able to limit the impact of these developments on its business, maintain production continuity, and fulfill its commitments to customers without affecting its performance.

 

He noted that investing in supply chain resilience represents one of the key pillars for sustaining growth, enhancing competitiveness, and ensuring the company's readiness to face future changes with confidence and efficiency.

 

Al-Ghannam also said that the second-quarter results reflect Avalon Pharma's success in implementing its strategy based on achieving high-quality growth that combines expansion, maximizing profitability, and creating sustainable value for shareholders.

 

The growth in net profit was not the result of short-term measures but rather the outcome of continuous strategic investments in developing the product portfolio, enhancing operational efficiency, and upgrading commercial capabilities, alongside disciplined resource allocation and capital management, said the top executive.

 

He explained that these results were achieved while continuing to invest in future growth drivers while maintaining a strong net profit margin, reflecting the strength of the company's business model and its ability to achieve sustainable growth across different economic cycles.

 

“Revenue growth is not about the figure itself, but rather the quality of that growth and the strategic drivers behind it that support building the future of Avalon Pharma,” the CEO stated.

 

He explained that revenue growth resulted from implementing a strategy focused on enhancing sales quality, increasing the contribution of value-added products, and expanding the company's presence in the most attractive sectors and markets, while maintaining commercial discipline.

 

The key distinguishing feature of this growth is its reliance on long-term strategic pillars, including innovation, regional expansion, diversification of revenue sources, and strengthening manufacturing capabilities, giving the company confidence in its ability to continue growing over the coming years, according to Al Ghannam.

 

He noted that the private sector was the primary driver of growth during the second quarter, accounting for 73.1% of total revenue and recording growth of 27.5% compared with the corresponding period of last year. He explained that this reflects the success of the company's strategy in strengthening its presence among customers, expanding its business base, and building a more diversified and resilient business model.

 

The government sector remains a strategic pillar within the company's business portfolio, with its performance linked to the nature of tender cycles, while the company has begun to see a strong recovery in the export sector following measures taken during the first quarter to reorganize operations, according to the CEO.

 

He said that the company views the balance between sectors as one of the strengths of its business model, as it enhances revenue resilience and reduces reliance on a single source of growth.

 

As regards geographical expansion, Al Ghannam said that Avalon Pharma does not view it merely as entering new markets, but rather as an investment in building a long-term regional growth platform.

 

“We have recently begun activating markets such as Sudan, Syria, and Uganda, in addition to reactivating our operations in Qatar and continuing our expansion across Gulf markets. The establishment of Avalon Egypt represents a strategic step that will provide us with a manufacturing and expansion base serving the Egyptian market and African markets,” he continued.

 

He expected this expansion to gradually contribute to diversifying revenue sources, enhancing business resilience, and creating sustainable growth opportunities, in line with the company's vision of making Avalon Pharma a leading regional player in the pharmaceutical industry.

 

Regarding pricing and product portfolio management, Al Ghannam explained that the company does not view them merely as tools for increasing revenue, but rather as part of an integrated strategy to maximize value and achieve sustainable profitable growth.

 

This approach was reflected in the company's ability to maintain a gross profit margin of 62.6% and a net profit margin of 21.1%, despite continuing to invest in expansion, innovation, and the development of future growth drivers, he added.

 

According to the top executive, margin quality is no less important than revenue growth, as it reflects the strength of the business model and the efficiency of execution. He expects profit margins to remain one of the key strengths of the company's business model, as it continues to develop its product portfolio, enter specialized therapeutic areas, and enhance operational efficiency.

 

He confirmed that the company is entering H2 2026 with confidence based on the strength of its operating fundamentals, continued commercial momentum, and clear strategic priorities.

 

“Our focus moving forward will remain on accelerating innovation, strengthening our product portfolio, expanding our regional presence, and investing in our manufacturing capabilities, including the Avalon 4 project, which represents a strategic pillar for entering specialized and high-tech products and opens new avenues for long-term growth,” Al Ghannam said.

 

According to Argaam’s data, Avalon Pharma’s net profit rose to SAR 55.7 million in H1 2026, up 26%, compared to SAR 44.2 million during the same period in 2025. Q2 net profit stood at SAR 28.8 million, up 16% year-on-year (YoY).