Mohamed Al Ghannam, CEO of Middle East Pharmaceutical Industries Co. (Avalon Pharma)
Mohamed Al Ghannam, CEO of Middle East Pharmaceutical Industries Co. (Avalon Pharma), said the company continues to work toward its 2026 financial targets, which include significant growth in revenue and net profit. 
In an interview with Argaam, the top executive said he was optimistic about the company’s performance in Q4 2026, amid the strong results achieved in the first nine months of the year, which reflect continued momentum in core operations and progress in implementing its growth strategy.
He attributed the positive outlook to several key factors, including continued growth in the private sector and exports, expected improvement in the execution and delivery of new government tenders and orders, gradual utilization of new production capacities and improved operational efficiency, as well as ongoing cost optimization initiatives and product mix management to support profitability.
Al Ghannam also said the company is gradually increasing its production capacity in line with demand growth. It can add 143.5 million units annually by increasing operating hours at its new production lines.
The company is also awaiting final regulatory approvals to start operating its new pharmaceutical liquids production line at Avalon 2 before year-end, which is expected to add approximately 18 million units annually. Meanwhile, the Avalon 4 plant project is expected to be completed by the end of 2027.
Below is the full interview:
Q3 2026 net profit rose 86% to SAR 15.43 million, compared with SAR 8.28 million in the same quarter last year. What were the key factors behind this growth, and do you expect positive performance to continue in Q4?
We delivered strong net profit growth in Q3 2026, reflecting our success in combining revenue growth with improved operational efficiency and cost management.
Revenue increased 15.2% to SAR 124.4 million, driven mainly by strong growth in the private sector and exports, alongside expansion of our customer base, improved sales performance, and a stronger product mix.
Improved operating profitability and disciplined expense management, together with our strategic pricing policy and input cost management, also contributed to the results.
EBITDA increased 53.2% to SAR 24.9 million, with its margin improving from 15% to 20%, while the net profit margin rose from 7.7% to 12.4%.
As for Q4 2026, we remain positive about continued performance, supported by growth in the private sector and exports, as well as the ongoing implementation of our operational and commercial initiatives.
Nevertheless, we will continue to approach geopolitical developments and supply chain costs with caution and discipline.
Private sector revenue rose 28.1% in Q3 2026 to SAR 86.4 million. Which products contributed most to this growth, and what was the contribution of prescription drugs to total sales?
The private sector is the company’s main growth driver. Its revenue increased 28.1% in Q3 to SAR 86.4 million, representing approximately 69.5% of the company’s total revenue during the quarter.
This growth resulted from improved commercial performance, an expanded customer base, stronger presence across distribution channels and pharmacies, a focus on high-growth therapeutic categories, and an improved product mix.
At the therapeutic category level, we recorded notable growth in several areas, particularly neurological and psychiatric disorders and infectious diseases, alongside continued strong performance in dermatology, respiratory diseases, and pain management. Together, these categories accounted for 66% of the company’s year-on-year revenue increase during the first nine months.
At the brand level, we continue to maintain leading positions in several specialized markets. Our key products include Prila, Salinose, Avohex, Avogain, Alpha Plus, Avalon Activ, and Avocom.
Prescription drugs accounted for 31.9% of the company’s total revenue during the first nine months of 2026, compared with 29.1% in the same period last year, while over-the-counter products accounted for 68.1%.
This reflects our strategic direction toward increasing the contribution of pharmaceutical products and gradually expanding into higher-value therapeutic categories.
Public sector revenue declined 26.5% in Q3 due to the timing of executing and delivering new tenders. What is the value of the government contracts and tenders currently being executed, and do you expect public sector sales to improve in Q4?
Public sector revenue declined in Q3 to SAR 19.6 million, compared with SAR 26.7 million in the same period last year. This was mainly due to the timing of executing and delivering new government tenders, rather than a decline in demand for our products.
It is important to note that the public sector remains a strategic segment within our business model. We continuously work to strengthen our presence through participation in government tenders and expansion of our portfolio of products eligible for supply.
We expect the segment’s performance to improve in coming periods as direct orders and tenders progress and are delivered according to their revised schedules. This is expected to translate into year-on-year growth for the segment.
Export revenue increased 32.9% in Q3 2026 to SAR 18.3 million. Which markets contributed most to this growth, and do you have plans to expand into new export markets?
The export segment delivered strong performance in Q3, with revenue accounting for approximately 14.7% of the company’s total revenue.
Growth was mainly supported by strong performance in the UAE, Iraq, Kuwait, and Oman, alongside the launch of new products and expansion of the product range available in existing markets.
Regarding geographic expansion, we are pursuing a clear strategy to strengthen our regional and international presence.
We have already taken important steps, including appointing a new distributor in Lebanon, strengthening our presence in Qatar, and signing a licensing and supply agreement in Morocco, where product registration procedures have commenced.
We are also working to establish an operating platform in Egypt through contract manufacturing and distribution agreements, with revenue generation targeted to begin in 2027.
We believe exports will be an important growth driver for the company in the coming years, not only by diversifying revenue sources, but also by leveraging our manufacturing capabilities and strengthening the position of Saudi pharmaceutical products in regional and international markets.
Given current conditions and challenges facing global supply chains, how do you assess current inventory levels of raw materials and finished products? Has the company taken measures to increase inventory to ensure production continuity and meet demand?
Maintaining supply continuity and ensuring manufacturing readiness are among our operational priorities, particularly amid geopolitical challenges and disruptions to some global shipping routes.
We have proactively addressed these challenges by strengthening our safety stock of critical raw materials and active pharmaceutical ingredients (APIs), diversifying supply sources, rerouting some shipments through alternative Saudi ports, and using air freight for essential materials when necessary.
We are also developing alternative logistics routes, strengthening supplier qualification, and improving procurement planning to ensure the availability of materials required for continued production.
At the same time, we seek to balance maintaining safe inventory levels with supporting liquidity and working capital, ensuring that higher inventory does not create unnecessary financial pressure.
Overall, the measures we have taken have proven effective in maintaining manufacturing continuity and meeting customer needs over the past period. We will continue to develop these measures in line with changes in the operating environment.
How have current geopolitical conditions and higher shipping and raw material costs affected the company’s product prices and production costs? Do you expect selling prices to be adjusted in the coming period?
Geopolitical challenges and global supply chain disruptions have undoubtedly affected shipping costs, certain raw materials, and delivery lead times, posing a challenge to the pharmaceutical sector in general.
Nevertheless, we have so far been able to contain these pressures through a range of measures, including supplier diversification, improved procurement efficiency, shipment consolidation, negotiating competitive freight rates, leveraging alternative supply sources, improving our product mix, and maintaining cost discipline.
The effectiveness of these measures is reflected in our results. We maintained a gross profit margin of 58.1% in Q3, compared with 57.7% in the same period last year, despite challenges related to input costs and supply chains.
As for selling prices, we approach the matter based on the nature of each product and the surrounding regulatory and competitive environment, while complying with pricing requirements approved by the Saudi Food and Drug Authority.
We do not rely on passing cost increases on to customers as the only solution. Instead, we focus first on improving operational efficiency and productivity and managing costs, while maintaining our competitiveness and ensuring product availability in the market.
Have current supply chain challenges prompted the company to accelerate its plans to localize pharmaceutical and medical product manufacturing? Which products are you targeting for local production in the coming period?
Current challenges underscore the importance of strengthening pharmaceutical security and localizing pharmaceutical manufacturing. This is a strategic direction Avalon Pharma has been pursuing for some time and is aligned with Saudi Vision 2030 objectives.
We view localization as a strategic opportunity that goes beyond reducing reliance on imports. It enables us to build advanced industrial and technological capabilities, develop higher-value products, and strengthen the competitiveness of Saudi pharmaceutical manufacturing.
In this regard, we are pursuing three main tracks:
First: Strengthening local manufacturing of existing dosage forms, particularly solid medicines such as tablets and capsules, by developing our current manufacturing capabilities.
Second: Expanding into specialized, high-value pharmaceutical products through our new Avalon 4 plant project, which targets therapeutic areas including oncology, injectable medicines, and ophthalmology. The project is expected to be completed by the end of 2027.
Third: Developing strategic partnerships with global pharmaceutical companies to transfer knowledge and technologies and expand the manufacturing and marketing of specialized medicines, biosimilars, and generic drugs in the Kingdom.
We have already signed strategic agreements covering advanced drug molecules in immunology and the central nervous system, in addition to licensing and marketing agreements for biological and generic products. These agreements support the expansion of our future portfolio and strengthen our local manufacturing capabilities.
We believe that building an advanced domestic pharmaceutical manufacturing base will contribute to strengthening the Kingdom’s pharmaceutical security and create greater growth and regional and international expansion opportunities for Saudi companies.
What was the company’s actual production capacity and utilization rate in Q3 2026? Are there plans to increase capacity to keep pace with growth in domestic and export demand?
Avalon Pharma currently operates an integrated and diversified manufacturing platform with annual production capacity of approximately 492 million units, covering a wide range of dosage forms, including tablets, capsules, liquids, creams, topical preparations, and personal care products.
Capacity utilization reached 73% in Q3 2026, compared with 91% in the same period last year.
This decline was mainly attributable to the operation of the new solid dosage production line at our second plant, Avalon 2, for limited hours during the expansion and gradual commissioning phase.
For the first nine months, capacity utilization reached 81%, compared with 79% in the corresponding period last year.
We already have clear plans to leverage this capacity and gradually increase it in line with demand growth. We can add 143.5 million units annually by increasing operating hours at new lines, such as those for sanitizers and solid medicines.
We are also awaiting the final regulatory approvals required to start operating the new pharmaceutical liquids production line at Avalon 2 before year-end. The line is expected to add approximately 18 million units to annual production capacity.
In parallel, we continue to develop our fourth plant, Avalon 4, which we expect to complete by the end of 2027. It will expand our manufacturing capabilities and enable us to enter specialized, high-value therapeutic areas.
Accordingly, our strategy is not limited to increasing production capacity. It also focuses on improving the utilization of existing assets, optimizing the product mix, and maximizing returns on manufacturing investments.
What are your expectations for the company’s Q4 2026 performance in terms of sales and profitability growth, given current changes in production costs and demand for pharmaceutical products?
We are optimistic about the company’s Q4 performance, driven by the strong results achieved during the first nine months of the year, which reflect continued momentum in our core businesses and progress in implementing our growth strategy.
Our positive outlook for the remainder of the year is based on several key factors: Continued growth in the private sector, supported by an expanding customer base, improved commercial performance, and increased market share; continued growth in exports and stronger presence in regional markets; expected improvement in the execution and delivery of new government tenders and orders; gradual utilization of new production capacities and improved operational efficiency; and continued implementation of cost optimization initiatives and product mix management to support profitability.
Accordingly, we continue to work toward our 2026 financial targets, which include significant growth in revenue and net profit.
We are certainly taking into accountchallenges related to geopolitical conditions, shipping costs, and raw materials. However, the proactive measures we have taken to strengthen supply chain resilience, diversify supply sources, and improve operational efficiency provide us with a solid foundation for continued growth.
Our focus is on achieving sustainable and balanced growth, rather than revenue growth alone, so that it translates into profitability, cash flows, and return on investment, while enhancing long-term shareholder value.
Mohamed Al Ghannam, CEO of Middle East Pharmaceutical Industries Co. (Avalon Pharma)
Mohamed Al Ghannam, CEO of Middle East Pharmaceutical Industries Co. (Avalon Pharma), said the company continues to work toward its 2026 financial targets, which include significant growth in revenue and net profit.
In an interview with Argaam, the top executive said he was optimistic about the company’s performance in Q4 2026, amid the strong results achieved in the first nine months of the year, which reflect continued momentum in core operations and progress in implementing its growth strategy.
He attributed the positive outlook to several key factors, including continued growth in the private sector and exports, expected improvement in the execution and delivery of new government tenders and orders, gradual utilization of new production capacities and improved operational efficiency, as well as ongoing cost optimization initiatives and product mix management to support profitability.
Al Ghannam also said the company is gradually increasing its production capacity in line with demand growth. It can add 143.5 million units annually by increasing operating hours at its new production lines.
The company is also awaiting final regulatory approvals to start operating its new pharmaceutical liquids production line at Avalon 2 before year-end, which is expected to add approximately 18 million units annually. Meanwhile, the Avalon 4 plant project is expected to be completed by the end of 2027.
Below is the full interview:
Q3 2026 net profit rose 86% to SAR 15.43 million, compared with SAR 8.28 million in the same quarter last year. What were the key factors behind this growth, and do you expect positive performance to continue in Q4?
We delivered strong net profit growth in Q3 2026, reflecting our success in combining revenue growth with improved operational efficiency and cost management.
Revenue increased 15.2% to SAR 124.4 million, driven mainly by strong growth in the private sector and exports, alongside expansion of our customer base, improved sales performance, and a stronger product mix.
Improved operating profitability and disciplined expense management, together with our strategic pricing policy and input cost management, also contributed to the results.
EBITDA increased 53.2% to SAR 24.9 million, with its margin improving from 15% to 20%, while the net profit margin rose from 7.7% to 12.4%.
As for Q4 2026, we remain positive about continued performance, supported by growth in the private sector and exports, as well as the ongoing implementation of our operational and commercial initiatives.
Nevertheless, we will continue to approach geopolitical developments and supply chain costs with caution and discipline.
Private sector revenue rose 28.1% in Q3 2026 to SAR 86.4 million. Which products contributed most to this growth, and what was the contribution of prescription drugs to total sales?
The private sector is the company’s main growth driver. Its revenue increased 28.1% in Q3 to SAR 86.4 million, representing approximately 69.5% of the company’s total revenue during the quarter.
This growth resulted from improved commercial performance, an expanded customer base, stronger presence across distribution channels and pharmacies, a focus on high-growth therapeutic categories, and an improved product mix.
At the therapeutic category level, we recorded notable growth in several areas, particularly neurological and psychiatric disorders and infectious diseases, alongside continued strong performance in dermatology, respiratory diseases, and pain management. Together, these categories accounted for 66% of the company’s year-on-year revenue increase during the first nine months.
At the brand level, we continue to maintain leading positions in several specialized markets. Our key products include Prila, Salinose, Avohex, Avogain, Alpha Plus, Avalon Activ, and Avocom.
Prescription drugs accounted for 31.9% of the company’s total revenue during the first nine months of 2026, compared with 29.1% in the same period last year, while over-the-counter products accounted for 68.1%.
This reflects our strategic direction toward increasing the contribution of pharmaceutical products and gradually expanding into higher-value therapeutic categories.
Public sector revenue declined 26.5% in Q3 due to the timing of executing and delivering new tenders. What is the value of the government contracts and tenders currently being executed, and do you expect public sector sales to improve in Q4?
Public sector revenue declined in Q3 to SAR 19.6 million, compared with SAR 26.7 million in the same period last year. This was mainly due to the timing of executing and delivering new government tenders, rather than a decline in demand for our products.
It is important to note that the public sector remains a strategic segment within our business model. We continuously work to strengthen our presence through participation in government tenders and expansion of our portfolio of products eligible for supply.
We expect the segment’s performance to improve in coming periods as direct orders and tenders progress and are delivered according to their revised schedules. This is expected to translate into year-on-year growth for the segment.
Export revenue increased 32.9% in Q3 2026 to SAR 18.3 million. Which markets contributed most to this growth, and do you have plans to expand into new export markets?
The export segment delivered strong performance in Q3, with revenue accounting for approximately 14.7% of the company’s total revenue.
Growth was mainly supported by strong performance in the UAE, Iraq, Kuwait, and Oman, alongside the launch of new products and expansion of the product range available in existing markets.
Regarding geographic expansion, we are pursuing a clear strategy to strengthen our regional and international presence.
We have already taken important steps, including appointing a new distributor in Lebanon, strengthening our presence in Qatar, and signing a licensing and supply agreement in Morocco, where product registration procedures have commenced.
We are also working to establish an operating platform in Egypt through contract manufacturing and distribution agreements, with revenue generation targeted to begin in 2027.
We believe exports will be an important growth driver for the company in the coming years, not only by diversifying revenue sources, but also by leveraging our manufacturing capabilities and strengthening the position of Saudi pharmaceutical products in regional and international markets.
Given current conditions and challenges facing global supply chains, how do you assess current inventory levels of raw materials and finished products? Has the company taken measures to increase inventory to ensure production continuity and meet demand?
Maintaining supply continuity and ensuring manufacturing readiness are among our operational priorities, particularly amid geopolitical challenges and disruptions to some global shipping routes.
We have proactively addressed these challenges by strengthening our safety stock of critical raw materials and active pharmaceutical ingredients (APIs), diversifying supply sources, rerouting some shipments through alternative Saudi ports, and using air freight for essential materials when necessary.
We are also developing alternative logistics routes, strengthening supplier qualification, and improving procurement planning to ensure the availability of materials required for continued production.
At the same time, we seek to balance maintaining safe inventory levels with supporting liquidity and working capital, ensuring that higher inventory does not create unnecessary financial pressure.
Overall, the measures we have taken have proven effective in maintaining manufacturing continuity and meeting customer needs over the past period. We will continue to develop these measures in line with changes in the operating environment.
How have current geopolitical conditions and higher shipping and raw material costs affected the company’s product prices and production costs? Do you expect selling prices to be adjusted in the coming period?
Geopolitical challenges and global supply chain disruptions have undoubtedly affected shipping costs, certain raw materials, and delivery lead times, posing a challenge to the pharmaceutical sector in general.
Nevertheless, we have so far been able to contain these pressures through a range of measures, including supplier diversification, improved procurement efficiency, shipment consolidation, negotiating competitive freight rates, leveraging alternative supply sources, improving our product mix, and maintaining cost discipline.
The effectiveness of these measures is reflected in our results. We maintained a gross profit margin of 58.1% in Q3, compared with 57.7% in the same period last year, despite challenges related to input costs and supply chains.
As for selling prices, we approach the matter based on the nature of each product and the surrounding regulatory and competitive environment, while complying with pricing requirements approved by the Saudi Food and Drug Authority.
We do not rely on passing cost increases on to customers as the only solution. Instead, we focus first on improving operational efficiency and productivity and managing costs, while maintaining our competitiveness and ensuring product availability in the market.
Have current supply chain challenges prompted the company to accelerate its plans to localize pharmaceutical and medical product manufacturing? Which products are you targeting for local production in the coming period?
Current challenges underscore the importance of strengthening pharmaceutical security and localizing pharmaceutical manufacturing. This is a strategic direction Avalon Pharma has been pursuing for some time and is aligned with Saudi Vision 2030 objectives.
We view localization as a strategic opportunity that goes beyond reducing reliance on imports. It enables us to build advanced industrial and technological capabilities, develop higher-value products, and strengthen the competitiveness of Saudi pharmaceutical manufacturing.
In this regard, we are pursuing three main tracks:
First: Strengthening local manufacturing of existing dosage forms, particularly solid medicines such as tablets and capsules, by developing our current manufacturing capabilities.
Second: Expanding into specialized, high-value pharmaceutical products through our new Avalon 4 plant project, which targets therapeutic areas including oncology, injectable medicines, and ophthalmology. The project is expected to be completed by the end of 2027.
Third: Developing strategic partnerships with global pharmaceutical companies to transfer knowledge and technologies and expand the manufacturing and marketing of specialized medicines, biosimilars, and generic drugs in the Kingdom.
We have already signed strategic agreements covering advanced drug molecules in immunology and the central nervous system, in addition to licensing and marketing agreements for biological and generic products. These agreements support the expansion of our future portfolio and strengthen our local manufacturing capabilities.
We believe that building an advanced domestic pharmaceutical manufacturing base will contribute to strengthening the Kingdom’s pharmaceutical security and create greater growth and regional and international expansion opportunities for Saudi companies.
What was the company’s actual production capacity and utilization rate in Q3 2026? Are there plans to increase capacity to keep pace with growth in domestic and export demand?
Avalon Pharma currently operates an integrated and diversified manufacturing platform with annual production capacity of approximately 492 million units, covering a wide range of dosage forms, including tablets, capsules, liquids, creams, topical preparations, and personal care products.
Capacity utilization reached 73% in Q3 2026, compared with 91% in the same period last year.
This decline was mainly attributable to the operation of the new solid dosage production line at our second plant, Avalon 2, for limited hours during the expansion and gradual commissioning phase.
For the first nine months, capacity utilization reached 81%, compared with 79% in the corresponding period last year.
We already have clear plans to leverage this capacity and gradually increase it in line with demand growth. We can add 143.5 million units annually by increasing operating hours at new lines, such as those for sanitizers and solid medicines.
We are also awaiting the final regulatory approvals required to start operating the new pharmaceutical liquids production line at Avalon 2 before year-end. The line is expected to add approximately 18 million units to annual production capacity.
In parallel, we continue to develop our fourth plant, Avalon 4, which we expect to complete by the end of 2027. It will expand our manufacturing capabilities and enable us to enter specialized, high-value therapeutic areas.
Accordingly, our strategy is not limited to increasing production capacity. It also focuses on improving the utilization of existing assets, optimizing the product mix, and maximizing returns on manufacturing investments.
What are your expectations for the company’s Q4 2026 performance in terms of sales and profitability growth, given current changes in production costs and demand for pharmaceutical products?
We are optimistic about the company’s Q4 performance, driven by the strong results achieved during the first nine months of the year, which reflect continued momentum in our core businesses and progress in implementing our growth strategy.
Our positive outlook for the remainder of the year is based on several key factors: Continued growth in the private sector, supported by an expanding customer base, improved commercial performance, and increased market share; continued growth in exports and stronger presence in regional markets; expected improvement in the execution and delivery of new government tenders and orders; gradual utilization of new production capacities and improved operational efficiency; and continued implementation of cost optimization initiatives and product mix management to support profitability.
Accordingly, we continue to work toward our 2026 financial targets, which include significant growth in revenue and net profit.
We are certainly taking into accountchallenges related to geopolitical conditions, shipping costs, and raw materials. However, the proactive measures we have taken to strengthen supply chain resilience, diversify supply sources, and improve operational efficiency provide us with a solid foundation for continued growth.
Our focus is on achieving sustainable and balanced growth, rather than revenue growth alone, so that it translates into profitability, cash flows, and return on investment, while enhancing long-term shareholder value.
