Kharazmi Advancing in Compliance with Strategic Plan
Ø Kharazmi Group Underlines Strong International Presence
Ø Foreign Investment a Must for Economic Growth
The city of Tabriz in East Azarbaijan Province was host to the 7th Conference of Kharazmi Investment Group in the presence of managers and experts of the company on the 13th day of Mordad (August 3).
Dr. Hojatollah Seydi, Managing Director of Kharazmi Investment Company, was the first speaker of the forum who pointed to the ups and downs in the history of Kharazmi Group and said: “Despite problems such as the general recession, the Kharazmi Group, in no previous period, has enjoyed the inspiring condition it has today. And we owe this all to the efforts of members and our compliance with the strategic plan of the group.”
Referring to the rise in consolidated income, parent company income and DPS of the group as compared to the previous year, Seydi said despite economic problems and bottlenecks, in an environment where most of the companies had negative equity income, Kharazmi experienced a tangible growth in most areas and “even some of our loss making companies made profits.” He noted that some of the companies are being restructured and “we have experienced a significant presence in the international arena.”
Sina Daroo & Confidence-Building in Pharmaceutical Market
Dr. Mohammad Hassan Vasefi, Managing Director of Sina Daroo Laboratories Company and the second speaker of Kharazmi conference said: “Sina Daroo is the only pharmaceutical company present in the gathering with a background of 50 years and is considered the grand child of Kharazmi family. This company is among the first companies which entered into Stock Exchange and holds 102 active licenses. Out of these 102 licenses, 49 cases hold between 80 and 100 percent of the domestic and foreign markets. They also account for 38 percent of the sale shares of Sina Daroo with a volume of 575 billion rials. Some 22 other products account for 50 to 80 percent and 31 products 50 percent of the shares which show diversity of Sina Daroo’s presence in the market.”
He further remarked that at present the competitors are only foreign companies which are constantly being pushed back in the competition arena. “We have a widespread network of marketing and sales and full time personnel throughout the country are supplying our products to the medical community.”
Meanwhile, Dr. Seyed Farzan Al-e-Nabi, a deputy at Sina Daroo Company outlined strategic targets of the company and said: “Sina Daroo has changed its strategic policies compared to the past few years. In the past the conservative policy of the company’s survival was on the agenda of the company and cash money was spent on its major activities but now policies have changed with the improvement of the business atmosphere.”
Pointing to the strong points of the company such as the high expertise of the technical and managerial staff, he said of course Sina Daroo had also some shortcomings such as old machineries, lack of enough attention to exports and overseas investment.
He stressed that Sina Daroo is determined to increase its capacity 20 to 80 percent by 2020 and realize utilization of mechanized tools with high application, receiving valid world endorsement and entry into regulated markets.
Another speaker of the conference was Dr. Seyed Mehdi Barakchian, economist, who referred to the sharp drop in GDP in previous years and said in a period between 1390 (2011/12) and 1393 (2013-2014) the GDP dropped by 10%, adding that between 1355 (1976/77) and 1393 (2014/15) the figure amounted to 29% while the world experienced a growth of 70%.
Referring to employment statistics in the country, he said in 1394 (2015/16), 64 million people (out of the 80 million population) were in employment age of whom 40 million were idle and only 24 million were working. “This means that the participation rate in Iran is 38% which places us in the list of three weak countries of the world in terms of high participation rate and dependency ratio for that matter. In other words, the main characteristic of Iran’s labor market is the low participation rate and the two digit unemployment rate.”
According to Barakchian, the participation rate in Iran in terms of world standards is 45% while the average rate in the world is 64%, in the Middle East is 48% and in East Asia 70%. From demand perspective, according to the senior economist, the main economic growth impulses were related to private sector consumption, public sector consumption, and investment. He noted that from 1341 (1962/63) up to 1355 (1976/77) the main growth factor was 77% for investment, 37% for final government consumption, adding that for South Korea in those years the private consumption and the export were the main drives for growth.
He said the main reason for low growth in the country was insistence on maintaining the growth pattern based on import substitution. Barakchian also noted that a country which gets involved in import substitution will keep its economic growth up for a period of time but gradually domestic products will exceed domestic demand and the country will fail to grow. The pattern for import substitution has a ceiling which is the domestic demand, a clear example of which is the status quo of the auto making industry, he noted.
He said a country like South Korea did not place production on the basis of domestic market. It did not consider domestic demand its production ceiling and evaluated it in accordance with the markets it was capable of entering.
Referring to the inevitable necessity of attracting foreign investment for realization of targeted growth, he stressed that if the current trend is continued and projected targets are not achieved in attracting foreign investment, even with 10 to 12 percent investment rate the GDP growth rate will not exceed 3 percent.
Kharazmi Managers Hold Coordination Meeting
Chairman of Tehran Chamber of Commerce, Mahmoud Khansari, speaking at the coordination seminar of Kharazmi Group directors said that prior to anything else the topic of making investment abroad should be replaced with strategies for entering into international markets. Meanwhile, he added, presence in foreign markets is not possible in the absence of strong foreign diplomacy. “In the past two governments, our relations with the outside world were minimized and restoration of the management which was lost in those years is a difficult task. A major part of our academic elite have left the country or if they are here they have not been attracted by government agencies.”
He added: “For the presence of foreign investment prior to anything else we should manage our foreign policy with the required stability. I do not know a country to have developed in the absence of foreign investment. The budget for the current year has reduced to one third of 1383 (2004-2005) nevertheless we are not able to renovate our industry and bring in new technology. Therefore we have no option but to attract foreign investment.”
He referred to the real exchange rates as a prerequisite for entering international markets and said: “Currently we have kept the exchange rate low in order to preserve the value of money and 40% of our commodities still receive government subsidized currency. If this amount of investment enters into the industry our industrial units will become operational and the way to exports will open. As long as domestic bottlenecks are not solved, no further steps can be taken.”
Dr. Alireza Yektadoust was another speaker of the seminar who talked about profitability of the health industry and said according to a study by Forbes Magazine, the health industry with 22% profit margin is the most profitable industry in the world. “One of the seven rapidly growing industries in the world is the generic industry, GWP, which stood at $78.3 trillion in 2014 of which $8.1 trillion or 10.5% was spent in the health industry sector. One eighth of the figure, i.e. about $1 trillion, is spent on medicine.”
Stressing that the United States has the largest allocation of the resources to the health sector, he said Iran spends 6.7% of its GDP on health and 14% of the health resources are allocated to medicine.
Yektadoust who is the planning and strategic development manager of Taamin Medicine Investment Company further remarked that the medical market in the world will take an upward trend up to 2020 the most important reason for which is increase in consumption of brand medicine and the emerging medicine markets. However, he noted, in order to reduce the health costs, governments usually approach the generic medicine.
He said the medicine market in the country due to the rise in currency rate, increase in consumption and entry of new medicine has experienced a growth since 1391 (2012-2013). “Our health data are acceptable data which indicate a drop in mortality. The medicine industry in recent years has created outstanding value added and we have the potential to function as a hub for the Eurasian region. We are one of the largest consumer countries in the world in terms of medicine consumption. 98% of the items required by the medicine industry are produced domestically and only 2% is imported. This shows that we have not acted satisfactorily in the field of technology and medicines such as biotech and our market has still too much to do.”
Meanwhile, Dr. Hojatollah Seydi, Managing Director of Kharazmi Investment Company, speaking at the concluding session of the seminar, said: “We are a real LLP company in the private sector with the least dependence on the government changes; therefore we are considered the best partner for foreign investors. We are ready for participation with others and we have had useful talks with foreign companies as we know that foreign investment is the best option for coming out of the present difficult condition.”
Underlining the need for increasing efficiency, he said one of the main steps for accelerating development is export but it does not mean that only the volume of exports should increase, rather production targets should comply with global markets. “We should see a large image of the future and make our services ready to be supplied to the world because when we produce for the world there is no ceiling for our products.”
He concluded by saying: “We are responsible for action and implementation. We should formulate our plans for presence in the international arena today so that we can outline both our plans and achievements in the 8th conference of Kharazmi Group.”
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