During May, Integrated Diagnostics Holdings (IDH) – the Company, IDHC on the London Stock Exchange – a leading consumer healthcare company with operations in Egypt, Jordan, Sudan, and Nigeria, announced that it had listed 30 million shares on the EGX to be the first listed company to do a dual listing of ordinary shares on the EGX’s main market.
The action came few days after the call by the Egyptian Immigration Minister that urged the Egyptian expats to trade on the listed companies on the EGX and to tap the securities investment ground as a bid to spur investment climate in Egypt.
The listing was the first for the company in the EGX.
In an exclusive interview, Ahram Online discussed with IDH’s CEO Hend El-Sherbini what the action means for the company and for Egypt's market.
She also covered the company’s future plans in Egypt.
El-Sherbini unveiled that IDH eyes value accretive acquisitions in African and Middle Eastern markets where its business model is well suited to capitalise on similar healthcare and consumer trends as well as capture significant shares of fragmented markets.
Ahram Online: How does IDH see the Egyptian market among others in the region?
Hend El-Sherbini: There are compelling structural growth drivers in the Egyptian market that we have seen. These include a large, rapidly growing population and growing health consciousness among the patient populations we serve. The medical sector in Egypt is very fragmented. Patients and customers drive the market in terms of quality and choose their service provider based on where they receive the best care.
Our presence in Egypt has allowed us to raise the bar in terms of quality. Our competitive edge stems from our unwavering commitment to quality and the provision of best-in-class diagnostic services. We have obtained the College of American Pathologists (CAP) accreditation in 2010 and are currently the sole operator of a CAP-accredited facility in Egypt.
In terms of behaviour and mindset, Egypt has invested in creating a culture shift towards preventative medicine. Raising awareness is a critical part of that and IDH is playing its part. Presidential initiatives, such as the '100 Million Healthy Lives' campaign, have also encouraged more testing, particularly for Hepatitis C and diabetes. The IDH has carried out over four million tests. This was done across the country through our network of over 430 branches in Egypt, where we operate under the brands: Al-Borg Laboratories and Al-Mokhtabar along with Al-Borg Scan.
In addition to services, I believe Egypt is rich in qualified human resources. Our management team combines several decades of healthcare experience and our board of directors is composed of healthcare and finance experts with knowledge around the region.
AO: Was the company’s performance and revenues affected by the COVID-19 crisis, especially in Egypt?
HS: 2020/21 has been an eventful year for IDH. Despite the exceptional difficulties it faced at the start of the pandemic in 2020 with the country being in lockdown and several branches operating under shorter hours, IDH leveraged its flexible business model and adaptive service offering to deliver strong growth and robust profitability. We have achieved excellent results and shown a strong performance during FY2020; with recorded revenues of about EGP 2.7 billion - equivalent to an increase of about 19 percent compared to FY2019. We have also recorded profits of EGP 609 million - equivalent to an increase of 21 percent, while the net profit margin reached 23 percent.
IDH has also served over 7.1 million patients in 2020 and performed more than 27.1 million tests across our regional network of over 480 branches in Egypt, Nigeria, Sudan and Jordan. In Egypt we have expanded our network, adding up to 35 new branches during the year.
AO: How do you assess the actions and policies Egypt has been adopting to protect its economy and navigate the crisis?
HS: The Egyptian government’s goal to address the current crisis and place Egypt on a strong footing for economic recovery is clear. Since the beginning of the COVID-19 outbreak globally, many decisions have been taken to protect Egyptian citizens and to achieve the highest safety levels for them in a way that does not conflict with providing all the necessities of their daily life and firmly dealing with this crisis to reduce the spread of the virus.
The performance of the Egyptian economy considering the coronavirus pandemic exceeded expectations, according to the testimony of international institutions and credit rating institutions, including the International Monetary Fund; the World Bank; Golden Man Sachs; Standard & Poor's; Moody's, and Fitch
AO: From your perspective, what sort of procedures does Egypt need to take to catalyse the private sector and to unleash its role in the country’s development and economy?
HS: Egypt’s government and leadership’s vision along with its directives have dictated synergy between the public, private and civil society sectors and that is evident in the number of projects and developments that are in terms of infrastructure, healthcare and manufacturing in recent years.
Egypt's economic reform plan within the framework of Egypt’s Vision 2030 has also proven successful, with the first phase demonstrating economic resilience. The second phase is expected to help Egypt recover from the repercussions of the pandemic, through private sector-led development efforts.
AO: How do you see the recent initiative on the EGX launched by the Minister of Immigration along with EGX in boosting Egypt’s stock market during the present?
HS: The recent initiative, launched by the EGX in cooperation with the Ministry of Immigration and Egyptian Expatriates Affairs, will see great benefits for us and other local brand names in boosting performance. This initiative helps spread the culture of saving and investment through the Egyptian capital market, while raising awareness for the fundamentals of investing, therefore encouraging Egyptian’s abroad to benefit from the Egyptian economic development, and helps them invest in their home country.
With this initiative, the Egyptian Stock Market adds another layer of attractiveness to international and local business, considering listing as it brings access to a different investor base across different markets.
AO: How is the new finance secured through the IFC expected to boost healthcare services in Egypt, particularly via IDH?
HS: IDH holds the largest market share in Egypt in terms of private sector diagnostics and we place customer healthcare at the top of our priorities. Our competitive advantage comes from our strict commitment to quality and the provision of the best medical diagnostic as well as analysis services in all its forms.
The IFC has stringent policies when providing finance and IDH’s strong strategy for growth and solid financial position, gave us an advantage in securing the financing. Through this new debt financing agreement, we are once again reinforcing our commitment to the healthcare sector across emerging markets, delivering on our shared strategy and aligned ESG goals to provide communities with the tools they need to better their lives.
Our multi-pronged approach to sustainable growth revolves around the strategic expansion of our branch network to improve accessibility and reach new segments of the population, where we, on average, add 30 to 35 new branches yearly.
The $45 million debt financing package will allow IDH to expand healthcare accessibility by growing its regional footprint through potential acquisitions, as well as expanding our current medical service offering, geographical reach and digital offering. All to ensure that we provide access to as many patients as possible.
Additionally, this new agreement further strengthens our existing long-term strategic cooperation that began with our co-investment in Nigeria, where we have jointly deployed millions of dollars to bring best-in-class medical diagnostic practices and technology to Africa’s most populous country.
AO: What are IDH’s future plans for the Egyptian market?
HS: Currently, at the top of our priorities is implementing our four-pronged growth strategy that focuses on expanding customer reach beyond opening laboratories in new geographies, in addition to reaching out to new customers with focused tactical marketing activities as well as new customer services.
In addition to organic expansion, we continue to seek value accretive acquisitions in African and Middle Eastern markets where the business model is well suited to capitalise on similar healthcare and consumer trends and capture a significant share of fragmented markets. While opening more branches will add both patients and tests, our strategy also looks at increasing tests per patients. This means that we will further diversify the test portfolio in combination with compelling offerings of promotionally-priced test packages which will drive the key financial metric of number of tests per patient.
The Group also looks to add diagnostic and medical services not currently provided on a large scale, believing its scale and experience position it well to take advantage of developing services opportunities that would raise the IDH profile to that of a one-stop-shop provider.