NAOUFAL LAHLOU

Morocco 2020/21 | HEALTH & EDUCATION | VIP INTERVIEW

TBY talks to Naoufal Lahlou, General Manager of Promamec, about 40 years of company operations, the critical importance of innovation, and targeting other countries in Africa.

Why was Promamec founded and what is the status of the company today?

The company was established in 1981 by my father after he identified a big market gap in the healthcare sector. The company started with only three people and has grown to almost 300 people after 40 years, generating MAD450 million in revenue last year.

Who are your main stakeholders, and do you have any international expansion plans?

Two of our main focuses are exports and the international development of the business. We currently generate 5-10% of our revenue through exports. Before, we simply worked with a few companies that requested a certain product from us, but one year ago we decided to hire an export manager to take care of our expansion. We are exploring business opportunities in many sub-Saharan countries. Another part of our vision is the development of the Promamec brand. Johnson & Johnson is one of our oldest partners; for years, we have been recognized and identified as distributors of brands such as 3M, Konica Minolta, and Baxter, among others. At present, we are striving to develop the Promamec brand as a real value-added partner and not only as a distributor of these brands.

How important is innovation to the company's success?

Our mission is to improve the access and quality of healthcare provided to all our patients and citizens. Innovation is definitely a big part of it, and we use innovation to add value to our devices; this differentiates us in the market. Our partners use this to maintain their leading position in all of their fields as well. All our partners are innovative companies with whom we share and discuss new technologies and techniques on an annual basis. Our marketing department has a medical division with many specialized doctors that enable us to promote these innovations and build a bridge between what the manufacturers are doing in their countries around the world and what we are doing in Morocco. Our medical division gets in touch with our partners to get all the data and then adapt it to the local market.

What is your opinion of the challenges in the Moroccan healthcare sector, and what barriers or opportunities do you see?

One of the main challenges in Morocco are unexpected changes that can affect our business plans and activities. Such changes force us to postpone some strategic decisions and projects. We have no other choice unfortunately than to adapt and wait until the dust settles. Fortunately, we do not start over from scratch, as there are always people in charge willing to push relevant and strategic projects. This also depends on the overall economy. Since Morocco's economy depends heavily on agriculture, the economy fluctuates on a yearly basis. Due to the type of projects we work on, this can be a challenge for us sometimes. We are starting to discuss with the Ministry of Industry and Commerce and also with the Healthcare Ministry to find a solution for this and incentivize the local manufacturers. This can be a real game changer and turning point in terms of the development of the local medical devices industry. In the private sector, one of the main challenges is payment terms. It is harming our working capital and for a long time it has slowed down our growth. We always keep around USD10 million worth of stock for our customers' needs. This figure is part of our working capital, which is key to any company's development. Notably, in 2018, we started hosting a private equity company called Africa Invest, which injected money in our capital and helped us accelerate the growth of the company. We now have the capital to catch a number of opportunities that we could not seize before due to less working capital.

What are your goals and objectives for 2020?

Our major focus in 2020 will be exports to Africa. We have spent one year exploring opportunities across the continent. There are plenty of opportunities but the majority of them are hard to capture. The key to being successful in African countries is being patient and working hard to find the right networks to build a sustainable business. The potential profit in African markets is in direct correlation with the risks and challenges attached. Our human capital is our real differentiation factor; our export team is able to overcome these challenges and realize the opportunities on offer.

Which countries in Africa are you targeting?

Ivory Coast, Senegal, and Gabon and surrounding countries like Mali, Mauritania, and Chad, where we have already participated in some tenders. We have had some opportunities in Ghana as well. We are closely following the opportunities we identified over the past 12 months.