State Owned Enterprises- Company Overviews

OCPA - Ministry of Industry & Minerals Note: All currency figures are in 000's of Iraqi Dinars unless otherwise noted. 1. General Information Company Name: Sector Brief Description State Companies for Drugs & Medical Supplies - Ninawa & Samarra Pharmaceutical Two Companies that were one until 2002. Manufacturers of pharmaceuticals, including tablets, syrups and oral drops. Most products are generic versions of branded drugs. Also manufactured intravenous bags and kits, but this factory was 100% destroyed in war.

Revenue in 2002 (Iraqi Dinars '000s) # of Employees Annual Employee Salaries & Bonus Headquarters Address

3,550 (2,603 in Samarraw, 947 in Ninawa) 1,920,000 (Ninawa only) Samarra: Drugs Sq. House No. 11

2. Company Highlights Samarah is Manufacturer of over 300 generic medical formulations and few Animal health products. Rich in know-how and skilled labor. Samarah facilities are old, but in good condition. Some equipment is relatively new, such as blister pack machines. Ninawa is a more modern addition but lacks good managent and know-how. Both companies are operational at a limited capacity due to electricity and raw material shortage. IV solutions factory destroyed but may be restored with $2M. Also there is an uncommissioned factory for disposable syrings. Also there is uncompleted/damaged? Vials factory. 70% of product for Ministry of Health consumption. 20% private farmacies distributed through KIMADIA-MIH. Good export potential exists. Raw material is subsidized but prices are also depressed by MOH prices structure. Samarra has equity stakes in 3 other companies in Iraq, Jordan and UAE. It is recommended that both companies will merge to share resources and opportunities. Company listed quality control laboratory to upgrade quality as most pressing need. Does not bode well for current quality standards. Sammara allocated $1.5M USD for 2H 2003 operating budget and provided with 3mw off of grid. Ninewa allocated $1.2M USD for 2H 2003 operating budget and provided with 3mw off of grid. 3. Facilities Name Province City Grid Samarra Headquarters Samarra LC9685 Ninawa Drug Factory Mosul Ninawa IV Fluid Factory Mosul Disposable syrings factory North Baghdad Glass vials factory Musayab Value of All Plant & Equipment Before War, and Current market value approc $10-20M Initial Purchase Dates and Prices for Major Items

Damage %

Power Needs

20% 100%? 20% +commissioning Unknown

Real value Good brand well trusted locally and regionally, Plenty of know-how to develop into sales. 4. Products - Ninawa only, Samarra not yet provided Product Name Unit Measurement Design Capacity Available Capacity 2002 Production 2002 Revenue Tablets Millions 1,080 810 540 Syrup 1000 Bottles 17,550 6,000 6,000 Oral Drops 1000 Bottles 9,200 1,500 1,500 IV Fluid 1000 Bags 2,835 3,600 3,600 Eye Drops 1000 Bottles 6,750 2,400 2,400 Ointments 1000 Tubes 7,200 6,000 6,000 Capsules Millions 405 180 180 Suppositories 1000 10,620 800 800 Description of Importance of Products to Other Finished products certainly needed by Iraqi population. Not clear if imports would more efficiently Iraqi Industries satisfy this demand.

5. Customers Customer Name Ministry of Health

2002 Revenue 100% of total

Subsidized (Y/N) Products Sold to Customer and Unit Pricing Unclear Prices set on a cost plus basis

6. Suppliers Supplier Name 2002 Purchases Subsidized (Y/N) Products Purchased and Unit Pricing Not imporant . All are jordanian agents new policy is to buy direct from manufacturers Current Payment Terms From Suppliers

7. Imports & Exports 2002 Import Markets for Raw Materials

Italy, India, China, Germany

Company Name: Potential Import Markets in Free Market 2002 Export Markets for Finished Products Potential Export Markets in Free Market

State Companies for Drugs & Medical Supplies - Ninawa & Samarra Same None Good Potential in Middle East and East Africa market.

8. Competition Description of Competitive Situation

Market Share Description

Company produces good quality competitive products. The company will distribute directly rather than via MIH. There will be draw back from opening the market. They may lose part of the MIH market but they should do well in the private market. Companies supplied 60% of Iraqi market, but actual demand not being met by supply. This share may drop because the MIH might be clinched by westren companies and free NGO supplies.

9. Summary of War Damage & Looting of Property & Equipment IV plant was destroyed but can be brought back to production @ $2M Description of Damage Current Operating Status Immediate Property & Equipment Needs To Restart Operations Total Cost to Return to Pre-War Condition 10. Inventory Status Raw Material Status Months of Material Supplies & Production Rate Immediate Raw Material Needs Finished Products Supply (Units and Value) 11. Fuel & Electricity Needs Description of Fuel Needs Description of Electricity Needs Both Companies operating on limited basis since May 18, 2003. Lack of raw materials is biggest issue. None IV plant @ $2M

Ninawa: Virtually out of all raw materials. Samarah: Good stock but missing critical ingredients. Samarrah: 1 month with top up will be 3-4 months. Few key items missing

Fuel oil for steam generating Samarrah currently being supplied with 4 mw from hydro-electric plant. Also have 4 x1 MW generators to supply .

12. Other Needs to Restart Working Capital Needs Security Needs Other Needs

Samah/Ninawa combined needs $5-10M working capital for raw material purchases. Secure location, no security issues MOH needs to agree to production purchases.

13. Strengths, Weaknesses, Opportunities & Threats Motivated staff and workforce, High level of know-how , Good brand, The combined facilities are Description of Strengths mostly modern though there are some old facilities as well. Technology and manufacturing facilities available to develop lucrative animal health division. Description of Weaknesses Description of Opportunities Lack of marketing skill since their products used to be marketed by the MIH. Leaving Samarah and Ninawa separate is causing fragmentation in of badly needed resources. Raising prices to a realistic level will take the company to a proftable position despite the increase in the raw material cost. Export markets can also be realistic opprtunity. Capabilities exist to undertake contract manufacturing for OTC drugs for major brands who wish to produce and market their products in the middle east. The medicine market is highly regulated market due to its dealing with controlled substances. The lack of import control may cause a serious damage to the industry as well as potential damage to health. The free medical supplies brought by the NGO's may depress the market.

Description of Threats

14. Long Term Strategy

Company Name: Description of Strategy

State Companies for Drugs & Medical Supplies - Ninawa & Samarra The companies need to be united and their marketing efforts need to be coordinated with AKAI, the Iraqi company in which they hold stake. The stake will need to be made a controlling state in the near future. The company should expand its presence in the I.V. solution market as well as the disposable syring market where it has factories for both. The medical cotton products (wound dresssing) may be brought in the fold after separating it from the State Co. for Cotton industries. The company should consider setting up joint ventures for suppling upstream material such as packaging for which represent high cost imported items. A full range of cancer drugs. Animal health drugs. Local investors exist who are intrested in entering into partnerships for the manufacturing of upstream input. Some NGO's are intrested in contract manufacturing of a number of drugs for Iraq. Iraqi Marketing companies negotiating the marketing of OTC drugs and vitamins are intrested in contract the manufacturing to Samarah.

Potential New Products Potential Partnership Opportunities

15. Revenue and Costs Overview Description of How Pricing Was Set

On a cost-plus 30% basis, leaving the company running on a low profit margin and no proper depreciation and reinvestment programme. The products are sold to KIMADIA-MIH who supply some products to the hospital and set the final prices to the pharmacies. Prices normally at less than 30-40% of the prices of imported drugs. This allows the pharmacies to mark up the product to much higher level and earn substantial margins. Most cost come from the imported raw materials and packaging. The company should buy directly from manufacturers which will save substantial costs. Sourcing packaging through local joint ventures should also help reduce costs. Labor costs still modest. Marketing costs will increase in the forthcoming period. Medicine is highly specialized market and commands high margins. The company has many technologies under its belt to keep supplying highly profitable products without incuring high R&D cost.

Description of Production Costs

Potential for Profitability in Free Market