Could a Middle Eastern ‘tiger’ finally start to roar?

Hikma Pharmaceutical, the Jordanian giant, has already shown its appetite for regional operations, in the process highlighting the untapped potential of the 31 million-strong Iraqi pharmaceutical market, once the largest and most sophisticated in the Arab world.

What this has demonstrated is that large, well-capitalised Middle Eastern companies are expanding with the same focus as their Western counterparts; and they are able to contemplate risky transactions with a view to long-term profit.

Observers insist this marks a striking change in the way Arab markets operate, which, until now, would aim for quick returns with little long-term vision and limited M&A scope.

Home growth

Today, companies such as Hikma or Egypt’s Epico are looking to grow within the Arab world. Investors are less risk-averse despite the chronic instability that characterises the region, and industry players have learnt to use their knowledge of volatile situations to their advantage. As one Lebanese banker puts it: “Once you know how to operate in the Middle East, anything else becomes child’s play.”

Transactions such as these have no doubt shown that Middle Eastern players are looking at Asian success stories with a view to emulating them. With plans to develop the local bourses and with private equity firms ready to launch initial public offerings in a bid to boost liquidity in often illiquid exchanges, the region is entering 2011 with fresh hopes for a recovery from both the global crisis and the infamous ‘Arab malaise’ that has crippled many regional economies.

Whether other sectors will follow suit only time will tell. But with the region setting itself new challenges and embracing exciting new projects, the year ahead could be the one that will see a Middle Eastern tiger finally make its voice heard.