Wednesday, February 29, 2012

A cure-all solution

Exceptional magazine, Jan-June 2012, Ernst & Young

Eleven years after leaving the US to launch a pharmacy chain in Jordan, Dr. Amjad Aryan has overcome financial and regulatory challenges to build a market-leading company with the potential to expand in the Middle East and beyond.

Dr. Amjad Aryan has always believed in being a big fish in a small pond. After spending five years working with his father at the helm of a small pharmacy chain in Florida, US, he realized that the business was never going to be a major player in the saturated local market. Rather than accept a safe wage and a small market share in Miami, he returned to his native Jordan in 2003 to establish his own business, Pharmacy1.

“Knowing that we weren’t going to be one of the big boys in the US, I started in Jordan and have become the big boy here,” says Aryan. “We now hope to become a major player in the Middle East.”

The journey from start-up to market leader took time and determination. The first challenge Aryan faced was how to finance the business — no mean feat in a country in which all retail pharmacies were small, non-bankable operations under the control of Jordan’s powerful pharmacists’ guild.

Although the country’s Ministry of Health had passed a law in 2000 that permitted the establishment of pharmacy chains, the guild strongly discouraged any changes, such as the introduction of retail chains or heightened competition.

“When I first came to Jordan, no banks would lend to us,” recalls Aryan. “I had to finance Pharmacy1 myself for the first five years, until a local banker called me and said he believed in the company’s future.”

The timing was fortuitous: in 2006, Jordan amended its law on the manufacture and sale of drugs, weakening the grip of the pharmacists’ guild and opening up the market. This, together with the additional financial support, enabled Aryan to take his business to the next stage. Today, Pharmacy1 is Jordan’s leading pharmacy chain, with 53 domestic outlets and revenue growth of more than 120% since 2009.

The human touch

Aryan puts much of his success down to his extensive experience in the pharmaceutical sector. After studying pharmacy in Boston, he spent time doing work experience at his family’s pharmacy, followed by a stint at a leading American pharmacy chain. He learned useful lessons in the US, particularly in terms of how not to treat customers. “The US has lost the edge on customer service,” he says.

“Pharmacists are so busy with doctors’ prescriptions that ou wait half an hour to ask a question, and even then it’s like speaking to a machine.”

Aryan’s commitment to customer service has made Pharmacy1 stand out. “We aim to greet the customer in 30 seconds and to get out from behind the counter to help them, rather than saying ‘go to aisle 2B or 3C,’” he explains. “You can go into a branch of Pharmacy1 and speak to a human.”

Convenience is also the key principle behind the layout of the branches, which resemble supermarkets and have separate areas for retail products and prescriptions. Aryan has taken an unusual approach to the location of the branches, choosing not to open them close to hospitals or clinics. “My idea is that people will go out of their way for good service,” he explains.

Recruitment drive

By offering better-than-average salaries and the prospect of moving up the career ladder, Aryan has encouraged a large number of expatriate Jordanians, many of whom had been working in the pharmaceutical sector in the US or elsewhere, to return to their home country and work for Pharmacy1.

This has helped to keep employees in the company and reverse the “brain drain” phenomenon, providing a strong incentive for young pharmacists to remain in Jordan. Aryan has also sought to attract more women to the pharmaceutical profession. Out of the 1,000 pharmacists who graduate every year in Jordan, 70% are women, but faced with a lack of opportunities locally, many of them end up “with just a certificate on the wall.” At Pharmacy1, however, 75% of the 296 pharmacists are women — a figure that is significantly higher than the national average of 15% female employees per company.

“My dream is to reposition the pharmacist as a health professional instead of a merchant,” he says. The company therefore works closely with local universities to attract talented young pharmacists to the team and has established “simulation pharmacies” for training purposes. Today, almost 90% of Pharmacy1‘s 570 team members are in their late 20s. Through this rigorous approach to education,

Aryan hopes to change the way pharmacists are perceived. Pharmacy1’s business model reflects Aryan’s respect for the profession and the ethical concerns that go along with this. He chooses not to have sales targets for certain products and is reluctant to turn the chain into a franchise. “My fear is that a bad franchise could affect the whole company,” he says. “I want continual improvement and I want to ensure consistency.” This hands-on approach to the business is one of the reasons why Aryan has decided against listing the company, despite having plenty of opportunities to do so. “I enjoy operating the business and I want to watch it grow,” he says. “You might cut costs to increase the bottom line and satisfy shareholders, but that is short-term thinking. Pharmacy1 is all about looking for long-term growth.”

International expansion is therefore crucial. Aryan has already opened six pharmacies in Saudi Arabia and one in Iraq, and is aiming to have 100 pharmacies in Saudi Arabia by 2014. The next step is to move into countries such as Lebanon and Egypt, but this will depend on a change in Middle Eastern regulations.

Meanwhile, with the European Union about to change its laws on chains, Aryan is not ruling out the possibility of making Pharmacy1 one of the “big boys” in Europe as well. “Knowing how pharmacies are managed in the US and here, we could have the edge in Europe,” he says. “We have the know-how in specialized health care retail, and that gives us huge potential.”

If the results Aryan has achieved in the Middle East are anything to go by, Pharmacy1 could soon become an international success.

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