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.

Tuesday, February 14, 2012

Dilapidation and deficit - Lebanon

More effective reforms needed to ease pressure on Beirut

Commentary - Executive magazine

My fiancé and I recently decided that we’d had enough — the grinding traffic gridlocks, the high-and-rising rent, the ever present noise of construction and the near complete lack of public green space in Beirut were daily agitations we could no longer bear. Our move — to a house with a large garden and mountain views 10 kilometers above Jbeil — was possible, we reasoned, given that we are both able to work remotely, via the Internet.

That was the theory anyway. In reality the infrastructure in our area provided for no functioning Internet network, and so we had to purchase an illegal, snail-speed connection. The other shock was regarding electricity, with power cuts vastly more pervasive than in Beirut, meaning we had to shell out for a UPS system for uninterrupted power — a viable solution but with obvious annoyances. All this made us tangibly aware that while the current government has spoken a great deal about reform — and indeed some progress has been made in the telecommunications sector — Lebanon still has a long way to go. Phone costs here are still among the highest in the world, and while Internet connectivity and pricing has improved — albeit not nearly as much as was promised by the telecommunications minister in October — for much of the country Internet speeds have gone from a snail’s pace to the velocity of a snail after a few energy drinks. Cheap telecommunications and fast Internet are economic essentials in this so-called ‘global village’ we live; when dealings with the rest of the world are fast and efficient, business is invariably stimulated. Jobs are already being created in call centers and related services that tap Lebanon’s skilled and multi-lingual labor force. Better telecommunications would also relieve some of the strain on Beirut as, in principle, more people would be able to work from home or at businesses outside the capital. As it stands, my own move to the countryside will have to be part-time — today’s journalists require high-speed Internet, and for that I will be forced to keep my office in the city and become another commuter clogging Beirut’s traffic arteries.

Successive governments have pledged to promote more equitable development throughout Lebanon, which would require investment in public infrastructure such as telecommunications, electricity, roads and so forth. This investment has not materialized, with the consequence for the northern regions being unemployment by far the highest in the nation, while constituting 46 percent of the poor in the country according to the United Nations. The lack of viable growth areas outside the capital has also concentrated the country’s economic expansion in and around the capital, with 400,000-odd vehicles entering the capital everyday according to air quality researchers, gardens being paved over for car parks, and open spaces disappearing under new tower blocks, among other stressors that have reached such a pitch in recent years that the city is becoming unlivable. Aside from killing productivity and fraying nerves, the increased traffic is also destroying people’s health: recent studies have shown that Beirutis are at high risk of almost constantly inhaling hazardous particulates, mostly from cars. Further statistics highlight the rampant urbanization: some 80 percent of Lebanese live in urban areas and there are an estimated 18,000 people per square kilometer in some areas of Beirut such as Nabaa and Dahyeh— an urban density higher than that of Shanghai or Beijing.

It is apparent that our policy makers are quickly losing the luxury of inaction on public service reforms — the infrastructure that is meant to prop up the country is teetering under dilapidation and deficit, placing pressure on Beirut that has become unsustainable.

Despite the inconveniences my fiancé and I have faced since leaving the city, the move could not have been more timely. The five-story building that collapsed in Beirut’s Fassouh district last month, killing 27 people, was the building my fiancé had lived in until just two weeks prior to the tragedy. If we had not moved when we had… well, I would rather not contemplate that possibility. Preliminary investigations indicate the building’s decrepit structure gave way after sustained heavy rains — a grim reminder of how, when neglected, eroding foundations eventually crumble.

PAUL COCHRANE is the Middle East correspondent for International News Services