With plans in the pipeline that include a range of own-brand over the counter medication and toiletries, as well as Jordan’s first drive-through pharmacy, Amjad Aryan has big ambitions for his fast expanding chain.
By Dina al Wakeel
Amjad Aryan founded his first branch of Pharmacy 1 in Amman back in 2001. The chain has since spread to 70 locations nationwide which serve more than 6.5 million customers.
Aryan’s business model, which was inspired by all-conquering chains like CVS in the United States and Boots in the UK, has proved a big hit with Jordanians long used to mom-and-pop style pharmacies with their far smaller range of products and services.
Pharmacy 1 has grown tremendously over the past few years. How has this been achieved?
We are not the largest in the number of branches but we are number one in sales and number of customers. The company owns all the pharmacies. We don’t franchise in Jordan but we do outside Jordan, like in Irbil and Sulaymaniyah, and we expect to sign a franchise in Qatar soon, with Sudan coming next. We also have an opportunity in Greece and the rest of Iraq. That differentiates us from others; we don’t give our name because by giving your name to other pharmacies you might jeopardize your ability to maintain consistency in the way you operate, even though we have a quality control department and mystery shoppers. We also moved our headquarters to a new building; after 15 years this is the first real estate owned by Pharmacy 1.
What makes you different from the competition?
I think it’s the human element. The pharmacy and the way it looks can bring in a patient once, but what keeps them coming is the person behind the counter. We are also trying to add new services. During the last five years we connected all our branches together, a patient’s profile can be retrieved from any of the Pharmacy 1 branches. We also introduced sign language for the deaf, and we are launching braille language for the blind.
Our drug information center is now also a poison control center that is linked to 911. On a business level we have become more automated and more digital. Today, we have total balance scorecards live showing us exactly what goes on in all our branches which helps me know how well we are performing and if there are any weaknesses that we need to address. We managed to quantify all our key performance indicators into numbers. We will have the first drive-through pharmacy opening soon. It’s going to be a green building that uses solar energy.
Medicine prices are fixed by the government. So how are you achieving your rapid growth?
Nobody can compete based on prices because there will always be someone who can offer lower prices. It’s customer experience and availability—that’s how we sell more. Profit margins for a pharmacy are set at 20.5 percent, with bonus it reaches 24 to 25 percent. This law was put in place in 1972 and it was never changed. I think so as not to burden the citizen we should cancel sales tax on medicine, which is 4 percent, and give half of that to the pharmacist. On the other hand, to be fair, the price of medication has increased since 1972. I think there is still a healthy market and I think there is still much we can do.
What are some of the main challenges you face owning a pharmacy chain and continuing to scale?
To date the biggest challenge is the Jordan Pharmacists Association, which is made up of colleagues of ours in the market and some of them are also our competitors. Whoever is in that post they will be biased. So they are our biggest challenge probably because every new service we would want to introduce they would try to block. I had to fight an uphill battle for the drive-through pharmacy. They did not want it, even though it can help the disabled, it can help a mother with children in the car, and it’s convenient.
We also introduced loyalty cards, and they got us to stop adding medicine because the law is very elastic. It stipulates that you are not allowed to use any direct or indirect measure to attract customers, although the sign we use is a method to attract customers, and so is the logo. I think the law is outdated.
Do you blame smaller pharmacies for holding a grudge against Pharmacy 1 which is squeezing them out of the market?
One needs to be creative and think how they can fight big fish. Instead of focusing on things that we can do and they cannot do, they need to focus on things they can do and we cannot. We cannot for example be a neighborhood pharmacy where we take the phone number of every patient that comes in and check on them after 24 hours. This is a niche that we cannot do because of the number of patients we have. I can tell you of so many pharmacies that have their own loyal customers and that won’t be affected no matter how many pharmacies we opened because they can offer them something we cannot offer.
Do you think there are too many pharmacies around Amman’s neighborhoods and do you support the law which states pharmacies must be located 200-meters apart?
In Jordan we have an open market economy and they introduced that to control competition, even though we have anti-monopoly and anti-competition laws.
It used to be 40 meters, then 100 meters, and now it’s 200 meters radius. I don’t know where the magic number of 200 meters came from. I disagree with that distance and I believe that competition can create better service and the ones to benefit are the customers.
Big pharmacy chains like Boots have their own product lines. Will you ever give this a try?
We’ve been working on this for the last two years and it’s very challenging. We’ve decided at the beginning to do it with local manufacturers. We have about 18 pharmaceutical companies in Jordan, so why not manufacture paracetamol for Pharmacy 1? The law stipulates that [a medicine can only be branded under the name of its manufacturer]. So it forced us to go to pharmaceutical companies outside Jordan that don’t sell here. We are now in the process of producing 120 different brands of pharmacy 1 brands of OTC items, including vitamins and paracetamol. These will be Pharmacy 1 products but will not carry the same name for liability reasons. What we can manufacture in Jordan are products like cotton buds and tissues.
You also have a supermarket chain called Jiwar. Are you applying the same business model and are there any plans to link it to Pharmacy 1?
I’m the chairman—I own about 27 percent of it—and I have partners. It’s the same business model more or less. We have five supermarkets and it’s one-and-a-half years old. For Jiwar, the plan is to grow faster than Pharmacy 1.
What I would love to do in the future is to link Pharmacy 1 with Jiwar, whereby customers can go in to buy groceries and medicines.
What are your future plans for Pharmacy 1?
As long as there’s an opportunity for us to grow we will grow, there is no set limit. Today we own 70 pharmacies out of 2,450 pharmacies nationwide, so we are at around 2 percent. We will grow according to market opportunity, not according to an imprinted number in my brain. Last year was a flat year, I think we had 1.5 percent growth, prices of medication went down, but we made up for that by increasing the number of customers. With existing branches we usually have 4 to 5 percent growth, with the new branches that jumps to 17-20 percent. Last year we opened only a few new branches towards the end of the year so they did not count much for growth. This year it’s been better than last year, the first quarter was stronger. What I would really love to do and this will be done before the end of this year is to give to Pharmacy 1 team members 10 percent of the company and I’m seriously working with lawyers to achieve this.