Safwan Trading: Strategy and Vision for Pharmaceuticals

Interview with Muhammed H. M. Al-Ali, Vice Chairman and CEO of Safwan Trading and Contracting

First of all tell us about Safwan, about your strategy and how you would like to achieve market leadership?

Safwan is a trading contracting company. Our objective is to enter the health sector with big agencies which we represent. Our goal is to expand our business to the maximum. We have strategies, goals and targets to be achieved and to be delivered. So far, the past four years have been successful years for us and we will keep growing and expanding in that sector.

What are the strategies that you want to utilise in order to become the leader?

We are attracting bigger companies in the health sector which we can add to our portfolios so we can expand in the medical, laboratory and pharmaceutical industries as well. We have other branches in Baghdad, Iraq and Erbil where we are operating and we are hosting some agencies and attracting more businesses.

We are trying to have more of the market share with the Iraqi government as well as the private sector. In Kuwait our strategy is to expand within the private sector because it’s promising since the insurance business is growing in the Kuwaiti market. Therefore, we are trying to take more of the market and we are participating in big tenders to upgrade governmental hospitals. We’re trying to have part share of upgrading them.

What is your vision for the company, where would you like to take it under your leadership?

Safwan is a promising, medium-sized medical company – we are trying to be the top. We are number two in the pharmaceutical industry, and we are trying to grow to become number one, to have more market share and to expand into other fields of medical and laboratory work. My vision is to increase the market share, the sales and profitability of Safwan to the maximum.

Is it listed on the stock exchange?

It’s listed, it’s on the market. It’s been trading since 2007 and it’s very healthy. The prices reflect the operation. It’s a 100% operational company in the same medical field.

Now how difficult is it to do business in Kuwait?

The competition is high in Kuwait. The competition is extremely high and we are trying to be different with the quality of services, the quality of people, the quality of market attendance and market share as well.

What are some of the main challenges that you are facing?

The price competition. Other competitors price below cost or at cost so they are counting on maintenance contracts, spare parts, accessories and reagents or consumables. It is a very competitive market and we are competing with them on services and after sale services.

What would you say is your main point of differentiation – how can you compete to have better customer service, better branding? Where can you really compete with your competition to be number one?

We’re coming in with a Japanese company for example Shimadzu which has a mobile x-ray. It’s a new technology on the market, for our market, where the patient stays in his room and they bring the x-ray machine to him instead of the patient going to the x-ray room. This is new technology. We successfully entered the market after three years of persuading doctors at the hospitals. Now we are getting a few orders so we can enter the market with it. This is new technology, a new invention and it will be a big success in the next two years.

So you are trying to come up with innovation?

Innovations and new agencies or new products which no one has or which are new to the market – to our market.

You need a year at least to educate the market, the doctors. We have to hold workshops or training for them, send them to the factory or to Japan. We sent a few doctors to learn and understand how these mobile x-ray machines work. I believe we will have a big success in this area.

What about the pharmaceutical field and supplies?

Pharmaceuticals it’s a growing business, the population is growing. We are getting more of the market share in all our brands on the market. The private and pharmaceutical sectors are growing as well because of insurance. As I said before, people are increasingly going to private hospitals to get treated and more pharmaceuticals and products have been prescribed for patients through their insurance, so that sector is growing as well. So in the future, I think the government will go for privatisation or give senior citizens the privilege to be treated in private hospitals. This will give us an increased percentage in the market share.

So can you tell us how much the sector is growing by and what are the potential returns on equity, investment and profitability in this particular sector?

I think it will reflect between 15% and 20% over the next three years.

We are also asking everybody if they are worried about the recent drop in the price of oil. Do you think it will impact the business environment in Kuwait?

I think the government has a stable budget for the health sector and I don’t think that it will affect much more really, but I think it will be stabilised.

What is your final vision for the company or the message of the Safwan brand? In three years time, what do you want to have achieved by then?

I would like to be number one in the market. My goals are to increase our sales in both markets, in Kuwait and Iraq, and my vision, our objective and our targets will work accordingly to double our sales in the next three years.

What about the brands?

With the brands, we are trying to negotiate and attract other agencies to our portfolio so we can have more sales and a greater market share. I can see it’s doable and achievable. At Safwan, we are pioneers and leaders in the market and we will maintain this reputation. Our goal is to be number one and to be leaders.

Why pioneers?

We are pioneers in the pharmaceutical industry.

Do you want to tell us the story?

We have life-saving products, life-saving medicines and we are present in every hospital, every clinic and every pharmacy and we are growing from that. Our mother company has a chain of pharmacies and we are present in their pharmacies and at every medical health point. In every hospital, clinic you name it we are there. We are trying to have more shares everywhere in the private and governmental sector.

What is your current market share?

In pharmaceutical our market share has reached 18%.

Is contracting something you want to focus on in the future?

No, the name of the licence is not trading and contracting. The licence means I can practise all kinds of business related to the medical and pharmaceutical industries. This is only the licence, it’s not industrial, it’s general trading and contracting and we are participating in many future projects to upgrade government hospitals so this will give us potential to grow. Of course we cover the KOC, the National Guard and the MOD, the Ministry of Defence, trying to get more contracts and more business with them.

With respect to… could you tell us more about this activity?

At KOC – Kuwait Oil Company – they have a professional hospital and they have field hospitals to cover oil wells and oil rigs. They provide their patients with the best equipment and the best pharmaceutical products. We are trying to make and sign a lot of contracts with them, convincing them to buy expensive, accurate equipment so they become market leaders.

How is your international strategy going?

We work in both markets, in two markets, locally in Kuwait and in Iraq. In Iraq over the past three years we have grown- tripled since we took over Safwan.

Our main objective is to have a 20% increase for 2015, the up and coming year, to have an increased market share and of course more sales.

In Erbil, we also have new warehouses, we have invested in new warehouses and new offices and we are attracting more agencies there. It’s a promising market. It has a population of 35 million.

To finalise, can you just describe why you could be the best here in Kuwait or in Iraq or the region for this very famous, international brand?

We have a good computer system, JD Edwards, which operates sales, warehousing, and logistics with multinational companies. The communication is perfect. We are honouring and hosting all the multinational contracts and tenders in an efficient manner and we deliver on time or early. We’re committed to that and we are very confident and assured of the levelling, hosting and servicing of our customers. That’s a promise from us to the market.