'Hamdard Laboratories eyes herbal exports market' an interview with Usama Qureshi, CEO Hamdard Laboratories

Usama Qureshi has over 18 years of experience in general management, stakeholders' management, marketing and business turnaround. His last assignment, before joining Hamdard Laboratories as its MD and CEO, was at K-Electric as its Chief Marketing & Communication Officer and Chief of Staff. Prior to that, Usama worked at the Pakistan State Oil, looking after the 'fuel cards' finance and operations unit. He is also the co-founder and Director of Oasis Energy Limited, a Dubai (DIFC) based holistic solution provider of power generation, transmission and distribution of electricity. Usama is also a member of the Federation of Pakistan Chamber of Commerce & Industry, serving as Chairman, Standing Committee on Energy. He is also a Director at Pakistan-UK and Pakistan-UAE Business Councils.
In this interview with BR Research, Usama talks about his plans to turnaround Hamdard Laboratories into a modern 21st century brand, the new products in the pipeline and his plans to tap the growing herbal export market. Below are selected excerpts from that meeting.
BR Research: What sets Hamdard apart from its competitors?
Usama Qureshi: Hamdard carries a very strong association of trust with the consumer, with an aura of affection and kindness around it. Hamdard's USP is its brand heritage, quality, trust, and its vast range of products. It is a pioneer and expert in Herbal and Unani products. Many multinationals and other big brands struggle with trust but Hamdard is a brand that people believe in.
Our business model, in the form of being a waqf, supports that belief. Whatever we make, most of it is dedicated to charities for education and health through the Hamdard Foundation Pakistan. We follow the ideology of Shaheed Hakim Muhammad Said: "Love Pakistan - Build Pakistan".
BRR: How much is the annual revenue of Hamdard Laboratories Pakistan?
UQ: We posted our company's highest-ever sales in the last financial year with gross top-line crossing Rs 9 billion.
BRR: What are the main divisions and products of Hamdard?
UQ: We have vast categories of products that envelop personal care, oral care, health care, refreshments, and specialized healthcare medications. Hamdard Laboratories have two divisions: pharma division and FMCG. The FMCG division is the bigger one because of Rooh Afza, which has been around for 110 years.
We have around 500 products. There are about 10 products in the FMCG sector; 20 products are sold over-the-counter (OTC) and the rest are medicines. We are thinking to rationalise those products under the pharma division. Our star products include Naunehal, Gripe Water, Hamdard Honey, Hamdard Joshanda, Hamdard Ghutti, Safi, Saduri, Somina, Ispaghol, Carmina, etc.
BRR: Rooh Afza has a long history in the market. What is its current market share?
UQ: We are the market leaders in this category. In the very early days, the first big sale of Rooh Afza were a total of 24 bottles in a day; that was Hakeem Mohammed Said sahib's big day to make such a huge sale. Today, the concentrated syrup market is around 70-80 million bottles a year and as per last year's stats by Euromonitor, we enjoy 60 percent of the market for concentrated beverages. Rooh Afza and red syrup are synonymous; it's only now that there are so many other red colored drinks.
BRR: What was the biggest challenge that you faced when you took charge of Hamdard?
UQ: There were and are many challenges. However, the biggest problem, as per our marketing research, was that Hamdard was perceived to be old-fashioned and conservative brand. Indeed, Hamdard had not upgraded itself, so it is considered to be un-progressive. I have been given this task by our Chairperson Mrs. Sadia Rashid to modernize the organization by improving in every way possible and to bring closeness between brand image and consumer image.
We carried out re-branding of Hamdard in January 2018. This re-branding has not only re-emphasized our traditional strength and core values, prestige, reputation and credibility in the market but it is also reflecting our new capabilities and our newfound aggression.
We have changed, and improved packaging of our products, and we have started targeting the youth, which is over 50 percent of our population, through marketing and communication. We are also aiming to promote and come out better in the efficient, vibrant and innovative marketplace.
I want Hamdard to be seen as a brand that moves with time, that is flexible, lively and youthful, and that is mature yet friendly and approachable. Alhamdulillah, we are on the right track now and accelerating towards excellence, delivering value with a promise to generations to come for better days ahead.
BRR: You mentioned efficiency and innovation. What kind of research and development (R&D) is taking place at Hamdard Laboratories?
UQ: Since there was no research work happening at Hamdard Laboratories, we established an R&D department for the first time to address this issue. I understand that R&D is not an easy task in pharmaceutical or any system of medication. R&D has to go through a system of multiple processes and various steps for new pharmaceutical product development, as per international standard. We are currently working on products related to blood pressure, cholesterol, diabetes, etc. and also on some of the new diseases, in coordination and support of Hamdard University's research departments.
We have noticed that medicines' usage needs to be simplified, by changing from liquid to semi solids, to attain comfortable usage and increased customer satisfaction. That is the also one of the tasks that our R&D wing is undertaking, along with improving the efficacy of our products. The R&D wing at Hamdard is being headed by the ex-vice chancellor of Hamdard University and a close associate of our Founding Chairman Hakim Mohammed Said sahab.
BRR: Where do you find the human resource for the R&D department?
UQ: Hamdard is the pioneer of Eastern Medicine in Pakistan. Twenty-four years ago, Hamdard had established the Eastern Medicine College that offers a four-year degree called BEMs. Every year, there are about 50-60 graduates. Since its inception 24 years ago, many other universities have started to teach eastern medicines. Our R&D department is staffed by those who have studied eastern medicines. We are also in close collaboration with Chinese herbal institution as they are doing very well in research on herbal medicines.
BRR: When was the last time a new product was launched, and what new products are you currently working on?
UQ: In the last five years, we launched four new products. Two of these medicines are for stomach and the other two are for cholesterol.
Currently, we are working on ready-to-drink options. Furthermore, we are working on Rooh Afza mocktails for category enhancements. We also plan to bring Rooh Afza milk in the ready-to-drink category. We will ensure that we provide the best quality milk for which we are exploring various options of milk sourcing.
On medicine side, we are working on various new medicines to respond to some of the new diseases. People are now looking at medicines that are free from side-effects, and Hamdard can play a major role in catering to this demand.
BRR: Could one say that the introduction of new products at Hamdard has been slow?
UQ: It has been quite slow. It has been 20 years since Hakeem Mohammed Said sahab left. In that time, very few entirely new products have been introduced. Almost all of the products have been around since his time. Even the new products have been mostly re-branding or reformulations of old products.
I strongly feel that herbal products are being sold everywhere; it's the new wave as people want to get away with the medicines that have enormous side effects. Everywhere in the world, there is a separate herbal counter in every pharmacy with products that are premium priced. We have to ride that rally and make Pakistan proud.
BRR: Does that mean you are looking at exports?
UQ: Currently, 10-15 percent of our top-line comprises of export revenue. But I see lot more potential in export sales and we are targeting to tap more markets in future. That will be good for the country as well, to increase exports and decrease imports.
We were also able to localize about 30 percent of the products, especially in packaging material that were imported. I believe in local development and we have developed local suppliers who are maintaining even better quality. Since, I have joined; we are able to garner about 30 percent savings. We have increased our export sales by 40 percent. And by next year, we hope to touch $10 million mark.
BRR: What is the break-up of your exports?
UQ: About 95 percent of our exports comprises of Rooh Afza because our other products are not registered abroad. Rooh Afza finds a market abroad wherever there is the Pakistani diaspora. For the first time in history, we have registered a few of our products in the US and now we have started exporting a few of our medicines to the US after meeting the necessary US FDA requirements.
Since many countries are now imposing heavy taxation on sugar-based products, we are now in the process of launching two new products of Rooh Afza: sugar-free and low-calorie. This is being done to ensure we are not left behind in terms of exports. We want Rooh Afza to be on shelves for the next century too.
BRR: Is there a market for Rooh Afza abroad outside the Pakistani diaspora?
UQ: From the feedback we have gotten from our distributors abroad, I can say Rooh Afza is not only for the 'desi' crowd. However, because of the sugar content, we have to give non-desi folks other alternatives, such as a sugar-free option. When we talk about the white people market abroad, I feel that the real potential lies in herbal OTC medicines related to cold & flu, sinus, skin, etc.
BRR: What growth numbers are you looking at for herbal sales abroad?
UQ: We don't have numbers at the moment because our first consignment has just gone abroad. Even if we concentrate only on North America, Europe and Russia and work on registration and exports, then in about five years, we can touch a top-line close to our local sales in pharma. That is a ballpark figure of $15 to $20 million. These markets have double-digit growth numbers for herbal remedies. Another advantage is that herbal brands abroad are premium products, which means we can compete in price as well as quality.
BRR: Do you have any plans to branch out to opening company-owned shops or consultant clinics?
UQ: The plan is to open professionally-managed consultant clinics or health centers. We hope to open at least 100 such Hamdard Life Health Centers across Pakistan, starting from 2 to 3 clinics that are company-maintained and operated in each city to set up a benchmark and then roll out a franchise plan. We will launch the first one in Karachi this year and they will be staffed by the graduates of the eastern medicine universities.
BRR: Overall, what are your growth targets for the next five years?
UQ: In the next five years, we expect to double the top-line with a CAGR of 16 percent. That is because we have a good brand with huge potential. We are working on a few digestive products; we see a lot of potential in Ispaghol, Hamdard Instant Joshanda, and Hamdard Honey in the new consumer-friendly packaging, ready-to-drink products, and a lot of products on the FMCG side. We just need to focus on the right products and penetrate the market.
BRR: Let's turn to regulations. Are you regulated by any particular authority or do you follow standards from elsewhere?
UQ: Previously, we were not regulated. We are now regulated by DRAP, which regulates allopathic medicines as well.
My biggest challenge when I joined last year was to engage with the regulator for our manufacturing license; the entire association was in court against the regulator. We jointly sorted it out through negotiations and started the regulatory process, and today all our factories are licensed from DRAP. We have also started the process of individual product registration as well, which is under review of the authority and expected to be approved within few weeks.
I saw the regulatory process as an opportunity for the sector to expand through regulatory endorsement and it is helping consumers to regain the trust in Unani & Herbal medicines. I must appreciate the role of DRAP on supporting this sector, which can generate lot of revenue for the country.
BRR: Is counterfeiting a serious problem for your company?
UQ: Counterfeiting in Rooh Afza used to be massive and even entire factories were caught counterfeiting Rooh Afza. I think this is the challenge for many brands and it's a continuous battle to fight.
BRR: Have there been instances where your formulas have been copied because of weak IPR laws here at home and inability to patent abroad?
UQ: Rooh Afza is pioneer in red syrup category and we maintain that "Not every red syrup is Rooh Afza". A lot of companies tried to copy our product.
The taste of their products doesn't even come close to the taste of Rooh Afza; yet they are still available and sold in market. I won't say that we have weak IPR laws, but enforcement of those laws is weak.