Read the Conversation
EF: What was your mission when you became Managing Director of UPD?
VS: UPD’s mission is to be the preferred healthcare supply chain partner of choice. While the South African healthcare landscape can be difficult to navigate at times, logistics plays a key role in enabling efficiency and access for the end customers. In light of Single Exit Pricing (SEP), our service in logistics differentiates us as a company.
EF: How has the South African pharmaceutical sector changed throughout the years?
VS: In the past originator manufacturers products sold themselves, especially when there were blockbuster drugs. The customer would ask for the product by name. Now, pharmaceuticals have become commoditized which highlights service as a key differentiator.
EF: And what is UPD’s role in the general South African healthcare sector?
VS: Our job is to assist in improving and saving people’s lives. We are the link between the manufacturers and the end consumers.
EF: What is UPDs strategic importance with regards to South African healthcare?
VS: Originally, our purpose was to be the distribution arm of Clicks pharmacy. While UPD still services distribution and logistics to the Clicks Group, we have expanded to take a broader role in healthcare. For example, today we have almost 75% market share of hospital distribution in the country. From South Africa, we are also at a position to other African territories.
EF: Could you shed some light on UPD’s business units?
VS: UPD has two major divisions: wholesaler and distribution. Our wholesaler division has 27% share of the private pharmacy market. Our distribution division has 32% of the value in the market. We have six distribution centers two of which are in Johannesburg and one in each key province: KwaZulu-Natal, Capetown, Bloemfontein and Port Elizabeth. Our Johannesburg facility is fully automated and we have plans to increase automation across our South African footprint.
EF: What is the secret to UPD’s double digit growth over the past few years?
VS: Logistics and distribution is a key service to both manufacturers and end consumers. Our growth has been driven by the fact that we provide superior service which entails much more than the simple delivery of a product. Quality service means having the right product for the end consumer when it is needed. Quality service means there’s an ease in doing business. We’ve been growing because we also provide bespoke solutions for our customers. When markets change and business models become more fluid, we are able to adapt with them, and this quality is what differentiates UPD.
EF: How do you account for the demand variability, for example key therapeutic areas shifting or patients needing something at the very last minute?
VS: A key element of our business model is the importance of being agile. Even though we are a large company, flexibility to changing external conditions is ingrained in our business methodology, This flexibility is important to give our customers an assurance; we give the same high quality service to all of our customers.
EF: How do you use technology to ensure safe and secure delivery?
VS: We use the ERP system that controls everything at a batch level. We automate our picking and packing processes to increase speed and accuracy for the end customer. We use certain machines for our fast moving goods and others for our slow moving goods. We constantly push the boundaries of how to engage with our customers. For example, we are now exploring projects to implement AI and machine learning. However, the technologies we invest must further two key objectives: i) make the customers’ life easier and ii) increase our service benefit.
EF: As a logistics company how would you personally define access?
VS: Access is ensuring the customer has what they require when they need it. As a logistics provider, my concern with access is to ensure that patients receive a product when they need it. We supply medicines across the continuum of the South African market for both the public and private sector with the same quality of service. To increase our range of access, we have 200 independently owned pharmacies under UPD to cover areas that other companies will not go. Our brand, Link pharmacies, covers specific under-serviced areas. We are proud of Link’s position as a community pharmacy. In the 40 years it has been around, Link has placed 3rd in brand recognition.
EF: What are some skills that are transferable from healthcare to other sectors of the economy? Are other sectors aware of the importance of healthcare to the general economy?
VS: I believe logistics can add a substantial amount of value to the broader supply chain of the country. Employees dealing with medicines at a UPD warehouse have a very specialized skillset. Due to the temperature control, timing, and regulations surrounding the job, these employees are overqualified for logistics in other areas since pharma is at the top end of compliance. We have started the UPD Supply Chain Academy in the company with the aim to train people and receive a formal qualification. This qualification helps them to be re-employable in the healthcare supply chain as well as other supply chains.
EF: Considering your vast experience and knowledge in the area, what executive advice would you give to other logistic companies?
VS: To ensure the sustainability of one’s business, I would advise to stick to one’s competencies. Specialization produces value while reducing cost in the process. We invest in specialized skill sets to differentiate us. For example, our rapid growth in pharmacies prompted us to invest in more pharmacists. Our business requires us to keep pace while working closely with our people. Our business has a duty to ensure it is lifting the people as the business itself grows.
EF: Any final message to business leaders on opportunities of how to invest in health?
- Collaborate with market leaders
- Try out unique models; the same models will not yield different outcomes
- Take calculated risks and continually try to re-innovate