I shall either find a way or make one, Hannibal Barca once said. This may best define the approach that led two science students, Shahzad Ahmed Khan and Zulfiqar Raja, into their first business venture.
It was in the 1990s when the duo was saddened to see the “exploitation of customers at the hands of corporate giants, the likes of GSK and Gilead Sciences”, which sold their equipment only to selected research labs and hospitals at “exorbitant” prices. This ultimately forced these hospitals and labs to transfer these costs to the consumers, which deprived lower income classes of these services.
They had two options: either go with the system or take matters into their own hands and come up with a solution. They chose the latter.
So one night they teamed up to start a new business, not sure where the money would come from and whether the idea would be successful. Next, the duo, who had just completed university, quit their startup jobs, emptied their bank accounts and decided to open up their office in Karachi.
Today, the venture is known as SK Trading Corporation, which deals in supply of laboratory instruments, diagnostic reagents, analytical equipment, pharmaceutical laboratory equipment and reagents.
From startup to sprawling enterprise
What commenced 17 years ago has by now emerged as a sprawling enterprise, for the major suppliers of scientific equipment now rakes in between Rs60 and Rs70 million in annual revenues – with up to Rs7 million in profit. Their clientele consists of more than 50 research labs and hospitals all over Karachi.
SK Trading is not just about promoting sales of their quality products from respective clients but also to provide post-purchase maintenance and support by their qualified and trained service team. This has helped build a vibrant relationship within the corporate sector of healthcare and life sciences – to the benefit of the community.
Now serving a diverse range of healthcare and R&D sectors, it includes pharmaceuticals, life sciences and diagnostic centres.
It, however, was not a smooth sailing.
Like most start-ups, Khan and Raja had a tough time, to begin with – arranging finance being the main issue. Due to high setting-up cost, even their families were not really optimistic. The price tag of the imported machinery and equipment, with government taxes and duties on top, was rather steep – run into millions of rupees. So the risk associated with the venture was certainly high.
“Since I come from a middle-class family, with a father who works for a living, I could not have possibly asked him to dish out a few million for me to set up my business”, said Shahzad Khan.
The upshot was that they used their personal savings and resorted to borrowing from a bank, in the main using running finance to launch the business.
“Initially we were barely reaching break-even, but we had eliminated the thought of profits from our minds. It was all about nothing but work back then,” Khan said. “But with time, taking one small step at a time, things incrementally got better and today we have grown from a trading company to a trading corporation,” he said.
Looking back at his journey, Khan seems satisfied with the sacrifices he made for making the enterprise a success – in the process foregoing an opportunity to settle in New Zealand.
“I knew that I would never be satisfied if I left all this behind,” said Khan, recalling how he abandoned his desire to move abroad for the sake of the nascent business.
That said, building the business from the ground up didn’t come without challenges.
For instance, for them hiring the right type of employees – who could work hard and smart – was an initial bugbear.
Therefore the duo knew that they needed a team of like-minded individuals who could understand the nature of the business and despite the lows remain motivated. The staff was critical to the success of SK Trading.
One incident that took place with them further made both Khan and Raja sceptical. Back in 2012, the company sent some staff on a trip to the interior Sindh to deliver blood testing equipment and bring back the cash. The employees eloped with the cash, never making it back to the office, recalls Shahzad with a discernible edge in his voice.
Eventually, SK got committed people. To-date they have a team of 15 who contribute in research and development of the company and selling of innovative and synthetic chemicals and reagents.
The pharma industry of Pakistan is worth $2.3 billion, along with being the largest employer of university graduates in semi-urban and rural areas. However, Khan says it’s not easy to start a business in this sector because of the high initial costs involved. “Therefore, the industry consists of few major multinational firms that exploit the situation,” said Khan.
Wedded to new technologies and innovations
Khan and Raja were motivated by the new technologies entering into the world of diagnostic sciences when they first stepped into this market. Despite these innovations all around the globe, the two partners noticed, the big and mushroom-type labs alike in Pakistan still followed the outdated path – with an archaic system, costing. The initial suppliers of the business to the people had two major names: the Aga Khan Hospital and the National Institute of Health. However, their prices were incredibly high.
Due to high levels of competition from multinational companies belonging to the diagnostic field and some other companies with vested interests that develop fake products in Pakistan, SK Corporation started importing their equipment and then reintroduced it into the market as nominal cost-effective quality products.
The B2B company has a total of 50 clients, but the number is increasing day-by-day, or so the partners claim. Major buyers of SK products are several government hospitals and few private research labs, like the Aga Khan Hospital & Medical College Foundation, Drugs Testing Laboratory, DOW University of Health Sciences, Skin diseases hospital, among others.
The average turnover of SK Corporation is Rs62 million, but it shrinks after paying customs duties. Their profit after tax amounts to Rs6.5 to Rs7 million, lesser compared to other firms, says Khan. Most of their profits are reinvested in the growth of SK Corporation.
SK Corporation claims it sells quality products at a relatively lower price, to maintain a competitive advantage as a small business. Customer and after-sales services are other areas of intense focus for the company.
The company went through a tough phase some years back because of rampant violence and critical law and order situation.
“In 2012, we got an official order from the government for two blood bank refrigerators, which we imported from South Korea. We delivered the order, but the payments never came,” Khan said. This left SK Corporation bankrupt. However, after a turbulent period, SK managed to recover and resume its growth trajectory.
The recent change in the political environment in Karachi has made life a whole lot easier for the business. Rangers presence turned out to be good for several businesses in Karachi, said Khan.