SUCCESS FORMULA: Rajiv Gupta from Kusum on the first steps in the pharmaceutical business and employees’ freedom
Rajiv Gupta, a Ukrainian businessman of Indian origin, CEO of the Kusum pharmaceutical company group, is running a business in the best traditions – he believes in karma, fate, and the cyclic nature of time.
Maybe that is the reason he values the partners whom the fate brought him at different times, and the people who work in his enterprises. The founder of Kusum knows exactly that harmony in interpersonal relations is more important than the result achieved at any cost. These relations are woven into the fabric of his life, as a unique pattern on Indian silk.
“If in six months after joining the company, a person does not feel better as a professional, if the quality of his life has not improved, then I, as the owner of the company, do something wrong,” assures Rajiv Gupta. This belief is the foundation of his international business.
Now the company operates four production sites in Ukraine and India, as well as two R&D centers. The company employs 2,100 people, who provide the production of more than 100 drug names. In Ukraine, the company is among the ten largest. Globally, Kusum operates in the markets of India, Moldova, Uzbekistan, Kazakhstan, the Philippines, Myanmar, Mexico, and Kenya.
Leadership Journey (LJ): How did you start your business in Ukraine?
Rajiv Gupta (R.G.): I came to the Soviet Union back in 1988, to study Mechanics in Machine building. When I completed the first internship at the Ukrainian plant, I realized that I would not be able to make a good engineer. Even on an internship at a motorcycle plant, I came in shoes and white clothes. After that, I tried to do business. Friends in the hostel used to scoff; they were saying sarcastically, “Oh, a businessman has come!” But there were also people who believed that everything would work out for me.
In Ukraine, the company of Rajiv Gupta is among the ten largest pharmaceutical businesses
Having taken the first steps in the pharmaceutical business, in 1994 I visited various factories in India, which supplied medicines in the Soviet Union. I remember a representative asked me, “What do you want?” – “I want to buy medicine from you”. – “What medicine?” I did not know the nomenclature and asked, “What medicine do you have registered in the Soviet Union?” – “We supplied these medicines. How much do you need? ” And I asked, “Can you advise me?” He laughed, seeing that I did not know anything.
LJ: How old were you at that time?
R.G.: I was 24. We are still friends with this man. Then he told me everything in detail; he explained that it was necessary to have a pharmacist in India for export. Back in Ukraine, I received permission to run a pharmaceutical business. We had five employees: a secretary, a customs broker, a driver, an accountant, and me.
LJ: What was the formation period of your company? How did you survive the financial crises? What did you lean on?
R.G.: On the eve of the 1998 financial crisis, many international pharmaceutical companies have already worked with us.
Against the backdrop of inflation, many competitors went bankrupt. It turned out that everyone owed me in hryvnyas, and I owed everyone in dollars. Deliveries were carried out on deferred payment terms.
The founder of Kusum knows very well that harmony in interpersonal relations is more important than the result achieved at any cost
At first, it was difficult: we had no crisis management education; we had no knowledge, no experience. We did not know how to do it right and used intuition in communication with people. The first thing I did was to say, “I’ll talk to all our suppliers; I’ll pay everyone, just have patience. The main thing is to have complete trust. I am ready to work transparently.”
Every day we showed suppliers how much money came from buyers, and we divided the income in proportion to the debt between all. This made a great impression on them.
We were one of the most transparent companies. Thanks to the honesty and openness of doing business we have significantly improved our image. Slowly we began to pay off debts. In some cases, suppliers provided us with credit notes. Any crisis ends eventually. Over time, we paid off all the suppliers. But the most interesting thing happened after the crisis. We have earned a serious name in the Indian and Ukrainian market, a reputation that our company can be trusted like a bank.
All the economic crises of 1998, 2008, and 2014 taught us one thing – you need to communicate more frequently with your employees and partners, especially during a crisis.
Competition in the market has tightened the same as the conditions for interaction with foreign manufacturers of drugs. In 2001, we realized that we earned practically nothing, and if we would not change ourselves, we could finish badly.
At that time, we were the number one distributor for many large manufacturers, but still, I was realizing that we run virtually a no-profit enterprise. We lacked working capital. Despite the fact that profitability was visible in the documents, we were not making money. Сash flow was bad, the delay in the market had increased.
The company has 2,100 employees, who provide for the production of more than 100 drug names.
The former president of a large pharmaceutical company, a good friend of mine, the guru of the international pharmaceutical business, who played a key role for our team in the development of marketing and management, advised us to launch drugs production under our own brand using a contract manufacturing. My brother Sanjiv was responsible for looking for partners in India and building relationships with them.
Gradually, we abandoned distributorship. We fully paid off the partners and parted beautifully.
LJ: What was your strategy for selling your own drugs in Ukraine?
R.G.: We have relied on small cities. We were inviting local specialists respected by medical doctors. The strategy was very simple, but as the practice had shown, effective.
LJ: When did the idea of building pharmaceutical plants emerge?
R.G.: In 2005, it became clear that we had a serious problem with supplies; the demand for our products was significantly exceeding the production capabilities of partners who could have other priorities. If we wanted a stable business, we needed to have our own production facilities. At the mere thought of building a plant, I had goosebumps on my skin. The thought “It’s unreal” was turning over in my head.
My brother Sanjiv and I decided to build a plant in India and began to search for a land site. In a very short time, about two years, and with relatively small investments, we managed to build and launch our first production site, as well as pass Ukrainian inspection and certification.
“ALL DECISIONS IN OUR COMPANY ARE MADE COLLECTIVELY”
Also in 2005, a friend of mine, a businessman from Sumy, suggested building a plant in his hometown on a partnership basis. I then said, “Do you understand what problems we may face? The plant can be taken away from us or raided.” He replied, “Do not worry, everything will be fine. The main thing is that we will do a good deed for my hometown Sumy”. The construction of the plant in Ukraine was completed in 2009.
LJ: Where did you buy equipment for the enterprise?
R.G.: Mostly in Europe and India. Ukraine at that time produced little, unfortunately. Now we are expanding the plant, and the Ukrainian components is a priority. In quality, they are no worse than those from Europe.
We created a company from scratch, and each of the employees invested 100% of their energy in it
LJ: True. You have a very beautiful corporate culture. Relationships with people are built on trust.
R.G.: For more than 25 years of the company’s operations in Ukraine, we have established a rule — you come to work at 9 a.m. and leave at 6 p.m.; you cannot stay longer.
I am sure that if a person is not leaving the workplace on time, then the next day he is not effective. I don’t care where he goes, but he needs to rest. Every person is working hard; we have no idlers.
“ANY CRISIS SOONER OR LATER COMES TO AN END”
We created a company from scratch, and each of the employees invested in it 100% of their energy and knowledge. Over the past few years, Kusum was increasing its turnover by 25–30% annually.
People need to be given freedom, by not limiting them with a framework and rules. And it will definitely pay off. If a person is not set to work, he can go for a walk, take a breath. When he is back and gets down to business, his efficiency will definitely be higher.
LJ: How many people in the company are involved in making strategic decisions?
R.G.: About 10. All decisions in our company are made collectively and are the result of the brainstorming. We do not have one person who makes strategic decisions for the business anymore. Without the contribution of each member of the team, we would not have grown to such a level. Today we are in the top 10 Ukrainian companies. This was only possible thanks to the work of all employees. I was very lucky with the team.
LJ: What do you do during the workday?
R.G.: Thanks to the delegating, I manage to devote more time to solving strategic issues, developing and expanding the business. But I did not learn to delegate right away. I think everyone goes through this. When a company is small, you can make decisions without consulting others, but when the company develops, you cannot do this.
“DIGITALIZATION IS THE BIGGEST FOCUS NOW»
LJ: Is Kusum an image of a perfect company? What else do you need to get closer to this image?
R.G.: No, there is no perfect company. You should always try to move on and on. Digitalization is the biggest focus now. We try to digitize everything that is possible and make the company as transparent as possible. For this, various IT solutions are being developed and implemented. You should not look for a shortcut in business. This also applies to changes in the company.