“Technology has transformed us from the ground up”: Hatul Shah, Sigma Pharmaceuticals Group 

“Automation was the first technology gamechanger for the business. We would not have been able to service customers with the speed and accuracy we now have while, crucially, increasing our volumes,” says Hatul Shah, CEO of Sigma Pharmaceuticals Group.

The group is one of the largest independently owned pharmaceutical wholesalers in the UK. Headquartered in Watford, it distributes generic, over the counter and branded medicines to more than 3,000 pharmacies and 1,000 hospitals through its distribution arm.

Shah says innovations include a conveyor-based picking and packing system for medicine and a semi-automated picking line running in parallel using barcodes and scanners.

“That's so radically different to how we were, when everything was done by hand. Technology has transformed us from the ground up. Volume and accuracy have increased significantly with those operational efficiencies,” says Shah.

As a low margin and competitive industry that relies on customers ordering in a ‘just-in-time’ manner, the capacity and speed capabilities that automation brings are key.

Crisis brings change

Since the commissioning of the automated system in 2017, geo-political and economic pressures have increased globally, which have impacted the supply chain and remuneration structure for pharmacy businesses in the UK. This has necessitated further technology investments, and smarter approaches to sustain the business and its clients.

A new ERP system was required as, due to multiple siloed systems in place for departments and divisions, the business had no clear, single view of its organisation’s data.

This model was a legacy of the founders of the business, Dr Bharat Shah and his brothers Manish and Kamal, who believed in personal relationships and supporting other businesses — a crucial part of their success story since Sigma was founded in 1982. However, as Sigma grew so did the difficulties with the generosity of that finance approach.

The difficulty was to bridge the gap in debtor payments to appease lender demands while upholding the client-centric values of the business. This meant focusing on the right customers and addressing any areas of inefficiency.

Data brings clarity, and sanity

The issue highlighted the need for a back-end system that provided the all-important single source of truth in real time. However, the business had to move from a starting point where getting management accounts six weeks post-month was how it had always been done. It was not going to be straightforward as much of the work would involve collating and mining data manually from various sources.

“Our commercial team used Excel to get ‘back of a fag packet’ snapshots of where we were every single day. But then we went further, using Power BI to optimise our sales approach, creating new product baskets to get more margin,” he says.

People, processes and systems

As technology was integrated across the business, and data literacy became ever more crucial to the culture, Shah and the board had to look carefully at their people — a significant challenge in a close-knit family business, especially one with such a proud history of long tenure.

Shah says: “We had to make some tough decisions; review people whose roles became obsolete and lean up a lot of processes in the business. But we were bloated because we had been throwing people at problems rather than looking at technology-based solutions or analysing relevance in a changing world.”

While the transformation was not without its challenges, the numbers don’t lie. The board and its focus on data has taken the business from just about breaking even in 2021, to landing £280m in revenue in the 2024 financial year. Discipline and governance are now the driving principles of Shah’s leadership approach, which includes bringing in non-family members onto the board.

“Our non-executives support me with tough family business decisions when it involves the founders,” he says. What was an entrepreneur-led business built on gumption, relationships and expertise is now all of that, augmented further by data and technology.

Shah concludes: “People, processes and systems — that is transformation for me. Since 2021, we've gone through the biggest transformation I could never have imagined when I was made CEO. We had to rip up the script while going through that generational transition and undergo a transformation journey, which I now know will constantly iterate — but despite the ‘pushing and pulling’ during the generational transition, and the fact that there is still so much to do — we are now proud to be delivering the vision of our founders.”