Medicine man

Sobhi A. Batterjee has come a long way since playing hide and seek in between the endless rows of his grandfather's medicine boxes in Jeddah over 50 years ago. So far, in fact, that his Saudi German Hospitals Group (SGH) company is now the largest regional player in its field and worth in excess of US$1bn.

"I grew up in a family where my grandfather brought medicine to Saudi Arabia in the 1940s. I would not change my path for the world," he says from his office in Dubai which he visits every week to keep tabs on the business's latest US$375m hospital complex in the emirate's Al Barsha district. SGH, founded by Batterjee in 1988, is one of the elder statesmen in the regional healthcare sector and is considered the largest private healthcare company in the Middle East and North Africa region.

It employs 5000 professionals - 1000 of whom form part of its in-house construction team that build the properties - with a further 2000 planned to join in 2008 in Dubai. It has projects in its home country of Saudi Arabia in Riyadh and Jeddah as well as Yemen, and is planning to "copy and paste", in Batterjee's words, its model in other areas of Saudi, and countries as far and wide as Turkey, Egypt, Ethiopia, Djibouti, Nigeria and Pakistan. Building a business empire, however, isn't Batterjee's primary objective. Raised by his parents on the principle that he should always look and care for others, helping those in need is and always will be in his blood. The company motto is further proof this will always be the case: ‘And if any one saves a life, it would be as if he saved the life of the whole people'.

"I woke up once when I was five years old to a man yelling in front of our house, calling my father telling him to come downstairs," he says looking back to one of his earliest memories as his principal catalyst to care.

"I remember it was an Eid day and we were all sleeping in. My father came down and then disappeared for an hour. I then woke up again to hear my mother asking him what had happened. The conversation went a bit like this:

Mother: ‘What did he want shouting and yelling like that?'

Father: ‘He was sick and he wanted me to go to the pharmacy to give him some much needed medicine'.

Mother: ‘How much did you sell him?'

Father: ‘I sold a quarter of a riyal.'

Mother: ‘Is that all?'

Father: ‘I did not go for the money, I went to help this man to relieve his pain.'"

The fast-talking, ever smiling chairman says he and his siblings grew up in a culture of care - the main reason why he chose to become the third generation of medically-inspired Batterjees. "This is why we're in healthcare and education. We know that real estate returns are 10 times more than healthcare and education, but we still believe that the work of relieving human suffering is a blessing to us. We feel this is a gift from Allah. It is an honour for us," he says.

"I followed in my father's footsteps where money is important but not the primary objective - it is secondary. The primary objective is to go to heaven, to help people and relieve their suffering."

There was one particular moment, however, that struck Batterjee harder than most and made him realise that he had to replicate his Saudi healthcare model and embark on a regional expansion plan.

"As soon as I heard that 17% of all newborns in Yemen die of diarrhoea, I knew I had to act and that figure was planted forever in my mind. I said to myself ‘I can do something about it and I'm doing it now'," he explains. "I'm not just building hospitals, I'm making holding companies with the next ones in Dubai and Egypt. The latter will be a US$1.3bn holding company with very big backers and which will restructure the entire healthcare system in Egypt. Once I succeed with the first one I'll copy and paste and do it in Turkey and Syria and all over," Batterjee adds.

But things weren't all that easy in the beginning of Batterjee's business career, particularly when he proposed the idea of building a 300-bed hospital in Yemen to several regional and international banks and backers.

"When I wanted to build a US$100m hospital in Yemen many people thought I was crazy. No one wanted to finance me or have anything to do with me." But Batterjee being Batterjee, and an "emotional man", as he labels himself, saw differently.

"I woke up one day in my palace with my Rolls Royce and Ferrari and with the thought of 17% of Yemeni newborns dying of diarrhoea, so I said I needed to do something about it. So I went there and made a huge investment, but no one, not even the Yemeni government wanted to have anything to do with me... until the project came to completion that is, and everyone then rushed in. And of course I let them. Now I'm 54% owner and the people have a successfully run hospital."

But the chairman isn't stopping at just bricks and mortar. He is so concerned with regional and global poverty that he is writing a book entitled Doing Business With The Poor as well as speaking about the subject across the world.

"I spoke at a huge African Development Fund gathering in front of many government dignitaries about doing business with the poor. It's a huge subject and one where people are beginning to listen," Batterjee explains.

The SGH chairman claims that the section of people that the world classes as ‘poor' are in fact "not poor". He admits that this dawned on him during his time in Yemen, setting up one of his most successful and personally rewarding projects.

"The poor are not poor, they are confused, unorganised and uneducated and sadly no one wants to do business with the poor. Imagine if no one wanted to do business with Microsoft, they'd go bankrupt the next day. That's the problem, no one wants to do business with the poor."

Batterjee, in a reaction echoing his response to the number of newborns dying from curable ailments across the underdeveloped world, then decided that "something had to be done" and that it was "time" that the private sector acted together to change the way the poor were being treated.

"I said ‘okay, the poor can't afford to pay'. The catch is, we as the private sector must look at the poor as though they are unsatisfied customers; we must come up with innovative solutions to make the poor do business with us, because if they do they will have self-esteem as customers.

"If we did this there would be a total change in mindset. It would raise their morale to go and seek education, improve their quality of life and so on, but we have to do that and do it now," he adds dramatically.

He suggests that all previous attempts to ease poverty have "failed". "Poverty is getting worse, so there must be another way to ease it. There must be private sector initiatives that we can come up with. All we have to do is scratch our heads as marketing, as sales and as manufacturing professionals to come up with innovative solutions to solve this."

Batterjee has several methods to alleviate poverty and bring "the poor" back into the business community up his well-pressed sleeve. One simple solution, he says, would be to change the way products are sold in bulk in retail outlets across the world.

"We can do something about packaging, for example. Instead of selling six packs, sell one pack, instead of increasing large volumes, reduce the volume. They tell you ‘buy one get one free'. Speak to the rich and tell them that you will give them one item and then sell another at a percentage in Yemen. As a company you are making more money because you are giving the rich one for sale and one for free, but now we are making 5% more by telling the rich to ‘buy one from me and I will deliver one for 5% of the cost price in Yemen'.

"Instead of giving you one for free in Yemen; I want to do business with the poor," he continues. "I don't want to give it away for free in Yemen I want to do business, he must pay for it but he will have access to the same product as the rich but at a discounted price. This will elevate the personality of the poor person, make him a customer, not a charity."

One of the chairman's heroes is Muhammad Yunus, founder of Grameen Bank in Bangladesh and pioneer of the extremely successful theory of microfinance.

"Have you heard of Muhammad Yunus and microfinancing?" he asks. "He did it so anyone can do it. Now imagine a household appliance company. When they come to doing business with the poor they say ‘look, I'm not going to give you a 20 kg machine, I'm going to give you a 5 kg machine, and instead of US$1000 it's US$100 and I'm going to lend you that money and ask you to pay it back at US$1 a month'.

"I've seen examples of poor people receiving this kind of treatment, and when you give them that self-esteem they will come and pay that US$1 every month and on time. The margin of defection is so small, it's wonderful to see," he says.

"When you do business with 1000 rich persons you will do business with 100,000 poor people. The volume is enormous. It's called the fortune at the end of the pyramid. Doing good is good business."
Saudi Arabia is SGH's strongest market and closest to the chairman's heart - he calls it a "magic place" - however, he remains constantly frustrated at its drawbacks in terms of foreign investment, and the slow pace of liberalisation.

"I often compare it [Saudi Arabia] to a lion in a very large cage waiting to get out, but it can't. The cage has a door and somebody has the key but no one knows who it is and even if they did they haven't opened it yet."

He adds that despite there being a certain level of poverty and unemployment in the country, Saudi Arabia faces a far greater, and more contradictory problem - the rise in wealth due to skyrocketing oil prices. "The higher the oil price is, the worse we [Saudis] feel and the worse it is because we don't need to reform, we don't need the private sector, we're rich, we can do it all. But they don't realise that oil doesn't last forever," he says.

"The country is not developing to a hundredth of its potential and it is such a shame. Saudi could be the Germany of Europe and the engine of growth in the Middle East, but right now it's Dubai.

"It's not big eats small anymore, it's a different law of the jungle... now it's fast eats slow.

"Dubai is building our King Abdullah Economic City, but we built Jubail Industrial City, a US$40bn 25 years ago when there was no Dubai. Saudi Arabia built these cities, now Emaar comes here to build KAEC."

Batterjee is not just building hospitals. SGH is nearing completion of the Arab world's largest medical college, the self-titled Batterjee Medical College in Jeddah, as well as SGH hospitals in Dubai, Cairo and Hail in Saudi Arabia, a blood bank in Jeddah and an extension to Batterjee's gymnasium franchise Gold's Gym Grand, the largest of its kind in the Middle East.

For now, however, he is focusing on a large-scale Dubai development, a "beautiful project", Batterjee says in his own words. "It's a miniature Healthcare City," he says showing me the project on his laptop. "I run the whole group from this machine", he adds.

From a curious five year-old examining his grandfather's medicine supplies, to a multimillion dollar business tycoon who is determined to leave behind him a legacy of care, quality and individual empowerment, KSA and the rest of the region owes Sobhi Batterjee a great deal of gratitude.

No doubt, the Gulf is healthier for his presence.