Why losing a key client was worth it for APHS’s Cathie Reid

In 1998, Cathie Reid bumped into Stuart Giles, an old friend of hers from university.

Six weeks later, they were engaged, and three months after that, they’d bought four pharmacies together.

The whirlwind romance has turned into a highly successful and profitable business partnership. Since then, they’ve grown and leveraged APHS into a dynamic business turning over $350 million in revenues a year, and have expanded into both oncology and pharmaceutical manufacturing.

Reid’s brother has since joined the business, and manages their pharmacies. Giles deals with the oncology arm while Reid is chief executive of APHS Packaging, the manufacturing business.

A pharmacist by training who’d worked in healthcare her whole career, she knew very little about manufacturing. She told SmartCompany how she became a manufacturing CEO and why losing a key client was the best thing that happened to the business.

In 2008, Ramsey Health Care, who was responsible for 60% of our profitability at the time, took their pharmacy business in-house. That was pretty torturous for us. It was a very confronting time. But in hindsight, they fact that they made the decision when they did was a Godsend for us.

We needed to reinvent the company. Building ICON, our oncology business, and APHS Packaging was on our road-map of things we wanted to do. But would we have done it as hard and as fast without Ramsey’s decision? Probably not. This was all before the global financial crisis. Our expansions were pretty capital-intensive. Would we have had that access to funding that allowed us to go down that pathway after the financial crisis? I don’t know if we’d have been able to.

While it was a real blow at the time, the timing was fantastic.

Since its founding, APHS Packaging has always been a growth story. We’re expanding our customer base through the retail pharmacy networks throughout Australia.

We’re actually trying new marketing strategies, and getting involved in YouTube promotions. The business is quite unique and quite difficult to explain. So we’ve been doing a lot of filming and doing videos on YouTube, to allow the filming to tell the story for us, rather than having to paint the picture with words.

We repackage medicines into dose administration aids, to assist people with compliance with their medication to make it easier to take them. Imagine you had to take three or four different tablets in the morning. Instead of going into different boxes and popping one out of that one and two out of another one, and carting them all around with you, we’ve collated them into a simple little sachet for you, which has your name, the time it has to be taken and details of all the medicines that are in there. You just rip the top off, swallow them, and off you go. It’s a style of medicine management that’s existed in residential care facilities for a long time. It helps the nursing and caring staff to be able to give medicines in a time-effective, safe and accurate manner.

The aging population means the majority of elderly Australians aren’t going to live in nursing homes, they’re going to be supported in their own homes. It was a logical thing to take the intellectual property that we’d developed in our pharmacy business and move that into a manufacturing space where that product can meet the needs of customers of any pharmacy in the country.

But even though it’s one of those things that made absolute sense from a logic perspective, still, the manufacturing space is a completely different world for me. So we found people who’d worked in pharmaceutical manufacturing and could understand the regulatory space there. Recruiting that specialist knowledge base was absolutely essential for us to succeed there.

I think the key to how my husband, brother and I are able to work so well together is we’re not afraid to each put our two cents in. We maintain really open communication. While there’s a definitive structure – we each manage one of the businesses – we maintain visibility and knowledge across the whole group.

Stuart and I worked together from the start. We have different roles, and don’t work in each other’s pockets. I don’t think we could have done what we have if we weren’t in it together. It’s allowed us to have that singular focus on the business and make decisions around what’s best for the business, rather than what’s best for a particular person’s career.

It’s really hard for people who have to juggle two high-powered careers and figure out which takes priority. But we’ve always worked on the understanding that we’ll both do what’s best for the business.

My brother came in when he wanted to relocate from Victoria to Queensland. We had a maternity leave position come up with our senior accountant. We said, take that, and we all have a get-out-of-jail card at the end of the 12 months if we don’t like it. We’d never had a goal of incorporating our wider family structure into the business. But within the first week, we all knew it was working out brilliantly, because he was my brother and he and Stuart have always gotten along really well.

He bought a huge level of candour and honesty to the role that an employee… would find much more challenging to deliver. He can just walk in and say, ‘What they hell are you doing it this way for’. If he wasn’t my brother, he wouldn’t have felt comfortable doing that.

The three of us are very different. We have different ways of doing things, different skill sets, but we mesh together really well.

Something that’s always been key in the way we’ve done business is to never burn our bridges. We always handle things as well when we exit a contract as we do on the entry. You never know with healthcare, people keep moving into different companies and different roles.

We’re back working with Ramsey again. When they needed a supplier in WA but couldn’t work within their in-house model, we were the people they came to.

Myriam Robin spoke to Cathie Reid in Istanbul, where she travelled as a guest of Dell, which paid for her flights and accommodation.