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By Anita Devasahayam



September 1, 2000

Hovid: Healthy Expansion Through the 'Net

Local pharmaceutical giant Hovid is testing the waters in the e-commerce space. While most industries have few problems selling their products through the Web, Malaysian pharmaceutical firms face a different kind of battle.



“Invisible barriers” such as tariffs, standards, safety requirements and cross border issues stand in the way of promoting Malaysian-made pharmaceutical products abroad even though Hovid’s products are sold to over 30 countries in the world. However, on the online playing field, these countries are not among those who grew up on a diet of catalogue shopping.

Ipoh-based Hovid was set up in 1945 as a herbal tea outfit before it ventured into manufacturing pharmaceutical and health supplements business in the 1980s.

Today, it offers more than 300 different kinds of finished pharmaceutical and healthcare products in various doses available through its chain of six pharmacies across West Malaysia. Its clientele comprise over 5000 private clinics, hospitals and Malaysia’s Ministry of Health.

Three years ago, Hovid adopted information technology and is busy upgrading, in concert, with its Web site for promotion, enquiry and sales; and ERP operations for the manufacturing plant. The RM1 million ERP solution from Baan (now owned by Invensys) is aimed at tidying the back-office operations and improving day-to-day running of the company.

“We cannot ignore the ‘Net although it does not work for us yet. We believe it will be the big thing five to 10 years from now. Right now we are concentrating on building our brand on the ‘Net for Malaysians,” said Hovid’s managing director David Ho.

Online Foray
Participating online is no longer a luxury and Ho believes that the influence of the Web on ordinary folks will continue to grow bigger and bigger, not any less. “We see it an opportunity and not a threat.”

Its Web site, www.hovid.com, was designed in-house a year ago and the firm partnered with Mimos’ Mall of Malaysia (MOM) on the e-commerce front. The Web site drew many visitors and a few online purchases. “The response through MOM was below our expectations and we are evaluating our options again,” he said, adding the company had no idea of the number of unique visitors to the mall.

However, initial statistics indicated that visitors from the US and Japan were interested in the herbal tea and natural products, and Ho had quietly begun devising a strategy to enter the European and American markets.

Its first overseas plant Hovid Toeranta in Donegal, Ireland came on stream two months ago with the production of soft gelatin capsules. “Because of their stringent regulations, we had to devise a different strategy to penetrate these markets. Ireland will be the gateway to the European Union and eventually we will set up base in United States as well,” he said.

Parallel to spreading its wings abroad will be the enhancement of its Web strategy, added Ho. “Our entry online has a long term objective. It is aimed at understanding the Web and discovering what makes it work. By gaining necessary experience, we will be able to hone the right strategy.”

Ho pointed out that foreign visitors to the Web site were interested in their herbal and natural product range while locals were keen on the pharmaceutical products. Based on the initial feedback, he said that work is underway to make the Web site more informative and interactive especially for foreign visitors who are unable to buy the products but will have an avenue to learn about the herbs and ingredients involved.

Information posted will be given away free.

Expansion Plans
A new Web site for Europe is also in the works to push Hovid’s presence in Europe. “It will be a form of advertising the type of products and services available in that region.” By growing the brand name, Ho hopes the payoffs will take shape on the horizon.

On the local end, Ho is targeting his B2B strategy at druggists and general practitioners. While he admitted that doctors are unlikely to order or replenish their drug supply via the ‘Net, he is compelled to build the infrastructure.

“It is an educational process and we are not going to wait at the sidelines until the doctors are ready to move online. We can help lead the way by offering the option of doing that. Soon they will realise it is cheaper and makes more sense to order drugs via the ‘Net.”

Ho does not see major issues to iron out with the distribution structure as the current network is pretty lean. The toughest barrier is convincing the majority to use the ‘Net as an option versus faxing or phoning in orders. “We like to see e-commerce work for us in Malaysia first and want very much to integrate the ‘Net as part of our sales channel,” he said.

























Ho also pointed out that the human relationship that forms an important part of the current business practice cannot be done away with. “The ‘Net is impersonal. It has not reached the level of interactivity to replace the real person. For us, if our local druggists and doctors use it as a means to send in repeat orders, it shows that we have succeeded to some degree.”


Published in Intelligent Enterprise, September 2000
(C) 2000 Julian Matthews & Anita Devasahayam. All Rights Reserved.
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