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A lifetime of fighting spirit, commitment, and vision
by Raquel Velazquez
Posted: Aug 19, 2004 22:54 UTC
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For Carlos Fraga, customer satisfaction is everything
SAN JUAN - At age 76, Carlos A. Fraga appears to possess the energy and fighting spirit of two people half his age. For the president & CEO of both Drugs Unlimited Inc. and Discount Generics & Brands, competition is always welcome, retirement is simply out of the question, and the customer always comes first.
“I love competition when it is fair competition. If I have a competitor offering products at a lower price, I will go that extra mile, offering a lower price or providing something extra, maybe in the form of service. I just like to fight and compete; I have been fighting my entire life,” says Fraga.
For 23 years, Fraga has distributed brand-name and generic drugs to independent pharmacies, hospitals, and local government entities in Puerto Rico. For the past 18 of those years, the company has operated from approximately 20,000 square feet in Puerto Nuevo.
With an expansion project under way and scheduled to be completed in 2005, the company plans to relocate to a new $7 million, 69,000-square-foot facility in Rio Piedras. The expansion is expected to increase the company’s revenue from $60 million in 2004 to $100 million a year, as it will allow the addition of new products such as medical supplies, more prescription drugs, vitamins, and other dry goods.
Humble beginnings
These are impressive results for a company that originated in a tiny house in Barrio Obrero. Today, however, it ranks among Puerto Rico’s largest locally owned companies.
Fraga was born in Cuba to Spanish immigrants. In the 1950s, he relocated to New York City, where he began working for the Sheraton Russell Hotel on Park Avenue. Over the years, he was promoted from doorman to manager of properties in New York, Venezuela, and Puerto Rico. Initially, Fraga was reluctant to accept the job offer as assistant manager/night manager in Puerto Rico because he wanted to return to Venezuela.
“But I figured I could get a cheaper fare from Puerto Rico to Venezuela, so I planned to quit after a week and return to Caracas,” he says. “However, upon setting my eyes on the palm trees gracing Ashford Avenue, I said, ‘This is my home.’ I feel I am Puerto Rican, and I love this island. I travel all the time, but by the third day, I just want to return home.”
Fraga left the hotel industry and embarked on a career selling advertising for magazines, radio, and television. He established a small advertising agency in Puerta de Tierra, which became the turning point of his career. A client of the agency, who distributed a line of medicine to local wholesalers, wanted to move and expand into the Miami market.
“I knew nothing about the industry, but I knew how much my client had invested in advertising, so I just made him an offer and acquired half the company,” says Fraga. He eventually bought out his partner and established an office in Santurce. Not long after, Fraga acquired a neighborhood drugstore near his office. The veteran entrepreneur admits he also knew nothing about managing a drugstore at the time, but he quickly saw the business was going under because of indifferent employees and a pharmacist who had been stealing merchandise.
Fraga hired Yolanda Navarro Rivera, who worked at a nearby pharmacy, and she began helping him put the business on the right track. “She hadn’t planned on staying long, but business picked up and she stayed,” says Fraga of Navarro Rivera, who is his wife of 23 years as well as the buyer and pharmacist for Drugs Unlimited and Discount Generics & Brands.
Fraga still had his advertising agency, in addition to a media-representation business that worked with radio stations in Arecibo, Mayaguez, and Ponce. He realized, however, that he was spreading himself too thin, so he sold those two companies to focus on expanding the pharmacy business. Fraga soon acquired a second pharmacy in Barrio Obrero.
The rise of generics
In the 1970s, generic drugs began arriving in the local market and Fraga started selling them. “I had to work extremely hard to get people interested in generics because they were perceived as low-class and low-quality,” says Fraga. This was mainly the result, he says, of an information campaign launched by manufacturers of brand-name drugs.
A low cost was all Fraga needed to convince customers to try generic brands, but he went a bit further. Aware that many of his clients were senior citizens living on Social Security benefits of less than $100 a month, Fraga attracted these customers with the offer of credit.
“It wasn’t my intention to make a business out of it. I just did it to benefit my customers,” says Fraga. “I wanted to help by offering them the same brand-name medications that may cost $1 per pill for about 10 to 15 cents in generic form.”
The hard part, he recalls, was getting customers to believe the generics were approved by the U.S. Food & Drug Administration and could be trusted.
Although generics were a small percentage of the prescription-drug market, Fraga believed they would quickly take off. He signed a deal with a major distributor of generic drugs and became its representative in Puerto Rico, distributing its products to an estimated 1,200 pharmacies throughout the island.
Brand-name drugs, too
Five years ago, Fraga added brand-name drugs to the company’s line of products. With a $2 million line of credit from Banco Popular de Puerto Rico, he created Drugs Unlimited.
Today, brand-name drugs represent 40% of the company’s sales. Fraga estimates the business is growing at an annual rate of 20% to 25%.
“My primary customers are pharmacies. We have the largest inventory of generics in the business and the biggest customer base in Puerto Rico, serving 900 mostly independent pharmacies,” says Fraga. The company also serves chains such as Farmacias El Amal, which Fraga says is among his most loyal clients.
Fraga says his love of the battle, combined with plenty of hard work, has kept him going. “Never take a punch without trying to give two; that has been the story of my life. I have worked in places until I felt I wasn’t comfortable anymore and then quit, but I love everything about this business,” says Fraga, who feels his employees are almost like family.
Though he admits he could have retired years ago, Fraga says that isn’t on his agenda. “I wouldn’t know what to do. I know I would have to do something else, but I wouldn’t get the same satisfaction,” he says.
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