Fairy tale? Illusion? An idea becomes reality

The story of the early years of Zur Rose has been adapted from the original by Stefan Scheytt (April 2013).

Ask people about the early days of Zur Rose and it will reveal some fascinating memories. Take for example, Thomas Schneider. Today he’s the Zur Rose Group's Vice Chairman of the Board of Directors and one of the original 20 founders of the company. Back then, he was a family doctor with a practice in Tägerwilen in the canton of Thurgau, Switzerland. "Zur Rose never intended to become what it is today. We had no idea that something this big could be achieved, it was more of an illusion," he says.

Alfred Muggli, also a doctor and the first Chairman of the Board of Directors, pulls out an article he published in a journal issued by the association Ärztekasse at the end of 1993, a few months after the founding of Zur Rose (the original company name). The report was entitled: The Rose - A True Fairy Tale.

What’s interesting about this is that the founding of Zur Rose alone seemed like a fairy tale to Alfred Muggli, whilst the massive growth that followed seemed like an illusion to Thomas Schneider.

Fairy tale, illusion? As is often the case with companies which have grown from the tiny kernel of an idea to a company of almost unimaginable size, it all began with the efforts of the partners, who had no time for visions because of the real, practical hurdles they had to overcome at the time.

Thomas Schneider
Zur Rose never intended to become what it is today. We had no idea that something this big could be achieved, it was more of an illusion.
Thomas Schneider
Vice Chairman of the Board of Directors, Zur Rose Group

The story of Zur Rose begins, as its co-founder Walter Oberhänsli says himself, “trivially". At the end of the 80s the lawyer was looking for a tenant for his newly purchased, baroque, half-timbered house with the name Zur Rose, in the centre of the small town of Steckborn, Switzerland. He had an idea that it should, or could be a pharmacy. Walter Oberhänsli wanted to give the property a new purpose, and his home town a new pharmacy. When he approached the pharmacy wholesaler, Galenica with the idea, they turned him down. Steckborn was far too small, they said, and besides, it was in a self-dispensing area, where doctors both prescribed and supplied medicines to their patients.

For Walter Oberhänsli, this could have been a good reason to abandon his idea. He could have looked for a bakery or a restaurant or an insurance agency as a tenant.

Self-dispensing medication organisation

Instead, he met local doctors at a local inn, Adler, including his own family doctor Alfred Muggli, who at the time was president of the Thurgau Medical Association.

In their meetings at the inn, the doctors regularly complained about the cartel of pharmaceutical companies that only sold their drugs at fixed prices. In fact, this was the reason the doctors had decided to create their own pharmacy as early as 1985, admittedly "only as a memorandum," as Alfred Muggli notes with a smile.

But Attorney Walter Oberhänsli provided a decisive pivot to the idea, in the legal form of a stock corporation. The doctor’s pharmacy could issue profit participation certificates to its shareholders, which would allow them to legally circumvent the cartel's ban on discounts and, at the same time, the doctors' prescription business would form a second financial foundation for the new pharmacy. "Basically not an earth-shattering idea, but it was in the air, and I was just the catalyst," says Oberhänsli.

Alfred Muggli succeeded in winning over the 20 doctors needed as founding shareholders for the pharmacy's own self-dispensing medication organisation, each subscribing CHF 10,000. But for almost three years, he and Walter Oberhänsli searched in vain for a Swiss pharmacist. At least a dozen pharmacists were presented with the project idea – only to turn it down because of professional politics.

And here again, Walter Oberhänsli could have thrown in the towel. "Personally, I probably would have given up what was a gruelling process," Alfred Muggli admits today, "but Walter Oberhänsli remained persistent, even stubborn.”

The idea grows

With the help of an exceptional permit from the cantonal government, a German pharmacist was eventually found. Walter Oberhänsli managed to ensure that the pharmacist was not denied membership in the Swiss Pharmacists Association. He also positively influenced manufacturers to supply Zur Rose with a legal opinion and a draft statement of claim. "We brought down the cartel," he says, visibly satisfied. With hindsight, it has to be said that it was the work of a very dedicated and stubborn lawyer that brought Zur Rose into being.

That’s when Walter Oberhänsli's entrepreneurial ambition really came into play. Soon after the first delivery of pharmaceuticals to doctors in June of 1993, the year the company was founded, the idea began to spread.

In Steckborn, Daniela Kieber-Huber, now head of internal sales for medical wholesalers, but at that time Zur Rose's sixth employee, was sitting in an office apartment above the pharmacy trying to cope with the growing number of orders from new doctors' shareholders.

The goods arrived in Steckborn by night train from Ticino; they were then divided up for distribution, and sometimes, Daniela Kieber-Huber remembers, the pharmaceuticals were still handed to the drivers through the window. Although later, the pharmacy rented rooms in a former sewing machine factory, restricted space remained a constant problem. "Everything was delivered by hand back then! Unthinkable today.”, she says, shaking her head.

A further boost came when the pharmacy-affiliated Galenica bought all three of the leading suppliers to doctors at the time, which had the effect of driving doctors to Galenica’s young competitor Zur Rose "in droves.” ”Low hanging fruit," comments Daniela Kieber-Huber.

Daniela Kieber-Huber
Everything was delivered by hand back then! Unthinkable today.
Daniela Kieber Huber
Head of Internal Sales for Medical Wholesalers, Zur Rose Group

At the same time, the new Zur Rose pharmacy began advertising to doctors in neighbouring cantons. "We had to increase our capital again and again and call in the notary many times," Alfred Muggli recalls with amusement. The doctors' federation FMH also became a shareholder, and Alfred Muggli experiences "a wave of enthusiasm" when Zur Rose is presented at a closed meeting of the FMH.

"In the beginning, Zur Rose grew too fast for me," admits Daniela Kieber-Huber, "but today I know that nothing better could have happened to me than a company that has so much drive.”

What's next?

Drive is definitely the right word. Sales increased from 2.5 million Swiss francs in the first year of operation to almost 60 million in 1998, and the number of shareholders rose from 20 to more than 400 in the same period.

But Walter Oberhänsli became restless. As he says, "Towards the end of the 1990s, we realised the business model was reaching its limits, that the momentum of the early years would not continue forever. And then the question was simply, what's next?”

This was followed in 1999 by the move to Frauenfeld, Switzerland and its new modern logistics centre. In 2001 Zur Rose started shipping medicines to patients via a mail-order pharmacy. Then the entry into the German and Austrian markets followed, and finally in 2012 the takeover of the mail-order pharmacy DocMorris. "I had not dared to dream it in 1993, but today we are very close to our goal of generating one billion francs in sales," says Walter Oberhänsli, who has held the CEO post since 2005.

Walter Oberhänsli
I had not dared to dream it in 1993, but today we are very close to our goal of generating one billion francs in sales
Walter Oberhänsli
Executive Director and CEO, Zur Rose Group

Walter Oberhänsli still lives in Steckborn and drives past the red and white, half-timbered house with the pharmacy on the first floor every day. "I have an insanely strong attachment to the house and the name. The pharmacy is still the company's headquarters," he says.

The owner of Zur Rose shares 1 to 8, Alfred Muggli, also passes by the original pharmacy regularly; it’s just a few minutes' walk from his home and his former practice, where his successor now sees patients.

Alfred Muggli stepped down as Chairman of the Board of Zur Rose in 1997 because he became a cantonal doctor. "Maybe that was good for the company," Alfred Muggli muses, "because Zur Rose’s expansion created such a big company that I, as a doctor, would probably no longer have been the right person for it. But Zur Rose is still – a little bit – my pharmacy.”

Note: Adapted from a story written by Stefan Scheytt, a freelance journalist based in Rottenburg near Tübingen in Germany.