PHARMA RETAILINGPHARMA RETAILING

PRESENTED BY: Ajay Jivani (0913) Mukund Mistry(0920)

Hiren Parmar(0923) Riddhi Patel (0929) Kuldeep Zala (0958)

RETAILING – CUSTOMER IS KINGRETAILING – CUSTOMER IS KING “A Customer is the most important visitor on our

premises. He is not dependent on us. We are dependent on him. He is not an interruption on our work. He is the purpose of it. He is not an outside of our business. He is a part of it and we are not doing him a favour by servicing him. He is doing us a favor by giving us an opportunity to do so.”

Mahatma Gandhi

INDIAN PHARMACY CHAININDIAN PHARMACY CHAIN Indian retail market is the 5th largest retail

destination globally. estimated to grow from the US $ 330 billion

in 2007 to US $ 427 billion by 2010 and US $ 637 billion by 2015.

current pharmacy retail market size was estimated to be of US$ 8.7 billion by 2010.

12-15 dominant players in india Retail pharmacy market growing at 15%

organized retail growing at 35-40%

PHARMACEUTICAL RETAIL – PHARMACEUTICAL RETAIL – EMERGING GROWTH SEGMENTEMERGING GROWTH SEGMENT With revenues of US$ 130 to 140 million in

2006-07, organised retail constitutes just two per cent of the pharmaceutical retail market in India

It is expected to grow at a high y-o-y growth of 30 to 40 per cent and is likely to become US$ 400 to 530 million market by 2010

Government contemplating to increase the FDI cap to 51 per cent in the case of single brand product

Sensing the tremendous potential of organised

retail, US retail majors Wal-Mart, Boots and Asian retailer AS Watson are expected to soon make a major foray in to the domestic market

$1 = Rs.40.32One crore = 10 million

CURRENT PLAYERS’ EXPANSION CURRENT PLAYERS’ EXPANSION PLANSPLANS

Pharmacy Chains Plans

Apollo Pharmacy (partof the Apollo HospitalGroup

To operate more than 1000 outlets by 2009.

Subhiksha Has over 1500 outletsMedicine Shoppe (partof Medicine ShoppeInternational Group)

Medicine Shoppe (partof Medicine ShoppeInternational Group)

Guardian Lifecare Regional player with 65 pharmacies expected to increaseto 3,500 by 2015

98.4 Has a presence of close to 60 outlets and plans toincrease to more than treble its count to 300 by 2011.

Fast changing due to the entry of organized players

Driven by two main factors – lower price and benefits the consumers can’t resist

Emphasis on innovation in products, process and services

PHARMACY CHAIN FORMATSPHARMACY CHAIN FORMATS

Hospital Pharmacies Retail Stores/Standalone stores Malls/Shop-in-shops Townships

MAIN ACTIVITIES IN PHARMA MAIN ACTIVITIES IN PHARMA RETAILRETAIL 1. Choosing store location

a. Attractivenessb. Conveniencec. Proximity

2. Sourcing / Buying / Vendor Partnership / Supply Chain Management

3. Achieving efficiencies in retail operationsa.  Margin-Turnover positionb.  Investment productivityc.  Space Productivityd.  Employee Productivitye.  Average size of transactions

ADVANTAGES TO ORGANISED  ADVANTAGES TO ORGANISED  PHARMA SECTORSPHARMA SECTORS Economies of scale Technology driven Retailing their own pharma brands/generic

brands along with competitors brands Passing advantages to patients and

consumers Increase in market share and profits Discount parameter

DISADVANTAGES DISADVANTAGES No economies of scale to small medical stores Small geographic area No home delivery services Winding up of  medical shops Losses from expiry of medicines Discounts can not be offered

S.W.O.T. ANALYSIS OF MODERN S.W.O.T. ANALYSIS OF MODERN PHARMA RETAIL INDUSTRYPHARMA RETAIL INDUSTRY

Strength Elimination of spurious drugs. Prevention of mal practices like creating artificial

shortage of drugs by intermediaries. Busy schedules of customers having less time for

detailed counseling and eventual purchase of drugs, whereas modern retail results in educated time and cost savings.

Ready availability of installed capacities with technically knowledgeable personnel.

Efficient management of installed manufacturing capacities resulting in complete sell-out.

Weakness Due to huge outlay, major share of rural and spread out

population cannot be reached. Substantial expenditure in advertising, promotional, and goodwill

activities. Fierce competition amongst players in projecting their own

products over others. Due to boost in local sales there may be lesser initiative to

export.

Opportunities Tapping previously ignored segment of urban

population in non-prescription areas. Ideal for gauging customer preferences To export to/ through the tied-up associated foreign

company who have their existing marketing infrastructure.

To cement the loose ends in coordination among customer, doctor, manufacturer and insurer, in terms of mutual business interests.

Threats An unholy alliance between independent unorganized

pharmacies in shunning products of the organised “Pharma Manufacturing - Retailing” giants.

Containment of rising hostility among “Pharma Manufacturing - Retailing” giants.

Possible government legislation to protect the interests of intermediaries and small retailers apart from government restrictions on more foreign players entering the market.

High cost of sales and marketing by way of advertising, promotional activities,incentive schemes (gift vouchers, etc), and loyalty programs.-

DRIVERS & CHALLENGESDRIVERS & CHALLENGES

OVERALL MARKET SIZE & OVERALL MARKET SIZE & GROWTHGROWTH

COMPETITION OVERVIEWCOMPETITION OVERVIEW Organized pharma retail chains operate in

three models:1. Fully owned store2. Franchise model3. Combination of owned and franchise stores Leading players are targeting rural areas and

are tying-up with organized retail players for

expansion

BIG PLAYERSBIG PLAYERS Ranbaxy's (Fortis), Pantaloon (Tulsi), Reliance Retail's (Reliance Health and Pharma) Apollo Hospitals Group's (Apollo Pharmacy) ,

Medicine Shoppe , Zydus Cadilla's (Dial for Health), Sagar Drugs & Pharmaceuticals' (Planet Health), Morepan's (Life Spring), Lifetime Healthcare's (LifeKen), Global Healthline (98.4), Guardian Lifecare's (Guardian Pharmacy),

MedPlus

OPERATIONAL PHARMACY OPERATIONAL PHARMACY CHAINS IN THE INDIAN MARKETCHAINS IN THE INDIAN MARKET

Apollo Pharmacy India's first and largest branded pharmacy

network, 720 outlets in 17 states International Quality Certification free health insuranceon purchase of above Rs.

6000 in a year. Fortis Healthworld Pharmacy chain promoted by the Singh family

of Ranbaxy

two models - Company owned and operated stores and Franchisee owned stores.

40 stores and planning to expand its presence to over 100 cities.

MedPlus Health Services 500 stores in Andhra Pradesh, Maharashtra,

Karnataka, Tamil Nadu, Gujarat and Rajasthan and plans to increase it to 1000 by March 2009. Mauritius based iLabs Management LLC has invested $5.2 mn in MedPlus.

Tulsi pharmacy retail chain of Future Group. 35 Tulsi outlets across the country.

Planet Health pharmacy retail of Sagar Drugs & pharmaceuticals. 20 outlets in Gujarat located in Ahmedabad, Baroda

and Gandhinagar. LifeKen Lifetime Healthcare Pvt. Ltd is a leading Pharmacy

Retail chain in Bangalore and Chennai. 82 Stores in Bangalore, Chennai and Mumbai. The

list comprises 37 LifeKen Stores, 11 Pill and Powder Stores and 7

stores in Spencer's Stores in Bangalore.

Guardian Lifecare Pvt. Ltd North India's largest retail chain of Pharmacy,

Wellness, Health and Beauty Retail outlets. 149 outlets in 16 cities. plans to open another 150 new stores across India by

March 2009 and Guardian chain will grow to 400 stores by March 2010

SAK CRS SAK Consumer Retail Services Ltd is a subsidiary of

Delhi based business group, SAK Industries. major centres in India to include Delhi, Noida, Gurgaon,

Pune and Chennai. more than 30 CRS Health Stores in India.

PLANET HEALTH PLANET HEALTH OPERATING PHILOSOPHYOPERATING PHILOSOPHY genuine and properly stored products health-related merchandise including monitoring

devices multiple products and brands including Ayurvedic

products counselling for shopping counselling for proper administration of products

especially medicines home delivery 24X7 service Tie-up with doctors and other paramedical services loyalty programme for a long-term relationship.

AN ILLUSTRATION OF SUBHIKSHA RETAIL AN ILLUSTRATION OF SUBHIKSHA RETAIL CHAINCHAIN

Pharmacies only which are 150 square feet in area.

Departmental stores plus pharmacies, 1000-1200 square feet, and

Supermarkets plus Pharmacies, 1600-2000 square feet.

To be able to offer such a high level of discount and still be profitable, Subhiksha needed three things,1. Command large volumes to enable volume discounts from 2. Manufacturers and cut out middleman3. Slash overheads and inventory costs.

The Subhiksha format rests on two main planks

1. Lower prices 2. Neighbourhood stores

Subhiksha believes that the MRP is just a cap on prices and prefers to sell everything at less then MRP. It manages to provide discounts in the range of 10 percent on nearly all products. Subhiksha's appeal to the average middle class household is considerable, the price savings mean a lot for them.

THANK YOU