Pharmacy retailing biz pops the shakeout pill
The $5 billion-a-year industry is expected to log a healthy 11% annual growth rate over the next two years.
The economy may not be in good health but one sector that seems to be in the pink is pharmacy retailing.
The $5 billion-a-year industry is expected to log a healthy 11% annual growth rate over the next two years compared with the 9% plus growth presaged in the retail industry in
general.
Within the undercurrents, what is visible is the big boys of the sector flexing muscle and putting in place expansion plans, while the small fry seem set to cash out or just fade away.
For instance, Apollo Pharmacy and MedPlus Health Services Ltd, two of the biggest players, are looking to be 1,000-store chains by the end of the current fiscal, while smaller players such as the Bangalore-based LifeKen and CRS Health have already sold out to Religare Wellness Ltd.
Likewise, Fortis Healthworld recently bought out another New Delhi-based small pharmacy chain, 98.4 Health.
More such M&As are in the pipeline, say industry watchers.
“It is an open market out there and we are very open to any such opportunities at a good price,” Shobana Kamineni, director, Apollo Hospitals group told DNA Money, adding she would be interested in even small chemists selling out to the chain.
Madhukar Gangadi, founder and CEO, MedPlus Health Services Pvt Ltd, however, felt there would be no value in acquisitions unless it was a chain with a minimum of 100-plus stores.
“Setting up stores is not an issue if you have the money,” he added.
MedPlus, which operates 600 outlets in seven states and 35 cities currently, has set itself an ambitious target of 10,000 outlets under its brand name in about four years. It will add close to 400 outlets by March 2009.
Apollo, which currently has 940 stores, will add just 40 more in that time though it is open to opportunistic acquisitions in the meantime.
Clearly, the small neighbourhood chemist is giving way to organised retailers doling out discounts to customers and promising genuine medicines and better quality of service.
There are roughly 8 lakh chemists operating in the country today, while organised retail pharmacy business accounts for less than 4,000 stores indicating a huge opportunity.
While MedPlus claims to have a 30% share of the organised pharmacy retail, Apollo is a bigger player with others like Guardian Lifecare with close to 150 stores and Fortis and Religare following with smaller shares.
The current situation has arisen because the expected influx of foreign pharmacy retail giants into the country has not happened and the acquisitions and the humongous multiples that smaller, opportunistic players were looking at did not happen, added Kamineni.
This is a game for deep pockets and players with a long-term perspective, she said.
The $5 billion-a-year industry is expected to log a healthy 11% annual growth rate over the next two years compared with the 9% plus growth presaged in the retail industry in
general.
Within the undercurrents, what is visible is the big boys of the sector flexing muscle and putting in place expansion plans, while the small fry seem set to cash out or just fade away.
For instance, Apollo Pharmacy and MedPlus Health Services Ltd, two of the biggest players, are looking to be 1,000-store chains by the end of the current fiscal, while smaller players such as the Bangalore-based LifeKen and CRS Health have already sold out to Religare Wellness Ltd.
Likewise, Fortis Healthworld recently bought out another New Delhi-based small pharmacy chain, 98.4 Health.
More such M&As are in the pipeline, say industry watchers.
“It is an open market out there and we are very open to any such opportunities at a good price,” Shobana Kamineni, director, Apollo Hospitals group told DNA Money, adding she would be interested in even small chemists selling out to the chain.
Madhukar Gangadi, founder and CEO, MedPlus Health Services Pvt Ltd, however, felt there would be no value in acquisitions unless it was a chain with a minimum of 100-plus stores.
“Setting up stores is not an issue if you have the money,” he added.
MedPlus, which operates 600 outlets in seven states and 35 cities currently, has set itself an ambitious target of 10,000 outlets under its brand name in about four years. It will add close to 400 outlets by March 2009.
Apollo, which currently has 940 stores, will add just 40 more in that time though it is open to opportunistic acquisitions in the meantime.
Clearly, the small neighbourhood chemist is giving way to organised retailers doling out discounts to customers and promising genuine medicines and better quality of service.
There are roughly 8 lakh chemists operating in the country today, while organised retail pharmacy business accounts for less than 4,000 stores indicating a huge opportunity.
While MedPlus claims to have a 30% share of the organised pharmacy retail, Apollo is a bigger player with others like Guardian Lifecare with close to 150 stores and Fortis and Religare following with smaller shares.
The current situation has arisen because the expected influx of foreign pharmacy retail giants into the country has not happened and the acquisitions and the humongous multiples that smaller, opportunistic players were looking at did not happen, added Kamineni.
This is a game for deep pockets and players with a long-term perspective, she said.