retailers gear-up for a boom with the opening of the retail
sector to FDI, reports N Rao.
retail revolution sweeping across the country has brought
in changes to the way average urban Indians shop for a
host of products and services from routine groceries
to attractive apparels, and from petrol and lubricants
to books and magazines.
a majority of Indians still visit the crowded neighbourhood
pharmaceutical store to buy a vitamin pill or a painkiller,
and in some of the smaller cities have to double-check
to ensure that the medicines are according to the doctor's
prescription, cosmetics like shampoos and creams are genuine,
and the chocolates are not past the 'best before' date.
$5-billion pharmaceutical retail market in India is, however,
priming itself for major changes. Says Viraj Gandhi, CEO,
Medicine Shoppe India: "Nine out of 10 blockbuster
drugs in the future will be bio-tech based, requiring
special storage facilities and transportation. Most of
the existing pharmacies in India would be unable to meet
the stringent requirements."
firm is the master franchisee in India of US-based Medicine
Shoppe International, the largest franchisor of independent
community pharmacies in America, and part of Cardinal
Health Inc (ranked 16th on the Fortune 500 list
in 2005), with group annual sales topping $75 billion.
Shoppe set up a presence in India in 1999, but faced stiff
opposition from the well-entrenched domestic retailers
of pharmaceutical drugs. Five years later, it had appointed
50 franchise stores in the country, and this month has
reached the 100 mark.
"From here, we aim to become a 200-plus pharmacy
chain by the end of this year, and cross the 700-mark
in 2010, by expanding our operations in urban as well
as rural India," says Gandhi.
are over 800,000 chemists in India, dispensing about $5
billion worth of pharmaceutical products every year. International
pharmacy chains have still not established a major presence
in the country, but with the Indian government eager to
open up retailing to foreign direct investment (FDI),
many are expected to enter India.
Indian government recently took tentative steps towards
achieving the ultimate goal of allowing 100 per cent FDI
in retailing, by permitting single-brand stores to set
up shop here. Bruce Burnett, vice-president and international
business head, Medicine Shoppe International, believes
that over the next five years, "there will be a very
strong boom in organised pharmacy retailing, where the
pharmacy models will start following the western world."
pharma retailers are expected to take advantage of the
liberalised FDI rules relating to single-brand stores,
and enter the country. Organised retailing today accounts
for a negligible share of the overall market. But an increasing
number of organised players have entered the business
giant Apollo Hospitals has established a formidable network
of 300 stores under the Apollo Pharmacy brand, but mostly
in south India. Another healthcare major, Bangalore-based
Himalaya Drugs, is also on a major expansion spree in
the retail sector. The herbal healthcare giant, has nearly
100 stores, and is planning an aggressive expansion.
has just signed up with Reliance Retail the ambitious
retail foray of the Mukesh Ambani controlled Reliance
Industries to set up its Himalaya Herbal Healthcare
stores at the new malls, hypermarkets and supermarkets
that Reliance plans to set up shortly.
to Subrata Dutta, business head, consumer division, Himalaya
Drug Company, "consumers today are far more discerning.
Along with quality products they are also looking for
ambience and convenience in shopping. Our outlets have
been designed keeping this in mind."
at its stores can browse through the vast range of its
products at the stores, while executives at the 'information
centres,' reply their queries. Importantly, the stores
are also electronically linked to a CRM cell, and aided
by a team of doctors they are able to answer specific
health queries of customers.
has tied up with several other retail majors including
Big Bazaar, Spencers, Nilgiris, Shoprite, D'Mart, Giant,
Vishal Mega Mart, Lifestyle and Big Shopper. It has also
gone in for tie-ups with other organised retailers of
pharma products, including Apollo Pharmacies, Medicine
Shoppe, Pill & Powder, CRS Health, Health & Glow,
Guardian Lifecare and Global Healthline, with its chain
of '98.4 degrees' stores.
the north, Guardian Lifecare has set up a chain of about
50 stores, and is one of the fastest growing organised
retail chains in the region. Its stores, under the Guardian
Pharmacy brand, offers a range of prescription and OTC
medicines, food supplements, toiletries, skincare, mother
and baby care products, and self-diagnostic equipment.
to Ashutosh Garg, chairman and managing director, Guardian
Pharmacy, the group plans to have 500 stores in just about
two years time. The company has also joined hands with
the DCM Shriram and set up its 'Aushadhi' chain of rural
pharma retail stores.
believes that the initiative would ensure that rural folk,
who face the problem of spurious medicines, would get
outlets are located within the 'Haryali Kisan Bazaars,'
the rural initiative of DCM Shriram. Ajay Shriram, managing
director of the company, wants to add about 50 more rural
utility marts (as the bazaars are known) over the
next one year. The company operates 25 such marts mainly
in north and central India. It would be investing about
Rs75 crore into this business.
like Guardian Lifecare and Medicine Shoppe see huge opportunities
in the rural areas, where healthcare facilities are minimal.
While the rural poor would obviously go to the public
healthcare facilities, the affluent are woefully under
serviced at present.
pharmaceutical retailers are also focusing on the higher-end
of the urban market. Says Gandhi of Medicine Shoppe, "Most
companies today sell super specialty drugs directly as
storage conditions, high costs of the drugs and returns
policy are big blocks for ordinary retailers. And since
these drugs are expensive, there is a high incentive for
Shoppe has set up 'super specialty stores,' which acquire
specialised products from the manufacturer, transport
them to its warehouse in temperature-controlled conditions,
and store them at the pharmacies in refrigerators. Importantly,
they also ensure free home deliveries to registered patients
anywhere in Mumbai.
Shoppe has also launched a special loyalty card. The smart
cards carry details of the customer's medication, and
even the patient's medical history can be accessed. The
loyalty card also entitles customers to points
10 points for every Rs100 spent at the
store and there are prizes, including free holidays
too has introduced a programme of privilege cards and
vouchers. Others are planning free medical insurance to
to Burnett of Medicine Shoppe International, India and
China are the two most promising markets for pharmaceutical
retailers. "India is a very unique market,"
he explains. "It has the largest middle income consuming
population, many of whom suffer
from chronic ailments. Over the next five years as baby
boomers start ageing, consumption of chronic as well as
preventive medications is going to increase."
retailers hope to expand their market share significantly,
and are going all out to woo this segment of the market.