Pharmacy Retail Market - India

September 2009
Executive Summary

The market is valued at INR XX bn in 20--; Estimated to reach INR YY bn in 20- -

Market
The market is fragmented and dominated by the unorganized sector

There are U pharmacies in India with about V distributors

Drivers &
Drivers:
–
–

PLE
Increase in healthcare spending
Growth in pharmaceuticals sector
Challenges:
–
–
Fragmented industry
Long distribution and supply chain

M
– Changing disease profile – Counterfeit drugs
Challenges

A
– Consumer attitudes – FDI regulations

S
– Attractive margins
– Growth in OTC Segment

Loyalty Schemes

Value Added Services
Trends
Tie-ups with Retail firms

Rural Expansion

Entry of Government in Pharmacy Retailing

Entry of Private Labels

Organized Retailers starting Pharmacy Chains

Company 1 leads in the organized pharma retail market with highest number of outlets
Competition
Leading organized players include Company 1, Company 2, Company 3 and Company 4

Primarily organized retail chains operate either as a company owned or as a franchisee outlet

PHARMACY RETAIL MARKET – INDIA.PPT 2

•Market Overview
•Drivers & Challenges
•Trends
•Government Regulations
•Competition
•Key Developments

PHARMACY RETAIL MARKET – INDIA.PPT 3

The market is highly fragmented and dominated by the
unorganized sector
Market Overview Overall Market Size & Growth
•There are U pharmacies in India today, with
about V distributors INR bn
•Market is fragmented and dominated by the

E
600

L
a% Y
unorganized sector

P
400
•Growth in this market is driven by increasing X

M
200
healthcare spending, growth in organized
retailing and attractive margins

SA
•The entry of organized players is changing the
face of the pharmacy business in India

The organized space of pharmacy retailing is
0
2009 2011

Revenue split – Organized vs Unorganized

Organized
dominated by p-q big players
v%

Primarily, organized retail chains operate either as
a company owned or managed stores or as a
franchisee outlet
•In India, pharmacies/drug stores are the
dominant distribution channel generating b% u%
of the overall pharmaceutical sales Unorganized

PHARMACY RETAIL MARKET – INDIA.PPT 4

Pharmacy chains are expanding operations using various
store formats
Store Format Description

• They are housed in hospitals & dispense a limited number of medicines

Hospital Pharmacies • They cater mainly to the requirements of patients admitted in hospitals

• Stores are located near the residential areas

Standalone Stores • Some of these stores offer home delivery
• The target customers are middle and upper class households

• These are located in supermarkets, malls or departmental stores

Malls/Shop-in-Shops • Company 1has a tie-up with Company 2 for its daily stores in South India

• Pharmacy chains are planning to set up shop in townships

Townships • Company 3 has signed an agreement with Company 4 to set up a
medicity inside the upcoming project T near Pune

PHARMACY RETAIL MARKET – INDIA.PPT 5

Drivers & Challenges

Drivers Challenges
Growth in pharmaceuticals sector Fragmented industry

Increase in healthcare spending Long distribution and supply chain

Changing disease profile Counterfeit drugs

Growth in OTC segment FDI regulations

Attractive margins

Consumer attitude

PHARMACY RETAIL MARKET – INDIA.PPT 6

Trends

Loyalty Schemes

Value Added Services

Tie-ups with Retail firms

Trends ` Rural Expansion

Entry of Government in Pharmacy Retailing

Entry of Private Labels

Organized Retailers Starting Pharmacy Chains

PHARMACY RETAIL MARKET – INDIA.PPT 7

Company 1 leads the overall market

Competition Overview Organized Pharmacy Distribution

• Company 1 leads in the organized pharma retail
market with highest number of outlets Company 1 740
• Sector has witnessed the entry of new players

E
Company 2 600

L
• Almost all players have expansion plans Company 3 350

P
• Organized pharma retail chains operate in three Company 4 130
models: Company 5 112

Fully owned stores
– Company 1 prefers fully owned model

Franchise model
– Company 2 operates in this model SAM Company 6
Company 7
Company 8
Company 9 35
110
92
50

Company 10 30

Combination of owned and franchise stores
– Company 3 prefers a combinational model Company 11 25
Company 12 14
• Franchisee model has enabled loss making stand-
Company 13 12
alone stores to be absorbed by organized retailers
Company 14 10

This is likely to trigger consolidation in this sector
Company 15 6
• Retail outlets of players like Company 4 sell only its
Company 16 6
products No. of Stores
• Leading players are targeting rural areas and are 0 200 400 600 800
tying-up with organized retail players for expansion

PHARMACY RETAIL MARKET – INDIA.PPT 8