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Chemists Prescribe Retail Pill For Survival
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Survival of Fittest
- Unorganised pharmacists n the country growing @ 8-9%/yr
- They command a market share of about 90%
- To form All India Chemist and Druggist Association
- Plan to launch retail chain co with a common branding
- Pilot project to start in Mumbai in 2007
- Ernst & Young appointed consultant for the project
- New trade model to have centralised purchasing, uniform transport
facility, trade policy, marketing techniques.
- Move to help small retailer retain mkt in face of competition from the
organised retail chains.
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Competitive pangs from growing organised retailing is
compelling a band of over 5.5 lakh unorganised chemists in the country to
come under a single retail-brand umbrella - All India Chemist and Druggist
Association. They plan to launch their own retail chain company with a
common branding across India. This unique move, they feel, will help them
sustain their marketshare in the Rs 25,000-crore pharma retail business amid
growing competition from organised retailers. The association estimates that
if its members do not come under on umbrella now, they would lose around
25-30% marketshare by 2010.
The association will have a holding company
alongwith subsidiaries in various states like Maharashtra, Delhi, Gujarat,
Bihar, Orissa etc. They are already looking out for key professionals like a
CEO and CFOs, for setting up and managing the business model.
The pilot project will be launched in Mumbai in
January 2007, and will involve about 50,000 pharmacist. Ernst & Young has
been appointed consultant for the project. The new trade model will have
centralised purchasing, uniform transport facility, trade policy, marketing
techniques. "Due to our large base, we will be able to extract discounts
which we can pass on to the consumers," says JS Shinde, honorary general
secretary of the association. The new company will be incorporated by the
end of the year. "The traditional retailers have great strength as they know
and understand their markets very well. Such a format will improve both the
front-end experience for the customers and the back-end support system. This
will also help the small-time retailer retain his market in the face of
competition from the organised retail chains," adds Harminder P Sahni, chief
operating officer of Technopak, a retail consultant.
The number of
unorganised pharmacists in the country has been growing at about 8-9% a
year. They now together command a marketshare of about 90%, but are losing
ground to organised retailers who grew nearly 100% or more in 2005.
Retail players such as Big Bazar, Reliance and Shubishka have either planned
or are already expanding their presence in the drug retail segment across the
country. Their small-store formats will be in direct competition with the
neighbourhood chemists.
"Work is on. But it will be slightly premature to reveal the rollout plans,"
says Utkarsh Palnitkar, director, lifesciences, E&Y. Sources said that the
consultant will help in implementing information technology systems, marketing
and also modernising internal systems such as cold chain, among others and
supply chain management.
The Maharashtra subsidiary will have seven directors - one each from seven
zones of the state. Later, five more directors will be inducted. The proposed
company has already started getting feelers from top venture finance companies
in India for some kind of participation. "At least 10 venture finance f0irms
have approached us for possible tie-ups such as joint venture or equity
participation. We are evaluating their offers," Shinde said.
(Ref : Economic Times dated September 23, 2006)
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