An average consumer spending on healthcare around two decades back was eight per cent. Between 2000 and 2015, it is expected to increase to 130 per cent in India, as per AT KEARNEY. This shows pharmacy retailing is in good health.
PHARMACY retailing in India is an old and established business. However, with the advent of organised retailers, pharmacy business is now beginning to make a paradigm change in the manner in which medicines are sold to the customer. India's second-largest consumer-spending sector in 2010 was healthcare. Being worth around Rs 1 lakh crore, the industry is already more than what Indians spend on clothing and all other sectors, as per a Technopak report. According to Tariq Ali, President, Business Developments & Projects, Guardian Lifecare Pvt. Ltd, “The organised retail pharmacy stores are barely a decade old in India and we expect to see significant growth in the coming years.” This increasing growth in pharmacy retailing is responsible for creating an opportunity for aspiring entrepreneurs, as some of the pharmacy retailers have opted for franchise route for expansion. However, the industry is still new to franchising.
Talking about the changing buying behaviour, Ali informs, “The buying behaviour of the consumer has changed in the past few years, as nutraceuticals (an amalgamation of nutrition and pharmaceutical) and cosmeceuticals have gained importance. People are ready to shell out money to buy ready-mix formulations to supplement nutritional deficiency. The nutrace-utical business in India is estimated at around Rs 44 billion. The consumer is willing to spend more if the product promises to deliver what it claims.
Opportunity for aspirants
Acknowledging the potential for growth in India, a large number of corporates are entering the pharmacy retail sector. Some of the prominent pharmacy franchisors offering opportunity are Guardian Lifecare Pvt. Limited, Religare Wellness and VIVA. India's fastest growing chain of health, wellness and beauty stores was started by Ashutosh Garg, Chairman and the Managing Director, Guardian Lifecare Pvt. Limited, in 2003 by establishing the flaship store at Galleria, Gurgaon. As per Ali, “Presently, the company has over 230 stores across India and is adding two new stores every week. It has presence in 20 cities and is expanding across India.”
Religare Wellness associated with Fortis Healthworld is a pioneering endeavour within India's healthcare industry, putting health solutions on the retail map. As part of the vision of Fortis Healthcare and Religare Enterprises, Religare Wellness incorporates setting up of a pan-India retail network of health stores that would provide comprehensive solutions under one roof.
The company cited gaps in the way medicines and FMCG items are sold and managed across India and then formulated an entry strategy to enter into the organised retailing space in the healthcare domain through a chain of chemist stores under the brand name 'VIVA - Your family Chemist'. Besides these franchise brands, there are companies like Apollo Pharmacy, MedPlus, Lifecare, Dialforhealth India Ltd that are in pharmacy retailing in India but have not opted for franchise route as yet.
The key to success for building trust among consumers is value-added services like home delivery, prescription records and reminder services, state-of-the-art pharmacy, a special diabetic care section, self-diagnostic equipment, natural foods, baby care products, skin care, toiletries, among other things.
Eligibility criterion for franchisees
The pharmacy retail brands follow a very strict process of selection to sign up a franchisee. The focus is on the individual's capacity to invest along with his background and location. Ali informs, “Interestingly, all our 35 franchisees are non-pharmacy background individuals and it works fine with us because of the fact that each one of them brings with them their own individual touch.” It is important for a franchise to understand the business and the financial commitment required. An alliance with a strong brand will help in pulling customers into the store but retaining customers can only be done at the store and through excellent service.
Threat from unorganised players
The pharmacy market in India is highly fragmented with over five lakh family-owned small-sized chemists and druggists operating across the country. Unorganised pharmacy outlets or chemists dominate the Indian pharmacy segment. The sector has over 7.5 lakh chemist shops and it handles revenue over Rs 90,000 crore, which includes medicine sales of approximately Rs 45,000 crore. Organised pharma retail chains have to concentrate on the service, add value and ensure reliability of medicines and ambience to handle competition. Ali informs, “Our strategy is to offer the customer genuine medicines under one roof and our loyalty programme offers customers redeemable points. The loyalty card also helps the customer get discounts at health and diagnostic centres. The customer also gets our bilingual health magazine, the Guardian Health Chronicle, when he shops at our stores.” The overall value proposition for the branded outlet would include a number of value-added services to become more attractive to the customer over the neighbourhood chemist.
What lies ahead
Pharmacy retailing is a serious business and it takes time for new entrants to build in the trust and faith that unorganised players are already enjoying for quite some years. Still considering the potential for growth and need for organised players, aspiring entrepreneurs can explore this upcoming franchise opportunity. Elaborating on the role of franchising, Ali opines, “Franchising is an excellent strategy for expansion. Franchises give a significant impetus to growth especially since they are able to maintain their environment more effectively. However, the franchisor should be ready with his value proposition before offering a franchise.”
Factors responsible for the growth of organised pharmacy retail in India are:
Large population: The country's growing population is expected to touch the 1.2 billion mark in 2011. With the addition of about another 150-odd million in the next 10 years alone, by 2020, the size of India's healthcare industry would be over Rs 600,000 crore, as per Technopak.
Emergence of organised players: Buying medicines from an unorganised local chemist shop has given way to a more sophisticated organised experience. This transformation can be attributed to the emergence of various organised players in the industry.
Increased health consciousness: Availability of vast access to knowledge via internet, television and newspapers and promotional strategies followed by the organised players has led to increased consciousness among people for health and wellness.
Scientific advancements: With growing scientific advancements, it is easy to get accurate diagnosis. So, people are not ignoring any kind of illness, be it small or big, and are ready to pay to be in a perfect state of health and body.