PHARMACY MAKES FOR A ‘HEALTHY’ BUSINESS

A pharmacy store makes year-round sales, thus making it one of the most lucrative businesses to take a plunge in.

Pharmacy retailing is a capital-intensive business proposition and its setup involves strategic location of outlets. The business calls for an investment of at least Rs 8-9 lakhs, which includes licensing and documentation cost of approximately Rs 35,000-40,000; ERP software worth Rs 50,000; interiors for Rs 2.5-3 lakhs; and roughly Rs 3 lakhs for initial stocks. For a franchise store, brands like Easymedico demand Rs 2 lakhs as one-time nonrefundable franchise fee. The operational expenses may be in the range of Rs 50,000-80,000, which includes lease or rent of Rs 20,000-50,000 per month depending upon the location and city.

Further, manpower of two trained people may cost Rs 20,000-25,000 and Rs 10,000 as miscellaneous expenses. The margins typically range between 15-26% for branded medicines, which may go up to 40-50% in case of generics. “While we offer 12-80% discounts to attract customers, we ensure more than 15% margin to franchise owners. The franchise stores may expect to become profitable within six months, once they achieve monthly sales of Rs 3 lakhs,” shares an Easymedico Franchise Manager.

MARKET SCENARIO

In India, the pharmacy retail market is worth Rs 1.2 to 1.5 lakh crore. Of this, 98- 99% is offline, informs Dr. Surendra Mantena, CEO, MedPlus Health Services. Though the sector is majorly unorganised, the organised players are becoming popular with increasing footprint, genuine medicines, and attractive offers.

“The independent local operators lack on customer experience and proper inventory management. I feel there is enough potential in this sector as it is not getting adequately served,” suggests Pradeep Dadha, Founder and CEO, Netmeds.

The market is witnessing a trend where online players are enhancing their offline presence. “Today, ‘click-to-brick’ strategy is being embraced by many e-retailer giants. Some adopt this model to provide better shopping experience for consumers. However, in the pharmacy business, it is more about serving the needs on time,” explains Dadha.

THE FRANCHISE OPTION

As per market experts, establishing an individual pharmacy store may be a costly affair in the long run, as the medicines have to be sourced from numerous suppliers with little preferential pricing due to lack of economies of scale. The franchise model helps with better pricing, comprehensive assistance in documentation, location identification, demand survey, inventory planning and training. “In addition, we support franchisees with combined marketing efforts and route our online leads through local franchise stores,” adds Dadha.

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