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Healthcare Industry 29 Sep 2014

Healthcare Sector in India foreseeing exciting times: Rajiv Goyal

The core USP behind the business is to provide people with a “one-stop shop solution” to all health needs through a large network of retail outlets.

The healthcare sector in India is foreseeing exciting times. With a host of international brands showing interest in the Indian market, it is of paramount importance that the existing domestic players buck up and rise to the challenge of upgradation. Rajiv Goyal, Chairman & Managing Director, Surya Pharmaceutical Limited, believes that the time is ripe for healthcare brands to be taken seriously.

Please tell us about Surya Healthcare.

Surya Healthcare is a subsidiary of Rs 1,600-crore Surya Pharmaceuticals Limited, which has already demonstrated astounding business growth by ranking in the prestigious Fortune India 500 companies, being the 17th largest pharmaceutical firm as well as one of the ET 500 and BS 500 companies in India.

Surya healthcare comprises of the retail and the distribution businesses under the name of ‘Viva – Your Family Chemist’ and ‘Value Source’ respectively. Being uniquely positioned in the pharmaceutical trade, well known for its competencies in API, formulations and contract manufacturing across different therapeutic segments, Surya Pharmaceutical Limited has gradually established its global footprint with acquisitions in the US and customers in more than 90 countries. It is a listed and certified company with a personnel base of over 5,000 dedicated and motivated employees.

What is the USP of Surya Healthcare?

The core USP behind the business is to provide people with a “one-stop shop solution” to all health needs through a large network of retail outlets with focus on fulfilling preventive, supportive and curative needs for an individual and society at large.

The retail outlets provide a host of meaningful services along with a promise of ‘genuine medicines’ at all times. At the time of conceiving this project, it was also thought that VIVA pharmacies would not be just trading based, but will be service based as well.

As a commitment to this ideology, our pharmacies play a proactive role by regularly working on a prescription reminder service through our stores, offer special price off packages for senior citizens on their monthly purchases of medicines and extend health management programs through our health prevention camps. These camps are held at our outlets and in neighbourhood areas at regular intervals in collaboration with leading doctors and other healthcare professionals.

We have never underestimated the power of “small stores” along with big box format; hence, VIVA operates express, mid and large format stores. The merchandise is as per the buying context, covering all major FMCG and FMHG categories with a clear emphasis on providing genuine medicines. Our strength is right merchandising and our differentiator is definitely availability.

Apart from our merchandise mix and availability, one of our major USPs is our presentation, design and branding. Our stores are distinct and contemporary in design. In our effort to provide a superior shopping experience, we place special emphasis on the use of extensive lights, space management through linear displays and use of designer elements.

In order to derive economies of scale, the methodology used for roll out and management was based on a clustered approach so that the chain could maximise on availability and be operationally efficient in the shortest span of time.

Please give us an overview of the healthcare industry in India.

The healthcare industry includes medical care providers, physicians, specialist clinics, nursing homes, hospitals, medical diagnostic centres, pathology laboratories and pharmacies. In terms of revenue and employment, healthcare is one of India’s largest service-sector industries. During the 1990s, Indian healthcare grew at a compound annual rate of 16 per cent. Today, the total value of the sector is more than $34 billion. This translates to $34 per capita, or roughly 6 per cent of the GDP. Revenues from the healthcare sector account for 5.2 per cent of the GDP, making it the third largest growth segment in India. India’s healthcare sector has been growing rapidly and revenues from the healthcare sector account for 5.2 per cent of the GDP, making it the third largest growth segment in India. The market size and growth of retail categories in the organised sector is estimated at Rs 4,479 crore for 2011-12.

Pharmacy, as a category, has shown a significant inclination towards the modern sector by posting a projected CAGR of 22.47 per cent. The total market for the category will grow at a CAGR of 15.37 per cent as per IRIS primary research.

The industry is growing at an average of 18 per cent per annum over the last few years, and is anticipated to grow at 15 per cent CAGR over the next 5 years. The industry has over 8,00,000 pharmacy retail outlets and more than 50,000 stockists/distributors, of which only 4 per cent constitutes organised retail, which is expected to grow at 50 per cent per annum for the next 10 years. Out of the total retail, two-thirds of the stores are in urban areas and one-third in rural areas.

What is the concept behind Viva Pharmacy? How many retail stores do you have in India and what are your expansion plans?

The pharmacy market in India is fragmented with over 1,000,000 family-owned small sized chemists and druggists operating across the country. Surya Pharma cited gaps in the way medicines and FMCG items were being sold and managed across India, formulated an entry strategy around the concept of providing a one-stop solution with assurance of genuine medicines to the customer and entered the organised retail space in the healthcare domain through a chain of chemist stores under the brand name VIVA – Your Family Chemist.

Surya Healthcare Limited, while setting up the pharmacy retail outlets, will widen the scope of its healthcare services by launching a concept of Integrated Health Centres (IHC). Through this concept, the company proposes to offer a number of healthcare services under one roof, which will primarily comprise of a family clinic, a diagnostic lab and a pharmacy.

Besides the urban concept, Surya Healthcare Limited also plans to enter the rural sector with strategic tie-ups, where the stores will provide basic healthcare liaison on behalf of the patient with city hospitals, along with providing branded and low cost generic medicines.

Furthermore, it will provide low cost insurance, with meaningful health coverage to all strata of the rural sector. In the next three years, we see ourselves as the largest and the ‘most preferred’ chemist retail chain known for availability of genuine medicines across 1,000 integrated urban and rural destinations, with emphasis on value for time and money for every individual. We plan to achieve this by continuously investing on human capital, technology, strategic tie-ups, collaborations and with emphasis on speed to execution. Currently, we have over 250 stores in the country spread across 7 states and 27 cities, serving more than 400,000 customers every month. The next few years should see VIVA emerge as the largest pharmacy retail chain across India with 2,000-plus stores by 2015 through a combination of company operated and franchised stores across India.

What is VIVA’s USP?

Every VIVA retail outlet carries a comprehensive range of genuine medicines, health and prevention products and places a special emphasis on "must have" essentials in order to provide a one-stop-solution with emphasis on value of time and money for every individual.

It is our mission to provide you genuine medicines, which we ensure by barcoding each and every product, thereby ensuring quality assurance checks at every level before the product is finally placed at the shelf. Keeping with our commitment to quality, we ensure that cold chain products, especially human insulin and eye drops are shipped, stocked and provided to you without breaking the cold chain requirements.

Changing urban lifestyle requires keeping up with unique health requirements and requires special products to manage various health needs. We place a high emphasis on support systems, vitamins, minerals and supplements for you and your family. All our retail outlets are contemporary in design, manned by trained and friendly registered pharmacists who ensure that they deliver you the same experience each time you visit the retail outlet during our operating hours from 8.30 am to 11 pm everyday, 7 days a week. VIVA operates a dedicated Express Procurement Channel, which processes special medical requirements at no extra cost.

Are you associated with any international brands for VIVA?

Surya Group has been associated with international brands like Palmer’s, QNT, Crocs Rx Footwear, Nursa, etc. Thus VIVA is able to make available a wide range of such products from these and other big brands at its stores.

Do you manufacture the medicinal products as well?

The parent company, Surya Pharmaceutical Ltd, manufactures and markets pharmaceutical products and services to clients across the globe, and its product portfolio includes a range of active pharmaceutical ingredients (APIs), fine intermediates, finished drug formulations (FDFs), phyto pharmaceuticals and CRAMS, with operations spanning in domestic and international markets.

The healthcare infrastructure is not the strongest part of India’s economy. What can brands like VIVA do to ensure the tier II and III cities are taken care of?

Pharmacy, as you know, is the vital link between the primary and secondary healthcare providers. VIVA is present in tier I and II cities and has been highly accepted as a preferred retailer. Through our stores, we plan to offer unique basic healthcare services, low health insurance and diagnostic services, which will help the cities to be upgraded to tier I status, because health is wealth.

Is consumer retention part of your strategy? For this, do you have any loyalty program in place?

Viva follows the policy of customer first and I believe our Health First Card provides unique and endless benefits and works for the customer and his/her family to fulfill the comprehensive health needs. It is aimed at providing well-balanced benefits, which add value and actually works in relation to all health and wellness needs. Our card members get access to various discounts and benefits from other chains through cross industry tie-ups. In the long run, we would like this card to be the choice of millions, through which they can get access to health insurance.

With the FDI in retail for single brand being announced, do you see growth of the sector in the near future?

We think that the government’s move to allow 100 per cent FDI in single-brand retail sector is set to tone up the pharmacy retail sector as well. The market size of the Indian retail pharmacy sector is estimated at $9 billion (Rs 45,000 crore) and is growing by 20-25 per cent annually. It is expected that new FDI norms would attract sizeable investments in the retail pharmacy sector, given the higher operating profit margin and the huge scope of market expansion in tier-II and tier-III cities. In this scenario, investments through tie-ups are expected to gear up.

What are company’s future plans?

At Surya Pharmaceutical Limited, a number of initiatives will deliver superior returns from 2012-13 onwards. The company’s mature verticals will capitalise on emerging opportunities; new business verticals will report their full years of operations. Surya expects to invest Rs 1,000 crore in a new, fully integrated manufacturing facility.

We will increase our product offerings in the US markets, leveraging over strength of ActiVon. Surya Care, a branded products division, is optimistic of achieving a topline of Rs 600 crore by 2014. We expect to achieve retail store strength of 1,000-plus stores by 2014. Soon, Surya will be one of the very few companies in India to have an exclusive set up for Carbapenem manufacturing.

With all these, as well similar other initiatives, the company expects to graduate from domestic pharmaceutical player to global pharmaceutical brand, strengthening its value for share-holders.

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