Pharmacy Retail Market India

July 2015

Executive Summary
Market

Drivers &
Challenges

Trends

The Indian pharmacy retail market is currently valued at INR x bn and is estimated to reach
INR y bn by 2019
The market is distinctly fragmented into organized and unorganized players with ~x% of the
market being dominated by the unorganized segment in 2014

Drivers

Challenges

Loyalty Schemes
Value Added Services
Entry of Government in Pharmacy
Retailing
Organized Retailers Starting Pharmacy
Chains
Entry of Private Labels

Rural Expansion
Health Insurance Plans made available in
pharmacies
Tracking of Counterfeit Drugs

Growth in Pharmaceuticals Sector

Rising Healthcare Expenditure
Changing Disease Profile
Growth in OTC Segment
Consumer Attitude
Attractive Margins

Capital Intensive Business

Fragmented Industry
Counterfeit Drugs

Key Players

Competitive
Landscape

Company A

Company B

Company C

Company D

Company E

Company F

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

Macroeconomic Indicators
Introduction

Market Overview
Drivers & Challenges
Key Trends
Government Regulations
Industry Association
Technology Adoption
Competitive Landscape
Strategic Insights
Appendix
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

Macroeconomic Indicators (3/3)

Lending Rate: Annual
x

Trade Balance: Annual

x

%
Per Annum
INR tn

2011-12
x

x
x
x

x
2012-13

2011-12
2012-13
N.B.:
2012-13 encompasses
figure for Apr2013-14
Nov 2012

2014-15

FDI: Annual
x
2013-14
x

INR bn
x

2014-15
x

2012-13

2013-14

x
Min

Max

Commercial Bank Rates: Key Lending Rates as Prescribed by RBI (All

Commercial Banks including SBI) - Minimum Rate General

x
2010-11

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

2011-12

Healthcare system in India requires a larger public outlay

due to the huge population base
Healthcare Industry Overview

Healthcare Sector Market Size & Growth

Indian healthcare industry contributes ~x% to the Gross

Domestic Product (GDP) and was estimated to be
valued at INR x tn in 2014
Favorable demographics, increase in awareness levels,
improvement in medical insurance penetration, better
medical care are some factors that are driving the
healthcare sector in India
Hospitals form the largest segment of overall healthcare
market, followed by pharmacy, medical equipments,
diagnostics and thereafter, medical insurance
Gradual penetration of health insurance is stepping up
affordability of health services through increased
demand for preventive and curative healthcare services
Superior quality healthcare, coupled with low treatment
cost in comparison to other countries, is benefitting
Indian medical tourism, thereby steering forth Indian
healthcare market

tn
x
x
x

2013

2014

2015e

x
x

0
2016e

2017e 2018e 2019e

Market Segmentation Overview (2013)

Hospital

Pharmaceutical
Medical Devices

x
x

Diagnostics

Treatment for major surgeries in India costs approximately x%

of that in developed countries

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

Health Insurance
Others

FDI Inflow into Indian Healthcare Segments

Several healthcare segments in India have earned good volume of FDI over a 14- year
span between Apr 2000 to Feb 2014

Drugs and pharmaceuticals sector

INR x bn

Hospital and diagnostic centers

INR x bn

Medical and surgical appliances

INR x bn

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

Disparity in income levels across population strata results in

income elasticity of demand for healthcare
Healthcare Expenditure of Population by Economic Standard
Top 10% Population

Medicine

Doctor/ Surgeons Fees

Medical Diagnostics

Hospital/ Nursing Home Fees

Middle 40% Population

Bottom 50% Population

Private healthcare spending is highly disparate for top x% and bottom x% population strata, which gets even more
pronounced in cases of medical diagnostics and hospitalization
According to recent statistics, income elasticity of demand for healthcare is over x
N.B.: Data as per NSSO 2011
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

Pharmacy retail has become the fastest growing traditional

trade channel for FMCG companies
Pharmacy Retail Market Overview (1/2)
Indian pharmacy retail stands out as a lucrative market that still remains underpenetrated, projecting strong potential
Growth of pharmaceutical sector has a direct impact on pharmacy retail sector which is the major sales format apart
from institutional sales
Currently the pharmacy retail market in India has over x pharmacy retail outlets and more than x stockists/distributors
Pharmacy retail chains have become preferred trade partner for consumer product companies and FMCG contributed
around 9% to the overall pharmacy retailers revenue in 2014

Market Size and Growth

Market Segments 2014

INR bn

x
x

x
x

0
2013

2014 2015e 2016e 2017e 2018e 2019e

Pharmaceutical Contribution

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

FMCG Contribution

Unorganized segment dominates a large volume of the

pharmaceutical retail market
Pharmacy Retail Market Overview (2/2)
The unorganized market is huge and is roughly valued at INR x bn occupying x% of the total market size in 2014
The unorganized pharmacy retail market is growing at a CAGR of x% while organized pharmacy retail is expected to grow at a CAGR of
x%
There should be a significant change in the market segmentation by 2019 when organized retail will capture approximately x% market
from the current x% share
Health awareness among consumers will result in gradual shift towards the modern pharmacy retailers

In India, pharmacies are the dominant distribution channels generating ~x % of overall pharmaceutical sales

Organized Market Size and Growth

Unorganized Market Size and Growth

INR bn

INR bn

x
x
x

x
x

x
x
0

x
x

x
x

x
x

x
0

2013

2014 2015e 2016e 2017e 2018e 2019e

2013

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

2014 2015e 2016e 2017e 2018e 2019e

Drivers & Challenges

Drivers
Growth in Pharmaceuticals Sector

Challenges

Rising Healthcare Expenditure

Capital Intensive Business

Changing Disease Profile

Fragmented Industry

Growth in OTC Segment

Counterfeit Drugs

Consumer Attitude
Attractive Margins

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

10

Growing Indian pharmaceutical industry stimulates the

pharmacy retail market
Growth in Pharmaceuticals Sector

Impact

XX
XX
XX
XX
XX

Pharmaceutical Market Size and Growth

INR bn
x
x
x

15.7%

2013

2014

2015e

x
0
2016e

2017e

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

2018e

2019e
11

Rise in chronic diseases is driving growth of pharmaceutical

sector, thus promoting the pharmacy retailing business
Changing Disease Profile

Impact

The disease profile in India is changing from infectious diseases to lifestyle-based diseases,
which requires more intensive care
The incidences of lifestyle-based diseases has increased with changing lifestyle
India is home to a large number of heart disease, stroke, cancer, diabetes and respiratory infection affected
patients
Stress, sedentary lifestyles and unhealthy food habits are key reasons for the growing number of patients
who suffer from lifestyle-based ailments that are of long duration and slow progression

This will entail medication on an ongoing basis, which in turn will make prescription-based
medicines mandatory for expansion of the pharmacy retail business in India
Diabetes Patient India

Cancer Patient India

000

mn

x
x

x
x

x
x

0
2012 2013e 2014e 2015e 2016e 2017e 2018e

Male
Femalee

2013

2020e

As of Apr 2015, Chronic diseases account for ~x% of all deaths in India
These diseases will cost India ~INR x tn between 2012 and 2030 in terms of economic output
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

12

Pharmacy retail business is a capital intensive proposition

that involves strategic location of outlets
Capital Intensive Business

Impact

Pharmacy retailing is a capital intensive business proposition and stands out as a catchment
specific business
Pharmacy Retail Business A Catchment Specific Business
Success Involves Proximity To

Hospital area

Commercial area

Spells burden on the business operators due to

prohibitive real estate cost in such areas
Pharmacy retail in todays scenario essentially involves store expansion and its multiplication
Each store involves an approximate cost of

Each store requires minimum

to set up and start operation

to breakeven
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

13

Key Trends

Loyalty Schemes
Value Added Services
Entry of Government in Pharmacy Retailing
Organized Retailers Starting Pharmacy Chains

Trends `
Entry of Private Labels
Rural Expansion
Health Insurance Plans Made Available in Pharmacies

Tracking of Counterfeit Drugs

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

14

Introduction of private labels by organized retailers pushes

their business
Entry of Private Labels
Some retail chains are now getting generic drugs, such as paracetamol, contract-manufactured
by licensed third-parties and then marketing them under their own brand-names
Private labels to
provide low cost
alternative medicines

Company A
XX
XX
XX
XX

Company B
XX
XX
XX
Attractive Pricing Private Label Brands
X

Currently, Organized Pharmacy Retailers private label portfolio comprises X% of their overall products
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

15

Government Role: Summary

Licence Procurement

Role
of
Government

Foreign Direct
Investment

Ownership Restrictions

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

16

All India Organization of Chemists and Druggists

(AIOCD)
XX
XX
Initiatives to Organize the Unorganized Segment of Pharmacy Retail
The Organization with its members have decided to go for
a common brand name, logo and color code

There are plans to open new shops for members that will
be inter-connected electronically, using common branding

XX
XX
XX
XX

The association has hired brand consulting firm

Chlorophyll for
Chlorophyll
forbrand-building
brand-buildingexercise
exerciseand
andproviding
providingITIT
support to chemists and back-end processes, which is
expected to bring down costs significantly

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

17

Technology Adoption: Summary

Customer Relationship
Management

Technology
Trends

Supply Chain
Management

Enterprise Resource
Planning

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

18

Porters Five Forces Analysis

Impact
X
Threat of New Entrants
X

Impact
X

Impact
X
Impact
X

Bargaining Power of Suppliers

X

Competitive Rivalry

Bargaining Power of Buyers

X

Impact
X
Threat of Substitutes
X

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

19

Competitive Benchmarking (3/3)

Key Ratios of Top 3 Companies Operational Basis (FY 2014) (3/3)
Debtors Turnover Ratio
2012

Asset Turnover Ratio

2014

2013

x
x

x
x

0
Emami Frank Ross Ltd.

RWL Healthworld

x
x
x
Emami Frank
Ross Ltd.

RWL Healthworld

The Himalaya
Drug Company

XX
XX
XX

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

20

Public: Domestic Company Company A (1/4)

Company Information

Corporate Address

XX

Tel No.

XX

Fax No.

XX

Website

XX

Year of Incorporation

XX

Ticker Symbol

XX

Stock Exchange

XX

Offices and Centres India

Head Office
Chennai

Products and Services

Category

Products/Services

XX

XX

XX

XX

Key People
Name

Designation

XX

XX

XX

XX

XX

XX

XX

XX

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

21

Public: Domestic Company Company A (2/4)

Financial Snapshot
Total Revenue

INR bn
60
40
20

1.84
26.05

2.19
31.48

Key Ratios
Net Profit / Loss
3.04

37.99

INR bn

3.17

43.84

4
2
0

Particulars

2011

2012

2013

2014

Gross Margin %

30.6%

31.4%

31.7%

31.2%

Net Income Margin %

7.10%

7.00%

8.00%

7.20%

EBITDA Margin %

16.20%

16.50%

17.00%

15.30%

Profitability Ratios

EBITA Margin %

0.13

0.13

0.13

0.12

EBIT Margin %

12.60%

12.70%

13.20%

11.60%

Financial Summary

Return on Assets %

6.00%

6.50%

7.10%

6.20%

The company earned a net profit of INR 3.17 bn in FY 2014, as

compared to net profit of INR 3.04 bn in FY 2013

Return on Working Capital %

7.5%

8.0%

8.7%

7.7%

Return on Equity %

10.1%

9.8%

11.5%

11.0%

Current Ratio

1.39

1.46

2.12

1.88

Cash Ratio

0.96

1.04

1.60

1.20

Total Debt/Equity

0.50

0.32

0.41

0.45

Total Debt/ Working Capital

0.33

0.24

0.29

0.31

Interest Coverage

4.45

4.95

5.51

4.74

2011

2012

2013

2014

The company reported total revenue of INR 43.84 bn in FY

2014, registering an increase of 15.4 % over FY 2013
The company earned gross margin of 31.2 % in FY 2014, as
compared to 31.7% in 2013
The company reported debt to equity of 0.45 in FY 2014, as
compared to 0.41 in 2013

Financial Summary

Liquidity Ratios

Leverage Ratios

Efficiency Ratios

Indicators

Value (08/07/2015)

Total Asset Turnover

0.76

0.82

0.86

0.86

Market Capitalization (INR mn)

Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)

181,328.8
194,967.9
N.A.
N.A.

Fixed Asset Turnover

1.55

1.63

1.64

1.58

Accounts Receivable
Turnover

9.95

9.16

8.76

8.83

Inventory Turnover

12.06

12.34

12.65

12.14

Note: Parent Company Financials

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

22

Public: Domestic Company Company A (3/4)

Key Business Segments
Healthcare Services

Key Geographic Segments

Pharmacy

Others

100%
50%
0%

India
100%

72.7%

70.0%

67.4%

68.9%

50%

25.2% 2.1% 27.1% 2.9% 29.0% 3.6% 31.1%

2011

2012

2013

2014

100%

India is the only geographic

segment in which the publicly
listed company operates

0%
2014

Business Highlights
Description

News

Overview

XX

Pharmacy Retail

XX

Acquisition

XX

Future Plans

XX
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

23

Public: Domestic Company Company A (4/4)

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

24

Private: Domestic Company Company B (1/5)

Company Information
Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Offices and Centres India

Kolkata

Products and Services

Category

Products/Services

Head Office

Key People

Name

Designation

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

25

Private: Domestic Company Company B (1/5)

Shareholders of the Company
Name

Ownership Structure
No. of Shares held

Bodies corporate
Directors or relatives of directors

82,739

78,400

52,500

39,000

36,000

3,449,861
Total

Other top 50 shareholders

26.5%

0.4%

3,738,500
73.1%

Ownership structure corresponds to Date of AGM: 10/09/2014

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

26

Private: Domestic Company Company B (3/5)

Financial Snapshot

Key Ratios

Total Revenue

Net Profit/Loss

INR mn
3000

INR mn
45.0
6.8

2000
1000

Particulars

1582.9

1848.7

1.6
1997.6

-21.4

2513.9

50

-50
2011

2012

2013

2014

2011

2012

2013

2014

N.A.

N.A

N.A

N.A

Net Income Margin %

2.84%

0.37%

0.08%

-0.85%

EBITDA Margin %

18.25%

15.39%

15.39%

11.36%

N.A.

N.A

N.A

N.A

EBIT Margin %

16.95%

13.94%

13.80%

9.64%

Return on Assets %

5.16%

0.54%

0.13%

-1.44%

Return on Working Capital %

33.90%

NA

61.46%

NA

Return on Equity %

32.51%

10.63%

2.49%

-48.60%

Current Ratio

2.14

0.99

1.28

0.95

Cash Ratio

0.47

0.10

0.25

0.12

Profitability Ratios
Gross Margin %

EBITA Margin %

Liquidity Ratios

Financial Summary
Company incurred a net loss of INR 21.4 mn in FY 2014, as
compared to net profit of INR 1.6 mn in FY 2013

Leverage Ratios

It reported total income of INR 2513.9 mn in FY 2014,

registering an increase of 25.9 % from FY 2013

Total Debt/Equity

4.29

14.51

14.13

21.99

Total Debt/ Working Capital

1.66

NA

4.45

NA

The company reported debt to equity of 21.99 in FY 2014, as

compared to 14.13 in 2013

Interest Coverage

4.79

2.28

2.19

1.71

Total Asset Turnover

1.97

1.74

1.58

1.82

Fixed Asset Turnover

6.19

5.97

5.86

6.11

Accounts Receivable
Turnover

25.69

32.87

32.05

32.63

Inventory Turnover

3.01

2.13

2.63

2.69

Efficiency Ratios

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

27

Private: Domestic Company Company B (4/5)

Business Highlights
Description

News

Overview

XX

Pharmacy Retail

XX

Future Plans

XX

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

28

Private: Domestic Company Company B (5/5)

XX

XX

XX

XX

PHARMACY RETAIL MARKET IN INDIA 2015.PPT

29

Thank you for the attention

Pharmacy Retail Market India report is part of Netscribes Healthcare Industry Series.
For any queries or customized research requirements, contact us at:
Phone:
E-Mail:

+91 22 4098 7600

info@netscribes.com

About Netscribes, Inc.

Netscribes, Inc. is a knowledge-consulting and solutions firm with clientele across the globe. The companys expertise spans areas of
investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its
core lies a true value proposition that draws upon a vast knowledge base. Netscribes, Inc. is a one-stop shop designed to fulfil clients
profitability and growth objectives.
Disclaimer: This report is published for general information only. Although high standards have been used in the preparation, Netscribes is
not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior
permission is required for guidelines on reproduction.
PHARMACY RETAIL MARKET IN INDIA 2015.PPT

30