Chemists Prescribe Retail Pill For Survival

Unorganised pharmacists n the country growing @ 8-9%/yr

To form All India Chemist and Druggist Association

Plan to launch retail chain co with a common branding

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.

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 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)