Mia Agnes M.

Tacoloy Entrepreneurship and Innovation

15-0598 September 13, 2019
The Generics Pharmacy: A Case Analysis
I. Point of View
The perspective that this analysis will attempt to orient itself in is that of Mr. Benjamin Liuson,
CEO and chairman of The Generics Pharmacy (TGP), the man who had been managing the organization
“for more than three decades” and his management team as of 2011.

II. Statement of the Problem

By 2011, The Generics Pharmacy had grown into a very successful organization in realizing its
mission of “bringing accessible, affordable and quality pharmaceutical products to the Philippine people.”
To add to this is their penchant for corporate social responsibility, which is most likely a big factor in
leading to the TGP brand winning a great amount of customer empathy. By this time, TGP had grown
into over 1000 franchises within a span of only four years despite the odds mentioned in the case,
including a volatile national business environment and notwithstanding intensified competition. The
main problem to be solved as seen through the eyes of Mr. Liuson now is how to maintain its leadership
position in the industry and successfully compete against major players.

III. Objectives/Goals of the Case

The case outlines not only the origins and history of TGP but provides a look into the
pharmaceuticals industry in the Philippines, further segmented into branded retail and generic retail. The
competitors of TGP are also enumerated and the natures of the business models discussed. Near the end
of the case, mentioned also are the steps the national and local government units have taken with regard
to generic medicines and how the competitive landscape has changed through the years, beginning in
1978. The main goal then would be to determine the best way to proceed with TGP maintaining leader
status in the country, which also involves reaching the 1,500-retail-outlet mark and completing the full
geographical coverage of the Philippines.

IV. Decision Analysis

A. Possible Options/Alternatives
a. Boost current marketing strategy/Create new marketing strategy
TGP’s current brand image that involves setting itself up as the go-to company/store for sourcing
cheap generic medicines at good quality is effective as we can see form its current status as the largest
and fastest-growing pharmaceutical retail organization in the country. In order to become even more
accessible by making inroads into other geographic locations nationwide, TGP can further boost its
current marketing strategy in order to increase awareness of its products. This is especially important
given its history for not emphasizing too much on advertising in order to lower costs. The case had also
mentioned its target market of low-income consumers as well as senior citizens. The company, in
partnership with its franchisees, can craft a marketing strategy that does not alienate this particular
market but maintains it, while attracting other market segments in order to expand its market base.
b. Offer more incentives to franchise owners to boost profits
The lifeline of The Generics Company is through its over 1000 store franchises. These may be
regarded as very important in upholding the mission of the business to become accessible for all,
especially those who cannot physically reach quality medicines and afford them at higher rates. In order
to possibly add more value to this component it may be a good idea to strengthen the company’s current
franchise concept and provide more incentives other than assisting with initial minimum stocks sold on
a consignment basis. This might increase competitive advantage in terms of business process and can
further encourage others to jump on the bandwagon of becoming franchisees for TGP.
c. Diversify current product line
Currently, TGP’s product line consists of 500 products covering 90% of major diseases, with each
product and packaging containing the generic product name and TGP logo. One option would be to
diversify the product line by adding more to merchandise such as basic medical supplies and common
personal care items. This would make it at par with other major players in the pharmaceuticals industry
such as Mercury Drug Corporation and Watsons in terms of product offerings and give more reasons
for its customers to purchase their needs at TGP stores.
d. Increase CSR efforts nationwide
Another possible alternative for further growth of the TGP franchise is to further increase its
efforts and endeavors related to corporate social responsibility. By initiating health programs and
implementing medical missions and the like, and partnering with local government institutions in areas
where the company doesn’t have a foothold yet in the country, the brand will become more visible to
potential markets and brand image would also strengthen on a positive note due to its authentic concern
beyond profits. This strategy might be able to initiate further expansion in order to reach the 1,500-retail-
outlet mark.
e. Improve accessibility through delivery
In order to further differentiate itself from other competitors, especially now that large retail
players have started to sell generic pharmaceutical products and TGP imitators were copying the
business model and carving out market niches, the company can decide to enhance accessibility by
taking advantage of other distribution channels such as deliveries for medicine. This way, TGP would
be able to prioritize convenience as something that adds value to products for its customers. By getting
medicines in quality, affordability and convenience, the company’s competitive advantage would
increase.
B. Decision Criteria
a. Profitability
It would be necessary for TGP to consider profitability as a decision criterion in a situation of
growth primarily because the profit is needed to maintain operations and deliver on company promises
to its customers. This goes hand in hand with maintaining a corporate social responsibility role in its
initiatives
b. Cost minimization
It is important for Benihana to also reduce costs because this will greatly affect profitability and
its partners in its value chain. Franchisees in particular look forward to the low-cost model of the
organization and this is probably one of the reasons why the TGP franchise concept is highly successful
and is putting a dent on large players’ profits.
c. Maintaining competitive advantage
The Generics Pharmacy is consistent in its message throughout the case that it builds and
maintains its organization based on its competitive advantage which also proves to be its “mission”: to
make affordably medicine available to low-income customers while promoting the concept of corporate
social responsibility. Many customers have been endeared to TGP primarily for this strategy, so it is
 necessary to maintain the mission to achieve customer loyalty as well as attract newer, potential markets
in the future.

V. Conclusion
As seen in the progression of the TGP brand and business model through the years, TGP has
successfully built its business by placing emphasis on the way its operations are ran, minimizing costs
and streamlining processes for effective lean management. It can be concluded that with the combination
of efficient operations, strategy of focus for the market and successful franchise concept, TGP is the go-
to drugstore that embodies affordable and quality medicine. Staying atop the industry will be hard to do
considering the emergence of many other competitors in the business and the proliferation of generic
medicines in the market helped by government intervention, which is why it is crucial for TGP to not only
maintain its competitive advantage but strengthen it as well in light of recent developments. The TGP
brand has become very much associated with its unique value proposition and has won the hearts of many
consumers, but in order to sustain this it will need to become even more visible and expand its nationwide
operations such that its presence is felt all over the country. It may be possible to implement the
alternatives of boosting its current marketing strategy in order to increase awareness, and maybe develop
a marketing strategy that focuses on customer retention while subtly attracting newer, potential markets.
It can also offer more incentives to franchise owners and management in order to further strengthen it
franchise concept and increase CSR efforts to add visibility. However, it should not diversify its product
line because doing so might affect the streamlined operations of the value chain and add costs to the
business process. Doing so might also increase competition for the company as the trend of drug stores
being increasingly seen as competitors with convenience stores might not bode well. Finally, TGP should
continue to add efficiency to its operations because this might be considered as the main strength of its
value chain.