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Pharmacy Chains in India: An Overview

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Manish Kumar Srivastava

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 PHARMACY CHAINS IN INDIA: AN OVERVIEW

By

*Manish Kumar Srivastava

Abstract:

In India, the Pharmacy retail market is fragmented and dominated by the

unorganized sector. The expected growth figure of Indian Pharmaceutical industry
in the coming years proves that Pharmacy retail market has tremendous scope to
grow in future. This has attracted many organized players in pharmacy
retailing.These players are adopting various measures to mark their presence in the
market which is normally dominated by the unorganized sector.Some of these
measures adopted by the pharmacy chains during recent years are highlighted in
this article.

*The author is a Faculty member at ICFAI Business School, Dehradun. He can be

reached atmanish.srivastava@ibsindia.org.
 PHARMACY CHAINS IN INDIA: AN OVERVIEW

Pharmaceutical Industry: An Introduction

Medicines are a vital need just like other basic needs i.e. food, clothes and shelter.
With an increase in the average life span, changing lifestyle conditions and access
to healthcare facilities, there is an increasing demand for health care products such
as medicines, surgical items and other wellness products and services across the
country.

As per a report by Equity Master, the Indian pharmaceuticals market is the third
largest in terms of volume and thirteenth largest in terms of value. The Indian
pharma industry, which is expected to grow over 15 per cent per annum between
2015 and 2020, will outperform the global pharma industry, which is set to grow at
an annual rate of 5 per cent between the same periodi. India’s cost of production is
significantly lower than that of the US and almost half of that of Europe. It gives a
competitive edge to India over others.

The Emergence of Pharmacy Chains

In India, the Pharmacy retail market is fragmented and dominated by the

unorganized sector. The expected growth figure of Indian Pharma industry in the
coming years proves that Pharmacy retail market has tremendous scope to grow in
future. Further, this market is treated as a recession free business as families may
cut down their expenditure on luxuries but continue to purchase medicines to
maintain health. This has attracted many organised players in pharmacy
retailing.These new players include not only those with pharmaceutical or
healthcare background, but also corporates from other sectors. All these factors are
changing the structure of the pharmacy retail market.

The way in which people use to purchase medicines has changed in the last few
years. The organized pharmacy retailing is dominated by ten to twelve big
players.The organized pharmacy retail market is dominated by big industrial
houses like Fortis, Reliance Retail’s (Reliance Health and Pharma) as well as
health care players like Apollo Hospitals Group’s (Apollo Pharmacy), Medicine
Shoppe , ZydusCadilla’s (Dial for Health), Morepan’s (Life Spring), Religare
Wellness (LifeKen), Guardian Lifecare’s (Guardian Pharmacy), MedPlus to name
a few.

Corporate magnates like Reliance Industries and Aditya Birla Group have already
forayed into pharmacy retail market. The central and state governments have also
ventured into this segment with Jan Aushadi outlets and Karunya pharmacy etc.
Moreover, government has smoothened the way for global medicine retail chains
into the country by opening up multi-brand retail sector.

These pharmacy chains are doing business using various store formats as
mentioned in Table 1.

Table 1: Store Formats followed by various Pharmacy Chainsii

S.No. Store Format Description

1. Hospital Pharmacies They are placed in hospitals and offer a limited
number of medicines to the patients admitted in
hospitals.
2. Shop-in-Shops These stores are located in supermarkets, malls
or departmental stores.
3. Standalone Stores These stores are located near the residential
areas and target middle and upper class
customers.
4. Townships Pharmacy stores at townships.
Source: Adopted from https://www.ibef.org/industry/pharmaceutical-india.aspx

Challenges being faced by Pharmacy Chains

At present, the pharmacy retail sector is dominated by local chemist shops

popularly known as mom and pop pharmacy stores. There are approximately eight
lakh pharmacy shops in India. Out of which, the number of branded pharmacy
stores/chains is less than one percent. The presence of thesestoresis making the
local pharmacy shops smarter. Besides this, the online companies have made this
market more competitive. With India getting more and more digital in the light of
availability of better internet facilities and the expansion of internet market
(Thanks to Reliance Jio and Digital India Campaign), the pharmacy chains are
getting stiff competition from the mom and pop pharmacy stores as well as from
online pharmacy stores.

Measures to counter competition:

To counter this competition, pharmacy chains like Apollo Pharmacy, MedPlus,

Religare Wellness and other medicine chains are launching new schemes so that
they can retain the customers and increase the scope of their business. Mostly all of
these stores are fighting competition by giving quality assurance and offering value
added services which at present are not being offered by any of the mom and pop
pharmacy stores.

Table 2: Measures to counter Competitioniii

S.No. Measure Description

1. Building brand value  Assurance of Quality (Genuine
Medicines)
2. Offering value added services  Availing medicines in air-
conditioned settings
 24x7 operations
 Door delivery
 Credit-Card acceptance
 Rewards & Discounts
 Loyalty Cards
 Adoption of Digital Methods
 Mobile Apps
 Gift Cards
 SMS Alert
 Providing Group Medical
Insurance
 Free Gifts
Source: http://www.business-standard.com/article/specials/branded-pharmacy-chains-pump-up-
the-volume-117022301358_1.html

Besides this, these stores had gone for various service innovations. Apollo
Pharmacy, one of the leading branded pharmacy store, has introduced various
service innovations (Table 3) like opening of nurse stations, launching ATM
(Anytime medicine) and introducing Compliance packs to stay ahead of
competition. Recently they have entered into an agreement with Uber and Ola Taxi
services so that they can train the cab-drivers to provide medical assistance in case
of on-road emergencies. The pharmacy have also issued ‘My Apollo Card’ to cab-
drivers which will provide them with medical benefits, while Apollo Munich will
entitle them to get accident insurance at discounted rates.

Table 3: Service Innovations done by Apollo Pharmacy

S.No. Service Innovation Description

1. Nurse Station Paramedic services like bandage and
dressing, blood pressure etc are
provided free of cost.

2. ATM (Anytime medicine) Patients can fax their prescriptions

from the fax machines installed by the
clinic, and they get the medicines
delivered within two hours of placing
the order, this service is without any
additional charges.

3. Compliance pack Patients are reminded of their medicine

schedule.
4. Medical Assistance Training After Uber, Ola has now partnered
program with Apollo Hospitals to train drivers to
provide medical assistance in case of
on-road emergencies.
5. Apollo Card Driver partners will be also be able to
opt for a ‘My Apollo Card’ which will
provide them with medical benefits,
while Apollo Munich will entitle them
to accident insurance at discounted
rates
Source: http://www.business-standard.com/article/companies/ola-partners-with-apollo-to-train-
drivers-for-on-road-medical-emergencies-117011800041_1.html &http://www.business-
standard.com/article/companies/ola-partners-with-apollo-to-train-drivers-for-on-road-medical-
emergencies-117011800041_1.html
View publication stats

Conclusion:

Retail chain pharmacy is still in the early stages of development but it has
definitely a bright future in India. The customers can get quality medicines at
reasonable rates. The pharmacy chains are facing some problems like margin
fixation by government, lack of effective regulatory mechanism, rigid licencing
norms, to name a few. In the light of, changing FDI norms in multi-brand retail,
opening up door to door global chains, improved customer services, it can be
concluded that retail chain pharmacy sectorwill surely see an exponential growth in
the coming days.

i
https://www.ibef.org/industry/pharmaceutical-india.aspx
ii
https://www.slideshare.net/ResearchOnIndia/market-research-india-pharmacy-retail-market-in-india-
2009
iii
http://www.business-standard.com/article/specials/branded-pharmacy-chains-pump-up-the-volume-
117022301358_1.html &http://www.business-standard.com/article/companies/ola-partners-with-apollo-
to-train-drivers-for-on-road-medical-emergencies-117011800041_1.html