Market Research Report : Pharmacy retail market in india 2014

Pharmacy Retail Market – India
April 2014

2
SAMPLEExecutive Summary
Market
Drivers &
Challenges
Competitive
Landscape
 The Indian pharmacy retail market is valued at INR xx bn and is estimated to reach INR xx bn by
2018
 The market is distinctly fragmented into organized and unorganized players with a major share of
the market being dominated by the unorganized segment
Drivers
 Growth in Pharmaceuticals Sector
 Rising Healthcare Expenditure
 Changing Disease Profile
 Growth in OTC Segment
 Consumer Attitude
 Attractive Margins
Trends
Challenges
 Capital Intensive Business
 Fragmented Industry
 Counterfeit Drugs
 Loyalty Schemes
 Value Added Services
 Health Insurance Plans Made Available in
Pharmacy segment
 Tele Consultation Services
 Entry of Government in Pharmacy
Retailing
 Organized Retailers Starting Pharmacy
Chains
 Entry of Private Labels
 Rural Expansion
 Tracking of Counterfeit Drugs
Key Players
Apollo Pharmacy Ltd. Emami Frank Ross Ltd.
The Himalaya Drug
Company
Medica Health Shoppe MedPlus Health Services Pvt. Ltd. Religare Wellness Ltd.
PHARMACY RETAIL MARKET IN INDIA 2014.PPT

3PHARMACY RETAIL MARKET IN INDIA 2014.PPT
•Macro Economic Indicators
•Introduction
•Market Overview
•Government Regulations
•Drivers & Challenges
•Industry Association
•Key Trends
•Technology Adoption
•Competitive Landscape
•Strategic Insights
•Appendix

4
SAMPLE
Healthcare system in India requires a larger public outlay
due to the huge population base
Healthcare Industry Overview
• According to “World Health Statistics 2013 Report, India”,
healthcare comprised 3.7% of India’s GDP in 2010
 General government expenditure on health as percentage of
total expenditure on health in 2010 was 28.2%
• Favorable demographics, increase in awareness levels
and better medical care are some factors that are driving
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
 Treatment for major surgeries in India costs approximately 20%
of that in developed countries
Healthcare Sector – Market Size & Growth
Market Segmentation – Overview (20--)
x
x
x
0
x
x
2015e 2016e
x
2017e
x
2014e
x
2012
x
INR tn
x
X%
2018e2013
16.2%
21.3%
0.9%3.4%
7.2%
50.9%
x
x
x
x
x
x

5
SAMPLE
Disparity in income levels across population strata results in
income elasticity of demand for healthcare
44%
41%
36%
27%
11%
11%
42%Doctor/ Surgeon’s Fees
Hospital/ Nursing Home Fees
Medicine 21%
62%
Medical Diagnostics 53%
35%
17%
x xx
•xxx
Healthcare Expenditure of Population by Economic Standard

6
SAMPLE
Unorganized segment dominates a large volume of the
pharmaceutical retail market
• Indian pharmacy retail stands out as a lucrative market
that still remains under penetrated, projecting strong
potential
• The Indian pharmacy market is ranked xth in terms of
value and xth in terms of volume
• The pharmaceutical sector on the whole contributes a
share of x-x% to India’s GDP
• The market is distinctly fragmented into organized and
unorganized players
 There are approximately x to x stores across the country
• The unorganized market is huge and is roughly valued at
INR x bn occupying x% of the total market size while
organized market is valued at approximately INR x bn
capturing close to x% of market share
 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 20-- when organized retail will capture
approximately x% market from the current x% share
• In India, pharmacies are the dominant distribution
channels generating approximately x% of overall
pharmaceutical sales
Market Overview
0
500
1,000
1,500
2,000
INR bn
X%
2018e
x
2017e
x
2016e
x
2015e
x
2014e
x
2013
x
Market Size and Growth
Market Segmentation
13.5%12.8%12.1%11.2%10.5%
0%
20%
40%
60%
80%
100%
87.2%
%
2018e
85.8%
14.2%
2017e2016e
86.5%
2015e
87.9%
2014e
88.8%
2013
89.5%
x x

7
SAMPLE
Pharmacy industry has an elongated distribution chain
before the products reach the retail outlets
Manufacturer
Central
Warehouse
Super Stockist
Sub Stockist
Stockist
Hospitals
Retail Outlets
Long channel of distribution and high
possibility of brand substitution makes it
mandatory for a company to make its
stock keeping units available all the time

8
Government Role: Summary
Role
of
Government
Licence Procurement
Foreign Direct
Investment
Ownership Restrictions

Drivers & Challenges
Drivers
Growth in Pharmaceuticals Sector
Rising Healthcare Expenditure
Changing Disease Profile
Growth in OTC Segment
Consumer Attitude
Attractive Margins
Challenges
Capital Intensive Business
Fragmented Industry
Counterfeit Drugs

10
SAMPLE
Rising health related expenditure is a strong determinant of
growth for pharmacy retail market…
• Healthcare spending has increased with rise in disposable income
 A middle class family earns an average annual income that ranges between INR 0.34mn to INR 1.7mn
according to 2009-10 price levels
 Growing affordability among large middleclass population has raised demand for better health services
• The pharmacy expenditure is almost always borne out of pocket that gives a major boost to
retail outlets
 About x% of Indian healthcare expenditure is essentially out of pocket (OOP) of which x% is accrued on
pharmacy products
Rising Healthcare Expenditure (1/x) Impact
22%
78%
x x
Average Health Spending (2011-12)
72%
28%
xx
Middle Class Population Growth Projection
113.8
53.331.4
547.0
267.0
160.0
0
100
200
300
400
500
600
2025e
8.5%
2010 2015e
mn
xx

11
SAMPLE
24%
23%
8%
45%
Favorable consumer attitude and attractive margins are
driving growth in pharmacy retailing in India
• Indian consumers confidently self-treat a wide range of
common ailments such as cough, cold, fever, pain and
sprains, heartburn and diarrhea
• There is a growth in consciousness among majority of
Indian population towards a healthy lifestyle that
inculcates a habit among them to spend on personal well
being
 This is in turn fueling the growth in pharmacy retailing business
• New age consumers demand congenial environment that
is quick, efficient and comfortable
 This is likely to promote the growth in the business of
organized pharmacy retail chains
Consumer attitudes Impact
• High margins in pharmacy retailing despite price controls have made it a lucrative business
• Retailers are entitled to margins of 16% for controlled formulations and 20% for decontrolled
formulations on MRP
Attractive margins
Level Margins
Retailers
Scheduled Drugs Non-scheduled Drugs
x% x%
Behaviour towards Minor Ailments
Impact
x
xx
x

12
SAMPLE
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
• Pharmacy retailing stands out as a catchment specific business
• Pharmacy retail in today’s scenario essentially involves store expansion and its multiplication
 Each store involves an approximate cost of to set up and start operation
 Each store requires minimum to breakeven
Pharmacy Retail Business – A Catchment Specific Business
Hospital area Commercial area
Success Involves Proximity To
Spells burden on the business operators due to
prohibitive real estate cost in such areas

Key Trends
`Trends
Loyalty Schemes
Value Added Services
Health Insurance Plans Made Available in Pharmacy
Tele Consultation Services
Entry of Government in Pharmacy Retailing
Organized Retailers Starting Pharmacy Chains
Entry of Private Labels
Rural Expansion
Tracking of Counterfeit Drugs

Technology Adoption: Summary
Technology
Trends
Customer Relationship
Management
Supply Chain
Management
Enterprise Resource
Planning

15
SAMPLECompetitive Benchmarking (1/x)
Public Trading Comparables (FY 20--)
Player 1 Player 2 Player 3
Market Capitalization (INR mn) 138,582.6 130,731.9 137.872
Share Price (INR) 904.35 980.00 0.90
EV/EBITDA (INR mn) 22.55 14.14 13.40
EV/Revenue (INR mn) 3.78 2.44 23.89
PE Ratio N.A. 24.32 0.18

16
SAMPLEKey Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/3)
Competitive Benchmarking (2/x)
97.61
-21.34
13.30
97.61
-134.54
0.08
-150
-100
-50
0
50
100
Player 2 Player 3
%
Player 1
Net Margin
Operating Margin
• xxx

17
SAMPLEPublic: Domestic Company – Player 1 (x/x)
Key PeopleProducts and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Category Products/Services
Pharmacy Retail
Chain
xxx
Online Retail xxx
Name Designation
xxx xxx
xxx xxx
xxx xxx
xxx xxx
Chennai
Head Office

18
SAMPLEKey Ratios
Financial Summary
• The company incurred a net profit of INR 3.03 bn in FY 2013,
as compared to net profit of INR 2.18 bn in FY 2012
• The company reported total income of INR 38.09 bn in FY
2013, registering an increase of 17 per cent over FY 2012
• The company earned an operating margin of 13.19 per cent in
FY 2013, an increase of 0.68 percentage points over FY 2012
• The company reported debt to equity ratio of 0.44 in FY 2013,
an decrease of 35.41 per cent over FY 2012
Financial Summary
Indicators Value (dd/mm/yyyy)
Market Capitalization (INR mn) 138,582.6
Total Enterprise Value (INR mn) 131,177.0
EPS (INR) N.A.
PE Ratio (Absolute) N.A.
Particulars
y-o-y change
(2013-12)
2013 2012 2011 2010
Profitability Ratios
Operating Margin 0.63 13.19% 12.55% 12.51% 10.86%
Net Margin 1.09 7.95% 6.86% 6.94% 6.50%
Profit Before Tax Margin 0.23 10.70% 10.47% 10.26% 9.78%
Return on Equity 2.29 10.95% 8.66% 9.48% 7.98%
Return on Capital Employed 0.07 12.24% 12.17% 10.98% 8.76%
Return on Working Capital -59.08 59.76% 118.84% 133.55% 45.61%
Return on Assets 0.42 10.38% 9.96% 9.06% 6.86%
Return on Fixed Assets 0.15 19.59% 19.44% 18.28% 14.24%
Cost Ratios
Operating costs (% of Sales) -0.54 86.77% 87.31% 87.38% 88.95%
Administration costs (% of
Sales)
-0.18 3.31% 3.49% 3.73% 3.11%
Interest costs (% of Sales) -0.16 2.40% 2.56% 2.84% 2.71%
Liquidity Ratios
Current Ratio 46.69% 2.15 1.46 1.39 1.69
Cash Ratio 1.91% 1.10 1.08 1.05 0.98
Leverage Ratios
Debt to Equity Ratio 35.41% 0.44 0.32 0.50 0.55
Debt to Capital Ratio 24.61% 0.31 0.24 0.33 0.35
Interest Coverage Ratio 11.29% 5.51 4.95 4.45 4.07
Efficiency Ratios
Fixed Asset Turnover -3.35% 1.48 1.53 1.45 1.29
Asset Turnover -0.06% 0.79 0.79 0.72 0.62
Current Asset Turnover -18.57% 2.41 2.96 2.96 1.69
Working Capital Turnover -51.76% 4.52 9.37 10.58 4.13
Capital Employed Turnover 1.23% 0.96 0.94 0.90 0.78
Improved Decline
Financial Snapshot
Total Income Net Profit / Loss
20
0 0
1
330
4
2
10
40
2.18
2012
INR bn
3.03
INR bn
2013
38.0931.80
20.62
2010
1.82
2011
1.34
26.29
Public: Domestic Company – Player 1 (x/x)

19
SAMPLEKey Business Segments Key Geographic Segments
Business Highlights
Description News
Overview • Xxx
xxx • xxx
xxx • xxx
25% 27% 29%3%2%1%24%
0%
50%
100%
2013
4%
67%
2012
70%
2011
73%
2010
75%
xxxxxxxxx
100%
80%
60%
40%
20%
0%
2013
100%
xxx
xxx

20
SAMPLE
• xxx • xxx
• xxx• xxx
TO
WS

21
SAMPLE
Private: Domestic Company – Player 2 (x/x)
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Name Designation
xxx xxx
xxx xxx
xxx xxx
Category Products/Services
xxx xxx
xxx xxx
xxx xxx
Kolkata
Head Office

22
SAMPLE
Shareholders of the Company Ownership Structure
Name No. of Shares held
xxx 39,000
xxx 78,400
xxx 10,000
xxx 10,000
xxx 10,000
xxx 5,000
xxx 1,930,307
Total 2,082,707
73.1% 73.1% 73.1%
24.6%
2.2%
100.0%
2011
0.4%
100.0%
2013
0.4%
26.5%
2012
26.5%
100.0%
xxxxxx xxx

23
SAMPLE
Financial Snapshot Key Ratios
Financial Summary
• Company earned a net profit of INR 1.61 mn in FY 2013, as
compared to net profit of INR 6.78 mn in FY 2012
• It reported total income of INR 1997.55 mn in FY 2013,
registering an increase of 7 per cent from FY 2012
• Earned an operating margin of 13.30 per cent in FY 2013, a
decrease of 0.41 percentage points over FY 2012
• The company reported a debt to equity ratio of 14.13
percentage points in FY 2013, a decrease of 2.85 per cent over
FY 2012
Improved Decline
Particulars
y-o-y change
(2013-12)
2013 2012 2011 2010
Profitability Ratios
Operating Margin -0.41 13.30% 13.71% 16.95% 10.13%
Net Margin -0.29 0.08% 0.37% 2.84% 2.45%
Profit Before Tax Margin 0.47 0.09% -0.38% 4.11% 2.06%
Return on Equity -8.16 2.47% 10.63% 38.13% 35.49%
Return on Capital Employed 1.28 26.83% 25.55% 27.84% 22.34%
Return on Working Capital 2101.78 127.84% -1973.95% -414.62% 30.43%
Return on Assets 0.56 20.78% 20.22% 22.34% 22.34%
Return on Fixed Assets -6.13 110.03% 116.17% 103.02% 88.01%
Cost Ratios
Operating costs (% of Sales) 0.46 86.63% 86.18% 82.98% 89.81%
Administration costs (% of
Sales)
N.A. N.A. N.A. N.A. N.A.
Interest costs (% of Sales) -0.14 5.79% 5.93% 3.56% N.A.
Liquidity Ratios
Current Ratio 30.17% 1.28 0.99 0.93 4.87
Cash Ratio 19.51% 0.06 0.05 0.03 0.17
Leverage Ratios
Debt to Equity Ratio -2.85% 14.13 14.54 7.16 5.57
Debt to Capital Ratio -0.19% 0.93 0.94 0.88 0.85
Interest Coverage Ratio -0.94% 2.31 2.33 4.79 N.A.
Efficiency Ratios
Fixed Asset Turnover -2.05% 8.23 8.40 6.05 8.64
Asset Turnover 6.25% 1.55 1.46 1.31 2.19
Current Asset Turnover 11.17% 2.12 1.91 1.78 2.37
Working Capital Turnover -106.70% 9.56 -142.80 -24.36 2.99
Capital Employed Turnover 5.70% 30.36 28.72 13.35 14.41
Net Profit/LossTotal Income
50
40
10
30
20
0
2000
1500
1000
500
0
INR mnINR mn
2013
1.6
1997.6
2012
6.8
1848.7
2011
45.0
1582.9
2010
33.2
1353.0

24
SAMPLE
Description News
Overview • XXX
xxx • XXX
xxx • XXX
Business Highlights

25
SAMPLE
• xxx • xxx
• xxx• xxx
TO
WS

26
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Pharmacy Retail Market – India report is part of Research on India’s Healthcare Industry
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Market Research Report : Pharmacy retail market in india 2014

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Market Research Report : Pharmacy retail market in india 2014