Market Research Report : Pharmacy retail market in india 2015 - Sample

Pharmacy Retail Market – India
July 2015

2
Executive Summary
PHARMACY RETAIL MARKET IN INDIA 2015.PPT
Market
Drivers &
Challenges
Competitive
Landscape
 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
 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
 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
Key Players
Company A Company B Company C
Company D Company E Company F

3PHARMACY 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

Macroeconomic Indicators (3/3)
Lending Rate: Annual
xxxxxxxxxxxx
%
Per Annum
2014-15
x
x
2013-14
x
x
2012-13
x
x
2011-12
x
x
MaxMin
Trade Balance: Annual
Commercial Bank Rates: Key Lending Rates as Prescribed by RBI (All
Commercial Banks including SBI) - Minimum Rate General
N.B.: 2012-13 encompasses figure for Apr – Nov 2012
FDI: Annual
x
x
x
x
INRtn
2014-15
x
2013-14
x
2012-13
x
2011-12
x
x
x
x
x
INR bn
2013-14
x
2012-13
x
x
2011-12
x
2010-11

5
Healthcare system in India requires a larger public outlay
due to the huge population base
Healthcare Industry Overview
• 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
 Treatment for major surgeries in India costs approximately x%
of that in developed countries
Healthcare Sector – Market Size & Growth
Market Segmentation – Overview (2013)
x
x
x
0
tn
x
2019e
x
2018e
x
2017e
x
2016e
x
2015e
x
2014
x
2013
x
x
x
x
x
x
x
Others
Diagnostics
Health Insurance
Medical Devices
Pharmaceutical
Hospital

6
INR x bn
INR x bn
INR x bn
Drugs and pharmaceuticals sector
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
Hospital and diagnostic centers
Medical and surgical appliances

7
Disparity in income levels across population strata results in
income elasticity of demand for healthcare
Medical Diagnostics x x x
Doctor/ Surgeon’s Fees x
Hospital/ Nursing Home Fees x x x
x x
Medicine x x x
Top 10% Population Bottom 50% PopulationMiddle 40% 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
Healthcare Expenditure of Population by Economic Standard
N.B.: Data as per NSSO 2011

8
Market Size and Growth Market Segments – 2014
Pharmacy retail has become the fastest growing traditional
trade channel for FMCG companies
• 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
Pharmacy Retail – Market Overview (1/2)
x
x
x
x
x
0
x
2019e
x
2018e
x
2017e
INR bn
x
2016e
x
2015e
x
2014
x
2013
x
x
x
FMCG ContributionPharmaceutical Contribution

Unorganized segment dominates a large volume of the
pharmaceutical retail market
• 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
Pharmacy Retail – Market Overview (2/2)
Organized Market Size and Growth Unorganized Market Size and Growth
x
x
x
x
x
x
x
0
INR bn
x
2019e
x
2018e
x
2017e
x
2016e
x
2015e
x
2014
x
2013
x
0
x
x
x
x
2019e
x
2018e
x
2017e
x
2016e
x
2015e
x
2014
INR bn
x
x
2013
x

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

Growing Indian pharmaceutical industry stimulates the
pharmacy retail market
Growth in Pharmaceuticals Sector Impact
•XX
•XX
•XX
•XX
•XX
x
x
x
x
0
15.7%
2019e
x
2018e
x
2017e
x
2016e
x
2015e
x
2014
x
2013
x
INR bn
Pharmaceutical Market Size and Growth

Rise in chronic diseases is driving growth of pharmaceutical
sector, thus promoting the pharmacy retailing business
• 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
Changing Disease Profile Impact
Diabetes Patient – India
x
x
x
mn x
2018e
x
2017e
x
2016e
x
2015e
x
2014e
x
2013e
x
2012
x
x
x
x
x
0
‘000
2020e
x
x
2013
xx
Femalee
Male
Cancer Patient – India
• 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 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 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
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

Introduction of private labels by organized retailers pushes
their business
Entry of Private Labels
Private labels to
provide low cost
alternative medicines
• XX
• XX
• XX
• XX
Company A
• XX
• XX
• XX
Company B
Attractive Pricing – Private Label Brands
X X X
Currently, Organized Pharmacy Retailer’s private label portfolio comprises X% of their overall products
• 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

16
Government Role: Summary
Role
of
Government
Licence Procurement
Foreign Direct
Investment
Ownership Restrictions

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
The association has hired brand consulting firm
Chlorophyll for brand-building exercise and providing IT
support to chemists and back-end processes, which is
expected to bring down costs significantly
•XX
•XX
•XX
•XX
The association has hired brand consulting firm
‘Chlorophyll’ for brand-building exercise and providing IT
support to chemists and back-end processes, which is
expected to bring down costs significantly
• X

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

Porter’s Five Forces Analysis
Competitive Rivalry
• X
Bargaining Power of Suppliers
• X
Bargaining Power of Buyers
• X
Threat of Substitutes
• X
Threat of New Entrants
• X
Impact
X
Impact
X
Impact
X
Impact
X
Impact
X

20
Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (3/3)
Competitive Benchmarking (3/3)
x
x
x
x
0
The Himalaya
Drug Company
x
RWL Healthworld
x
Emami Frank
Ross Ltd.
x
Asset Turnover Ratio
• XX
• XX
• XX
x
x
x
0
RWL Healthworld
xx
x
Emami Frank Ross Ltd.
xxx
20142012 2013
Debtors Turnover Ratio

21
Public: Domestic Company – Company A (1/4)
Key PeopleProducts and Services
Company Information Offices and Centres – India
Corporate Address XX
Tel No. XX
Fax No. XX
Website XX
Year of Incorporation XX
Ticker Symbol XX
Stock Exchange XX
Category Products/Services
XX XX
XX XX
Name Designation
XX XX
XX XX
XX XX
XX XX
Chennai
Head Office

22
Key Ratios
Financial Summary
• 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
• 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
Indicators Value (08/07/2015)
Market Capitalization (INR mn) 181,328.8
Total Enterprise Value (INR mn) 194,967.9
EPS (INR) N.A.
PE Ratio (Absolute) N.A.
Particulars 2011 2012 2013 2014
Profitability Ratios
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%
EBITA Margin % 0.13 0.13 0.13 0.12
EBIT Margin % 12.60% 12.70% 13.20% 11.60%
Return on Assets % 6.00% 6.50% 7.10% 6.20%
Return on Working Capital % 7.5% 8.0% 8.7% 7.7%
Return on Equity % 10.1% 9.8% 11.5% 11.0%
Liquidity Ratios
Current Ratio 1.39 1.46 2.12 1.88
Cash Ratio 0.96 1.04 1.60 1.20
Leverage Ratios
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
Efficiency Ratios
Total Asset Turnover 0.76 0.82 0.86 0.86
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
Financial Snapshot
Net Profit / LossTotal Revenue
4
2
0
60
40
20
0
INR bnINR bn
2014
3.17
43.84
2013
3.04
37.99
2012
2.19
31.48
2011
1.84
26.05
Note: Parent Company Financials

23
Key Business Segments Key Geographic Segments
Business Highlights
Description News
Overview • XX
Pharmacy Retail • XX
Acquisition • XX
Future Plans • XX
27.1% 29.0% 31.1%
72.7% 70.0% 67.4% 68.9%
3.6%2.9%2.1%25.2%
0%
50%
100%
2014201320122011
100%
50%
0%
2014
100%
India is the only geographic
segment in which the publicly
listed company operates
OthersPharmacyHealthcare Services India

24
• X • X
• X• X
TO
WS

25
Private: Domestic Company – Company B (1/5)
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address X
Tel No. X
Fax No. X
Website X
Year of Incorporation X
Name Designation
X X
X X
X X
Category Products/Services
X X
X X
X X
Kolkata
Head Office

26
Shareholders of the Company Ownership Structure
Name No. of Shares held
X 82,739
X 78,400
X 52,500
X 39,000
X 36,000
X 3,449,861
Total 3,738,500
26.5%
0.4%
73.1%
Ownership structure corresponds to Date of AGM: 10/09/2014
Other top 50 shareholders
Directors or relatives of directors
Bodies corporate

27
Financial Snapshot Key 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
• It reported total income of INR 2513.9 mn in FY 2014,
registering an increase of 25.9 % from FY 2013
• The company reported debt to equity of 21.99 in FY 2014, as
compared to 14.13 in 2013
Net Profit/LossTotal Revenue
3000
-50
0
50
2000
1000
0
INR mn INR mn
2014
-21.4
2513.9
2013
1.6
1997.6
2012
6.8
1848.7
2011
45.0
1582.9
Particulars 2011 2012 2013 2014
Profitability Ratios
Gross Margin % 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%
EBITA Margin % 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%
Liquidity Ratios
Current Ratio 2.14 0.99 1.28 0.95
Cash Ratio 0.47 0.10 0.25 0.12
Leverage Ratios
Total Debt/Equity 4.29 14.51 14.13 21.99
Total Debt/ Working Capital 1.66 NA 4.45 NA
Interest Coverage 4.79 2.28 2.19 1.71
Efficiency Ratios
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

28
Description News
Overview • XX
Pharmacy Retail • XX
Future Plans • XX
Business Highlights

29
• XX • XX
• XX• XX
TO
WS

30
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Market Research Report : Pharmacy retail market in india 2015 - Sample