Pharmacy Retail Market India - MarketResearch · PDF fileConsumer Attitude Attractive Margins...

Pharmacy Retail Market – India

April 2014

2

SAMPLE Executive 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

xx

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

ManufacturerCentral

WarehouseSuper 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

113.853.331.4

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

TechnologyTrends

Customer Relationship Management

Supply Chain Management

Enterprise Resource Planning

15

SAMPLE Competitive 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

SAMPLE Key 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

SAMPLE Public: 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

SAMPLE Key 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 RatiosOperating 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 RatiosOperating 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 RatiosCurrent Ratio 46.69% 2.15 1.46 1.39 1.69

Cash Ratio 1.91% 1.10 1.08 1.05 0.98

Leverage RatiosDebt 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 RatiosFixed 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

402.18

2012

INR bn

3.03

INR bn

2013

38.0931.8020.62

2010

1.82

2011

1.34

26.29

Public: Domestic Company – Player 1 (x/x)


19

SAMPLE Key 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 RatiosOperating 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 RatiosOperating 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 RatiosCurrent Ratio 30.17% 1.28 0.99 0.93 4.87

Cash Ratio 19.51% 0.06 0.05 0.03 0.17

Leverage RatiosDebt 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 RatiosFixed 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

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26

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Pharmacy Retail Market India - MarketResearch · PDF fileConsumer Attitude Attractive Margins...

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Transcript of Pharmacy Retail Market India - MarketResearch · PDF fileConsumer Attitude Attractive Margins...