Guillermo Martorell
Director General
Grupo RFP
View from the Top

Smaller Pharmacies Fighting Back Against Big Chains

Thu, 09/07/2017 - 09:37

Q: What are the greatest challenges that pharmacies are facing in the current market?

A: We face aggressive competition from national chains that are entering areas where regional chains had maintained an unchallenged presence for many years. Everyone can compete on price, but the main issue is service and a big pharmacy can offer all the medicines listed on a prescription. The national chains often have large inventories and if a regional pharmacy does not, it becomes less competitive. Medicines for chronic diseases are now in high demand and although people are cost-conscious, they also prefer to obtain all the items they need at one store. Service, stock, location and price are the top four challenges.

Q: To what extent would you consider creating your own brand?

A: More than an own-brand, we would be creating an exclusive brand because it would be sold through our pharmacies and would not bear the logo and branding of each individual pharmacy. We are in the process of creating such a brand that would be available throughout the group. Generics are enjoying the most growth, so combining generics with a private label should produce good results. To date the brand is designed and developed, we are simply awaiting regulatory approval. We hope to launch it in 4Q17.

Q: What plans do you have to put doctors in these pharmacies?

A: We have set up 100 consultancies so far from a base of zero and we continue to grow. Of those, 62 pharmacies are in operation and the others are still a work in progress. The doctors are not our employees and they have full liberty to decide which treatment to prescribe. We use a third party that is specialized in this area to find those doctors. In addition to general doctors, we hope to add specialized consultancies.

Q: To what extent will specialists in pharmacies be linked to the specialized areas within stores?

A: They will be in two senses. First, salespeople will be specialized in what they are selling, usually linked to the provider, which trains those people to use the products. Secondly, we want to add specialized doctors such as dermatologists. We will first see how this progresses and then bring other areas online. We are even considering offering basic dental services. The company we are working with to provide doctors also collaborates with us to set up clinics in those small towns that suffer from access issues.

Q: What growth do you expect for home deliveries and online sales?

A: We are hoping for aggressive growth because we are still small. We need to more than double our revenue from home deliveries in 2018, reaching around 150 percent growth as we are starting from a small base. We expect to see growth of around 300-400 percent in our online services. The platform is already running in two chains. The back end of the platform will be the same for each chain, although the front end will reflect the individual chain.

Q: How is the platform organized and what impact is e-commerce having on pharmacies?

A: We sell through various channels, one of which is online, which is an emerging and growing area. By technological platform, we mean mostly two things. The first is information management at the point of sale. The second enables operations related to inventory control, to sales statistics, costs and putting costs online to allow customers to make quick decisions, promotions and discounts. In addition, we want to implement specialized software for personnel management, because there is a high level of rotation in the pharma-retail sector and constantly training people is expensive.

Q: Will independent pharmacies have a role with the group?

A: We are working on a program to invite independent pharmacies that we hope will be ready by the end of 2017. We hope to close 2017 operating around 600 pharmacies, not counting those that are independent.