Optimising opportunities Multipharma

OPTIMISING OPPORTUNITIES

Multipharma is a market-leading retailer of pharmaceuticals and cosmetic products. Philip Yorke talked to Marc Hendrickx about the company’s plans to develop its own-label products and non-pharma sales, as well as to increase the number of its retail outlets.

Multipharma is a retail cooperative that was founded in a small town near Brussels, Belgium, more than 90 years ago. It began with just one ‘Apotheke’ (Pharmacy) and has grown steadily over the years to become Belgium’s premier retail pharmaceutical supplier. Today the company operates 248 outlets across Belgium and is by far the largest retailer of its kind in the country. Multipharma employs over 1400 people and prides itself on its high quality of personal service and in-store presentation, as well as its ability to ensure that retail stocks are consistently replenished through its state-of-the-art warehouse facilities and logistics operations throughout the country.

Growth in own-label product sales

Continuing legislation concerning both operational and pricing policies, plus constraints on advertising by the Belgian government, has led Multipharma to explore more innovative ways to maintain its profit margins. Mr Hendrickx said, “It is a very competitive marketplace and the strict government controls on the pricing structures of pharmaceutical products have had a negative effect on our profit margins whilst our overheads continue to climb.

“To combat this trend we decided a couple of years ago to trial the launch of a few products under our own brand name, and this was made possible due to our large number of outlets. The projected sales figures based upon our extensive range of outlets across the country made this decision economically viable. This move proved to be a big success with our customers as it offered them quality products backed by a name they could trust and in addition, more competitive prices. The high volumes we were producing in these lines made it more profitable for us, as we could control our margins for the very first time on our pharmaceutical over-the-counter (OTC) non-prescription, self-medication products.

“In another strategic move, we decided to rearrange our stores to enable us to better display our non-pharma products and in particular our cosmetic and nutritional products which offer better margins for us as high street retailers. In keeping with most other EU countries, prices are continuing to go down, and in our case more than 2,200 products were reduced in price over the last two years. We are therefore facing a bleak time over the next four years or so with decreasing revenues in the pharmaceutical sector, whilst our overheads, and in particular, our staff costs continue to rise. We therefore have to do more with less. Currently we are produc-

Providing health and better well-being

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As the European leader* in pharmacy products for baby care and stretchmark treatment, Mustela has supported parents and baby care professionals for more then 60 years. Mustela is designed to meet the needs of babies, young mothers and mothers-to-be.

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ing 82 own-label products and we are now extending these OTC medicines to include vitamin and nutritional supplement products. In this way we hope to not only maintain a healthy bottom-line, but also to improve upon it.”

Acquisitions and organic growth

The only other way to grow the company is through the acquisition of independent ‘apothekes’ in Belgium and other smaller cooperatives or local chains. However, this is not an easy option as there are very few independents wishing to sell their familyrun retail businesses in Belgium. The main opportunity for growth therefore comes back to being innovative with the company’s existing infrastructure.

Mr Henrickx added, “Fortunately we still have the monopoly of pharmacies in Belgium and are also fortunate at this moment in time, because unlike other EU countries, supermarkets are not allowed to sell overthe-counter’ medicines or to operate an in-store pharmacy. We are hopeful that the status quo will remain in place as otherwise this would be a big blow to our future prospects. We are very pleased with the sales of our own-label products; under the current government legislation we are allowed to promote our products with publicity that extends beyond the branding to be seen on the side of our delivery vehicles. All other independent advertising is forbidden in Belgium”

Multipharma is a success story that is based upon a management culture of innovation combined with dedicated customer services and a practical approach to the market. Although opening new outlets beyond Belgian borders is unlikely because of the very different legislation and controls in each EU country, the company is likely to continue to see healthy growth in the years to come. This achievement is a credit to the company’s resilience and its innovative management style that continues to overcome the prevailing economic climate and the many constraints that are imposed by the Belgian government. n