Pharmacy Retail Market – India April 2014
SAMPLE
Executive Summary Market
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
Drivers & Challenges
Growth in Pharmaceuticals Sector Rising Healthcare Expenditure Changing Disease Profile Growth in OTC Segment Consumer Attitude Attractive Margins
Challenges
Trends
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
Competitive Landscape
Capital Intensive Business Fragmented Industry 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
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•Macro Economic Indicators •Introduction •Market Overview •Government Regulations •Drivers & Challenges •Industry Association •Key Trends •Technology Adoption •Competitive Landscape •Strategic Insights •Appendix PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Healthcare system in India requires a larger public outlay due to the huge population base
SAMPLE
Healthcare Industry Overview
Healthcare Sector – Market Size & Growth
• 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
INR tn x X%
x x
x
x
x
2012
2013
2014e
x
2015e
x
x
x
0 2016e
2017e
2018e
Market Segmentation – Overview (20--)
x 21.3%
x x
3.4% 0.9% 7.2% 16.2%
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
50.9%
x x x
4
Disparity in income levels across population strata results in income elasticity of demand for healthcare
SAMPLE
Healthcare Expenditure of Population by Economic Standard x
Medicine
Doctor/ Surgeon’s Fees
Medical Diagnostics
Hospital/ Nursing Home Fees
35%
x
x
21%
44%
42%
17%
41%
36%
53%
62%
11%
27%
11%
• xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Unorganized segment dominates a large volume of the pharmaceutical retail market Market Overview
SAMPLE
Market Size and Growth
• 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
INR bn 2,000
x
X%
1,500 1,000
x
x
x x
x
500 0
2013
2014e
2015e
2016e
2017e
2018e
Market Segmentation % 100%
x 10.5%
11.2%
12.1%
x 12.8%
13.5%
14.2%
80% 60% 40%
89.5%
88.8%
87.9%
87.2%
86.5%
85.8%
2013
2014e
2015e
2016e
2017e
2018e
20% 0%
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Pharmacy industry has an elongated distribution chain before the products reach the retail outlets
SAMPLE
Sub Stockist
Manufacturer
Central Warehouse
Super Stockist
Stockist
Retail Outlets
Hospitals
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
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Government Role: Summary
Licence Procurement
Role of Government Foreign Direct Investment
Ownership Restrictions
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Drivers & Challenges
Drivers Growth in Pharmaceuticals Sector
Challenges
Rising Healthcare Expenditure
Capital Intensive Business
Changing Disease Profile
Fragmented Industry
Growth in OTC Segment
Counterfeit Drugs
Consumer Attitude Attractive Margins
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Rising health related expenditure is a strong determinant of growth for pharmacy retail market…
SAMPLE
Rising Healthcare Expenditure (1/x)
Impact
• 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
Middle Class Population Growth Projection
Average Health Spending (2011-12)
mn 600
547.0
8.5%
500
22%
28%
400 267.0
300 160.0
200 100
31.4
113.8 53.3
78%
72%
0
2010
2015e x
2025e x
x
x
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
x
x 10
Favorable consumer attitude and attractive margins are driving growth in pharmacy retailing in India
SAMPLE
Consumer attitudes
Behaviour towards Minor Ailments
• 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
8% 23%
This is likely to promote the growth in the business of organized pharmacy retail chains
45%
24%
This is in turn fueling the growth in pharmacy retailing business
• New age consumers demand congenial environment that is quick, efficient and comfortable
Impact
x
x
x
x
Attractive margins
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 Level Retailers
Margins Scheduled Drugs
Non-scheduled Drugs
x%
x%
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Pharmacy retail business is a capital intensive proposition that involves strategic location of outlets
SAMPLE
Capital Intensive Business
Impact
• Pharmacy retailing is a capital intensive business proposition • Pharmacy retailing stands out as a catchment specific business Pharmacy Retail Business – A Catchment Specific Business Success Involves Proximity To
Hospital area
Commercial area
Spells burden on the business operators due to prohibitive real estate cost in such areas • Pharmacy retail in today’s scenario essentially involves store expansion and its multiplication Each store involves an approximate cost of
Each store requires minimum
to set up and start operation
to breakeven PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Key Trends Loyalty Schemes Value Added Services Health Insurance Plans Made Available in Pharmacy Tele Consultation Services
Trends `
Entry of Government in Pharmacy Retailing Organized Retailers Starting Pharmacy Chains Entry of Private Labels Rural Expansion Tracking of Counterfeit Drugs
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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Technology Adoption: Summary
Customer Relationship Management
Technology Trends Supply Chain Management
Enterprise Resource Planning
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Competitive Benchmarking (1/x) Public Trading Comparables (FY 20--)
Player 1
Player 2
Player 3
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
Market Capitalization (INR mn)
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Competitive Benchmarking (2/x)
Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/3) Operating Margin
%
97.61
Net Margin
100 50
13.30
97.61
0.08
0 -50
-21.34
-100 -150
-134.54 Player 1
Player 2
Player 3
• xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Player 1 (x/x) Company Information
Offices and Centres – India
Corporate Address
Tel No. Fax No.
Website Year of Incorporation
Head Office
Ticker Symbol Chennai Stock Exchange
Products and Services Category
Products/Services
Pharmacy Retail Chain
xxx
Online Retail
xxx
Key People Name
Designation
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Player 1 (x/x) Financial Snapshot Total Income
INR bn 40 30 20 10
1.34 20.62
1.82 26.29
Key Ratios
Net Profit / Loss INR bn 3.03 4 2.18 3 31.80
38.09
0
2 1 0
2010
2011
2012
2013
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) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
138,582.6 131,177.0 N.A. N.A.
Particulars
y-o-y change (2013-12)
2013
2012
2011
2010
0.63
13.19%
12.55%
12.51%
10.86%
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
1.09
7.95%
6.86%
6.94%
6.50%
0.23
10.70%
10.47%
10.26%
9.78%
2.29
10.95%
8.66%
9.48%
7.98%
0.07
12.24%
12.17%
10.98%
8.76%
-59.08
59.76%
118.84% 133.55%
45.61%
0.42
10.38%
9.96%
9.06%
6.86%
0.15
19.59%
19.44%
18.28%
14.24%
-0.54
86.77%
87.31%
87.38%
88.95%
-0.18
3.31%
3.49%
3.73%
3.11%
-0.16
2.40%
2.56%
2.84%
2.71%
46.69%
2.15
1.46
1.39
1.69
1.91%
1.10
1.08
1.05
0.98
35.41%
0.44
0.32
0.50
0.55
24.61%
0.31
0.24
0.33
0.35
11.29%
5.51
4.95
4.45
4.07
-3.35%
1.48
1.53
1.45
1.29
-0.06%
0.79
0.79
0.72
0.62
-18.57%
2.41
2.96
2.96
1.69
-51.76%
4.52
9.37
10.58
4.13
1.23%
0.96
0.94
0.90
0.78
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
Decline
18
SAMPLE
Public: Domestic Company – Player 1 (x/x) Key Business Segments xxx
xxx
Key Geographic Segments
xxx
xxx
100% 50% 0%
75%
70%
73%
67%
24% 1%
25% 2%
27% 3%
29% 4%
2010
2011
2012
2013
100% 80% 60% 40% 20% 0%
100%
xxx
2013
Business Highlights Description
News
Overview
• Xxx
xxx
• xxx
xxx
• xxx PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Player 1 (x/x)
• xxx
• xxx
S
W
O
T
• xxx
• xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Player 2 (x/x) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Kolkata
Year of Incorporation
Products and Services Category
Products/Services
xxx
xxx
Head Office
Key People
xxx
xxx
xxx
xxx
Name
Designation
xxx
xxx
xxx
xxx
xxx
xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Player 2 (x/x) Shareholders of the Company
Ownership Structure xxx
Name xxx
39,000
xxx
78,400
xxx
10,000
xxx
10,000
xxx
10,000
xxx
5,000
xxx Total
xxx
xxx
No. of Shares held
100.0%
100.0%
100.0%
73.1%
73.1%
73.1%
1,930,307
2.2%
0.4%
0.4%
2,082,707
24.6%
26.5%
26.5%
2011
2012
2013
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Player 2 (x/x) Financial Snapshot Total Income
INR mn
Particulars
INR mn
50
33.2
1000 500
Net Profit/Loss
45.0
2000 1500
Key Ratios
1353.0
40 1582.9
1848.7 6.8
1997.6 1.6
0
30 20 10 0
2010
2011
2012
2013
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
y-o-y change (2013-12)
2013
2012
2011
2010
-0.41
13.30%
13.71%
16.95%
10.13%
-0.29
0.08%
0.37%
2.84%
2.45%
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
0.47
0.09%
-0.38%
4.11%
2.06%
-8.16
2.47%
10.63%
38.13%
35.49%
1.28
26.83%
25.55%
27.84%
22.34%
2101.78
127.84% -1973.95% -414.62% 30.43%
0.56
20.78%
20.22%
-6.13
110.03%
116.17% 103.02% 88.01%
22.34%
22.34%
0.46
86.63%
86.18%
82.98%
89.81%
N.A.
N.A.
N.A.
N.A.
N.A.
-0.14
5.79%
5.93%
3.56%
N.A.
30.17%
1.28
0.99
0.93
4.87
19.51%
0.06
0.05
0.03
0.17
-2.85%
14.13
14.54
7.16
5.57
-0.19%
0.93
0.94
0.88
0.85
-0.94%
2.31
2.33
4.79
N.A.
-2.05%
8.23
8.40
6.05
8.64
6.25%
1.55
1.46
1.31
2.19
11.17%
2.12
1.91
1.78
2.37
-106.70%
9.56
-142.80
-24.36
2.99
5.70%
30.36
28.72
13.35
14.41
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
Decline
23
SAMPLE
Private: Domestic Company – Player 2 (x/x) Business Highlights Description
News
Overview
• XXX
xxx
• XXX
xxx
• XXX
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Player 2 (x/x)
• xxx
• xxx
S
W
O
T
• xxx
• xxx
PHARMACY RETAIL MARKET IN INDIA 2014.PPT
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