Pharma Trends

Pharma Retail Chains in India - Time to change the way you buy medicines?

May 29, 2013: The modern pharma retail chains are trying to bring a change in the buying habits of the consumers. But will the efforts meet the desired results?  


Neighbourhood Pharmacists (fondly known as Chemists), labelled under the ‘unorganised’ category have been operating in the Indian market for the past many decades now. However, the rise of modern retailing has given birth to organised retail chains in the pharma sector. In fact, names like Apollo Pharmacy, Med Plus, and Guardian Pharmacy et al have been trying to bring a change in the buying habits of the consumers.


During the 12-month period that ended in May 2012, the market recorded a growth of 16.5%, as per the data from All Indian Origin Chemists & Distributors (AIOCD). Currently valued at Rs 65,000 crore (US$ 11.58 billion), market estimates suggest that this segment will grow at a rate of 15 per cent CAGR over the next 5 years. But have these modern retail chains have been able to attract enough consumers to their stores? Not so far. Even after a handful of national and regional chains have tried expanding their base in the organised space, the unorganised pharma retailers still account for over 90% transactions in the industry. But as the Indian consumer gets more concerned about the health issues, it is expected that there will be a gradual shift towards the modern pharma retailers.


Apart from the fact that modern retailers offer a one-stop shop for all health needs to the consumers, it is the confidence that the consumer is getting genuine medicines which gives them the competitive edge. Share of fake/counterfeit medicines is estimated at 15- 20 per cent of the total Indian market, as per a report from FICCI’s National Initiative against Piracy and Counterfeiting. For the record, organised pharma retail stands at a much high percentage in markets like China, Russia, Mexico and Brazil as compared to India. For instance, as per a McKinsey report, Chinese organised pharma market has a 50 per cent share while Russia, Mexico and Brazil stand at 36 per cent, 35 per cent and 30 per cent respectively.


Even after the clear advantages these pharma retail chains holdover the conventional pharmacists, it will take some time for the consumers to move beyond their ‘trusted’ neighborhood chemists. Clearly, there is a lot of headroom in this segment of the market and as a result, organised players are currently in a phase to build a network that will be future-ready. In other words, there is no doubt over the fact that the share of organised pharma retail is well poised to go up in the coming times and one should not be surprised to see many more established names joining this industry in the near future.


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