By Ashraf Biran
India has traditionally had an affinity for traditional brick and mortar “medical shops” that also doubled up as general stores. However, with the onset of digitisation and the Indian customer becoming better versed with international products, organised pharmacy chains have established a significant presence in urban and semi-urban areas.
The advent of pharmacy retail pharmacy chains is expected to organise the currently unorganised Indian retail pharmacy sector that continues to have haphazard and inconsistent development.
Modern retail pharmacy chains have the advantage of being digitised, organised and tech-enabled. This helps them to track medicine inventories and sell 100% reliable goods. They have neat and appealing displays that attract customers to browse at ease and inquire about a range of healthcare and wellness products. Additionally, retail pharmacy chains provide value-added services for consumers who have medical claims or insurance filing to be done, and can always be requested to refurbish previous bills or memos. Hence, these pharmacy chains function based on hyperlocal or Omni channel business models that perpetuate a more transparent and convenient source of selling goods.
Currently, such organised retail pharmacy chains only occupy 8 to 10 per cent of the market and most of them are concentrated in urban areas. There is still a wide gap between demand and supply of pharma products, especially in tier II cities and rural areas. Thus, there is a huge opportunity for pharmacy retailers to expand their distribution channels across the length and breadth of the country.
In addition to being outlets that offer a range of reliable and quality products, retail pharmacy chains are also witnessing the growth of private labels. Most of these private labels operate in the health, wellness and beauty category. Private labels offer significant margins for retail pharmacies that can go as high as 40% to 50%, vis à vis the 9% to 20% offered by branded products.
For retailers, private labels work out 20% to 25% cheaper in comparison to branded products, and it is a win-win situation for pharmacies and consumers because trust and quality are maintained. Furthermore, any feedback or grievance about the product is immediately addressed by the resident pharmacists; the consumer connect factor is thus kept in mind while developing such products.
Hence, the focus has now shifted from curative to preventive healthcare and people are beginning to understand the importance of maintaining good health through diet, exercise, adhering to doctor’s advice about medication and usage of wellness products. India’s pharmacies have aided in this transition of perception and are becoming steadfast and loyal health and wellness partners for customers across India.
The shift in the approach towards health cannot be emphasized enough, there is now a clear pre-pandemic and post-pandemic phase. To this effect, immunity-boosting drinks, foods, and vitamin products have become increasingly popular to maintain optimum health. This increase in demand for better quality healthcare products and focus on wellness is now single-handedly driving the growth of the organised retail pharmacy sector in India.
Indians are known to have stressful and sedentary lifestyles that are exacerbated by the consumption of unhealthy food habits. This has led to a ballooning of lifestyle-related ailments. In fact, according to a study by the Centre for Science and Environment, India ranks second in the list of countries with the highest diabetes patients and lifestyle diseases are the biggest killer in India today.
Consumers today are thus inclined towards products that can help improve their immunity, manage their sugar, blood pressure, and body weight. Hence, along with prescription-based drugs, retail pharmacies are increasingly offering consumers wellness products that help with their general wellbeing. The idea of good health is thus migrating towards wellness and it is aspirational. And pharmacies aim to not just be drug providers but also become trusted wellness partners and advisors to their loyal customer base.
Pharmacies have been functioning consistently throughout the pandemic, taking huge risks and providing customers with undisrupted services in times of need. Throughout the pandemic, they have tried their best to ensure that the right drug was made available at the right time and more lives could be saved.
They were able to do this because of tech-enabled and modern streamlined processes. For example, a cold chain facility for injections needs to be well maintained and identical safety processes need to be replicated at all stores. The adoption of digital tech helped to do this and it ensured the proper functioning of the systems and the timely delivery of goods to end-users.
All of these positive trends have led to major corporations showing considerable interest in this sector and many planning to venture into the retail pharmacy segment in the near future. The emergence of organised retail pharmacy chains is thus poised to lead to an overall uplift of India’s pharma industry.
(The author is Promoter & Director, Wellness Forever Medicare. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)