The Hindu Business Line : Apollo Hospitals to hive off pharma retailing into separate co

At present, the company has 642 pharmacies across the country and the plan is to raise this number to 1,000 by February next year, according to Ms Shobhana Kamineni, Director, Apollo Hospitals, who looks after pharma retailing.

“We are opening pharmacies at the rate of one a day,” Ms Kamineni told Business Line on Wednesday, adding that she would like to see 10,000 Apollo pharmacies across the country eventually. “India has six lakh pharma outlets. This 1,000 does not mean anything,” she said, putting the plans in context.

Asked if Apollo would take a strategic partner on board when the pharma retailing becomes a separate company, she said, “if it adds value, why not?”

At present, all the outlets are run by Apollo itself — though the real estate may belong to some one else — but beyond the first 1,000 stores, Apollo is open to looking at a franchise model, Ms Kamineni said.

Apollo has been selling medicines through its pharmacies within the hospitals for a long time, but it was only in 2006 that the company began setting up standalone pharmacies. Ms Kamineni reckons that for all the 1,000 outlets, Apollo may not need to spend more than Rs 200 crore, half of it coming from profits generated by the stores themselves.

Last year, because Apollo added 262 pharmacies, it dragged the company’s profits by Rs 8.8 crore. For 2008-09, this drag may be around Rs 16 crore. “But once we complete 1,000 stores, there is no stopping,” she said.

Like for any retail business, the major challenge is finding manpower. Apollo has sought to tackle this problem by working with NGO and picking up youngsters from semi-urban centres and training them in pharma retailing.

At present, Apollo has about 600 people recruited that way, against the total employee strength of 6,000, but Ms Kamineni said that hiring through NGOs is now picking up.

In this context, she criticised poaching by “new entrants”, who offer double the salaries and pick up Apollo-trained staff, even though such salaries could not be sustainable.

“An additional challenge in pharma retailing is that the margins are extremely regulated,” she said, observing that many entrepreneurs might be starting chains only to sell off later.

Apollo is also set to increase volume of medicines manufactured for it. Ms Kamineni observed that there is no need for Apollo to buy basic, over-the-counter medicines of other brands, paying more. “The generic strategy is to get the best material and get it manufactured,” she said.

Accordingly, it contracts out several low-value medicines to other pharmaceutical manufacturers. These medicines are currently sold under two brands of the company —Apollo and Doctors’ Choice. Shortly, Apollo would launch a “big vitamin range” under a separate brand, details of which would be disclosed in due course, she said.

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