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An expenditure of Rs 40 crore has been earmarked for its 2006-07 expansion by 140 stores. First such deal in pharma retail sector

MR M.C. KINI, CEO, co-promoter and Director of Lifetime Healthcare (left), and Mr Mahendra Chowhan, Managing Director of Vardhaman Pharma, at a press conference in Bangalore on Thursday. — G.R.N. Somashekar

Bangalore , Oct. 26

M&A winds are blowing from pharma companies to organised drug retailers. In the first move of its kind in the country, LifeKen has bought Pill & Powder, Bangalore's first and five-year-old pharma retail chain, for an undisclosed sum.

The acquisition of 11 stores makes LifeKen, now with 60 stores in Bangalore and Chennai, the largest branded drug chain in Bangalore and No. 2 in the South (after Apollo) in less than two years, said Mr M.C. Kini, CEO, co-promoter and Director of the closely held Lifetime Healthcare Ltd. LifeKen is promoted by Lifetime Healthcare.

"(It) is an important milestone in our journey towards expanding to 200 stores over the next one year and 700 stores in the next three years," Mr Kini told a news conference here on Thursday.

It still has not decided whether to retain the `Pill & Powder' brand or start a re-branding exercise, he said. The integration process will be over in the next 3-6 months.

The 40 combined walk-in stores now cover the city. Post-acquisition, the company expects its turnover, set for Rs 18 crore this fiscal, to soar to Rs 80-100 crore next year, said Mr A. Suryanarayanan, Lifetime's COO and co-promoter. The stores do a monthly business of around Rs 2 crore each.

An expenditure of Rs 40 crore has been earmarked for its 2006-07 expansion by 140 stores, which includes opening news ones, buying existing stand-alones and franchises, Mr Suryanarayanan said. These would be in Bangalore, Chennai, Hyderabad, and tier-2 cities such as Mysore and Coimbatore and Madurai.

The northern foray would follow after consolidation in the South.

For now, the growth would be financed from internal accruals.

Currently among the country's top 5 retail pharma companies, LifeKen's aim is to reach the top-2 league in about five years. The organised pharma retail industry forms a tiny 2 per cent of the total drug retail market in the country, estimated at Rs 35,000 crore. Bangalore has barely 150 organised outlets among 4,500 pharmacies.

According to Mr Mahendra Chowhan, MD of P&P's promoter company, Vardhman Pharma, the latter was looking for an exit in order to focus on its core business of pharmaceutical distribution.

More Stories on : Retailing | Mergers & Acquisitions | Pharmaceuticals

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