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In the current globalized retail era it is very tough task to fight and survive in the global as
well as local market. The Pharma sector is one among sectors which is facing hard
competition in is industry. By introduction of retail malls the customers are getting all the
daily use commodities under a single roof. They are getting each and everything which are
basic as well as secondary requirement for a high, middle and lower class segment of global
society. Now the question arises what will be the future of small retailer in pharma
industry? The answer is considering that pharma retailing is clubbed with fast moving
consumer goods retailing in most cases. The consumer is getting everything in air
conditioned environment – fruits, garments, healthcare articles as well as fulfilling other
essential requirements. So we can say it is "starting end" of small pharma retailers or we
will use a hindi phrase – "Swagat kehi saath vida ki hoti dekhi tayyari".
THE VALUE CHAIN ANALYSIS
The term Value Chain is used for adding some extra utilities in the product and then
supply / sale it to the end user. The value chain activity starts at the time of production and
ends not after selling but continues till the consumption by the customer. It includes
different services provided by retailer / whole seller or manufacturer to the end-user
customer. The value chain of a pharmaceutical company also consists of all physical and
technological distinct activities within the organization that add value to the consumers
experience. For all types of production organizations their must be some –
1) Primary Activities &
2) Supporting Activities
The primary activity of a sample value chain are
1. Inbound logistics
2. Operations
3. Outbound logistics
4. Sales & marketing
5. Services
The each and every product in case of any organization will have to pass through all the
primary activities then only product can easily face the competition and prove superiority.
Retailing comes under sales and marketing and services segment. The terms logistics
means the art of stationing and moving. Inbound logistics deals with how the company is
getting its raw material and sources to manufacture a certain product. Where operation is a
process or procedure or stages of product development by using raw materials, chemicals
and machinery and know how and other essential requirements for operational activity. The
next stage is outbound logistics which deals with packaging of goods or commodity. A good
packing is good market making. It totally depends upon the size of commodity. It is only
management control activity to ensure the type of packaging by thinking about the
customer's conveyance as well as safety of product. For the organizational welfare this is
another management control activity to "think about the cost" packing".
The next step after the outbound logistics is delivery of product i.e. sales & marketing. By
using different sales promotion activities like – advertising through different medias we can
sell our product and also we can increase our turnover. At this stage the management has
to think about the advertising cost as well as other sales promotion activities and
transportation cost to deliver the product to the various stockists, wholesellers, retailers and
distributors.
The last step of primary activity of a value chain is services. In business terminology we
can say "Service to customer is service to God" because customer is King in the market and
concerns are entertainer to the king. Here we have to face lot of competition with our
competitors. The customer satisfaction is only 100% which encourage the products to do
something new which results in growth of entrepreneurship.
The supporting activities are frameworks or structure under which all the basic / primary
activities fulfills their best. We can take the example of few very important supporting
activities.
* Organizational structure
* Organizational infrastructure
* Human resource management
* Technology Upgradation and
* Procurement.
With the help of these above supporting activities the concern achieves its great success by
producing good quality product which has good demand in the market and which helps in
capturing market and creating the monopoly situation.
India is now considered as a fastest developing economy in the world. India is developing in
every area of economy i.e in education, technology, agriculture, power generation,
Information technology, space technology, development in roads, railways and airways etc.
We consider trade and commerce are the core areas of any country, here we consider
retailing has to be given more emphasis as it is the subject of every common man in India
today. In Pharma Retailing there are two types of sectors :
1. Organised Pharma Sector : Pharma chains like Apollo Pharmacy ,Med plus,
Subhiksha, Hetero Etc.
2. Unorganised Pharma Sector : Unknown and Small retail outlets.
The organized pharma chains are generally owned by large and Established business houses
which have decades of experience in handling large Industries, organized businesses etc.
They have expertise in Trading various Drugs, Manufacturing Drugs, Processing ,
Packaging , Logistics Handling , Inventory Management, cold storages etc.
These players are high end and deal in bulk quantities of raw-materials, Processing of raw
materials to finished drug formulations. Branding the finished products then packaging and
labeling the drugs and they have expertise in using all tools of marketing mix- i.e
1. Product
2. Price
3. Place
4. Promotion
5. Service etc.
Advantages to Organised Pharma Sectors/ Pharma chains
1. Economies of scale : The large players in pharma retail sector buy Raw material in
bulk quantity, process in bulk quantity, package in big lots, use high technology in
processing, packaging and transporting, so they get the finished drugs at the lowest
possible prices.
2. Technology driven : These large players use modern ,latest and automated machinery
in manufacturing Drugs, in Inventory management, supply chain management, use of
latest display tools, free samples to Doctors and hospitals etc.
3. Retailing their own pharma brands/generic brands along with competitors
brands : It helps in promoting their own brands/generic brands which can fetch more
profits using push strategy through doctors and hospitals by providing free samples,
sponsoring free treatment to patients.
4. Passing advantages to patients and consumers : With the optimum use of available
resources and technology, some price. Advantages can be passed over to patients
5. Increase in market share and profits : With all the advantages from points 1 to 4
above the pharma chains can achieve higher market share and profits.
6. Discount parameter : According to the latest self-study we have found that up to 10%
discount is offered by retail pharmacy chains like Apollo, Hetero, Subhiksha and Med Plus.
The second type of pharma retailers are the individual outlets i.e small retail medical shops
DISADVANTAGES TO SMALL RETAILERS
1. No economies of scale to small medical stores : These small stores buy in small
quantities from drug distributors with higher prices with no schemes thereby it reduces
profit margins
2. Small geographic area : These small retail medical shops operate from small lanes
and by-lanes where it could cater to limited range of patients who belong to that
surroundings only. This results in lower turnover of sales resulting in lower profits.
3. No home delivery services : These small medical shops generally run on low man
power or some times run as a family business and therefore cannot effort to hire persons
for home delivery of medicines.
4. Winding up of medical shops : Notwithstanding the business threats from large
pharma chain stores most of these stores close their stores by sustaining huge loses.
5. Losses from expiry of medicines : New formulas are frequently launched into the
market and doctors always want to try new formulas on patients thereby sales of old
formulas are slowed down which causes huge quantity of expires of medicines which in turn
result in heavy loses.
6. Discounts can not be offered : Small medical shops buy in smaller quantities and
cannot avail the advantage of various schemes on quantity purchases, there by their unit
purchase prices are higher and can not offer discount to patients/ customers.
MAIN ACTIVITIES INVOLVED IN RETAILING
1. Choosing store location : Three attributes are important to all retail locations
a. Attractiveness
b. Convenience
c. Proximity
2. Sourcing / Buying / Vendor Partnership / Supply Chain Management
3. Achieving efficiencies in retail operations
a. Margin-Turnover position
b. Investment productivity
c. Space Productivity
d. Employee Productivity
e. Average size of transactions
AN ILLUSTRATION OF SUBHIKSHA DISCOUNT CHAIN
Subhiksha gets about 30 days credit from suppliers and uses about 7 days for its cycle,
saving 23 days value. Subiksha has three models : -
1. Lower prices
2. Neighbourhood stores
Subhiksha believes that the MRP is just a cap on prices and prefers to sell everything at less
then MRP. It manages to provide discounts in the range of 10 percent on nearly all
products. Subhiksha's appeal to the average middle class household is considerable, the
price savings mean a lot for them.
CONCLUSION
In the field of pharma retail the Apollo Hospital enterprise is doing its business with more
than 642 pharmacies across the country with an aim to reach 1000 units at the end of profit
year 2008. Las year Apollo added 262 pharmacies and gained the profit of Rs.8.8 crore.
Now they have aim to reach Rs.16 crore for the year 2008-09. The share of organized retail
in the total market is likely to grow many fold from existing 2% in the coming year. The
latest Indian retail review shows that in the year 2010 this rate will be 20% because growth
is attracting new players in the market. So in conclusion we can say that though there is
hike in retail market and specially in organized retail. Then we have what will be future of
unorganized small retailers. I am using the sentence for small retailers of famous Hindi
Novelist - Premchand "Kisaan ab apni hi zameen par mazdoor bankar reh jayega.
REFERENCES
Business world
Business & Economy
V.S. Ramaswami & S. Namkumari
Business line.
The Hindu
Economic Times.
doing business in India has launched a new report on Pharma Retailing in India, already adding to its excellent
repertoire of reports on the Retail Industry in India.
The pharma retail sector in India, so far dominated by unorganized players, is expected to see a shakeup and
consolidation soon. Big retail chains and other organized players have invested long term in it and are going about
changing the business landscape. What does this mean for the local medical shop? What does the customer gain in
the process?
This report (www.india-reports.com/summary/pharmaretailoverview.aspx) presents changing trends, lists out the key
players and their growth and expansion plans and challenges and benefits to the Indian Consumer, suitably
illustrated through relevant charts and graphs.
India Reports also provides specific research to suit needs of customers on request. Special offers are also available
on the purchase of multiple reports.
www.india-reports.com emerged out of the growing demand for facts, trends and economic indicators on India.
www.india-reports.com provides accurate and easy to understand India specific reports that capture trends, map
business landscapes and custom-made reports for specific needs. The other reports available on www.india-reports
are on outsourcing, tourism, food and other emerging sectors in India.
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