Friday 10 February 2012

Private label generics on Apollo Hospitals’ cards soon


Apollo Hospitals Enterprise Ltd is all set to introduce the range of its branded products for retail from its pharmaceuticals stores.
Apollo had set up 200 stock keeping units to introduce 50 non-pharma FMCG products in 2010, including toothbrushes, toothpastes, lotions, and creams for retail under the Apollo brand. At present, the Apollo range contributes about 2% to the turnover of the pharma business.

Now Apollo is expanding to include products in generics and over-the-counter drugs such as cough syrups, cough lozenges, paracetemols. It also plans to expand to 3,000 stores by the end of five years from the current 1,200 stores. Investment per store is Rs12-14 lakh, and the company is looking at investing Rs50 crore per annum in this business.

This fits in with its strategy for structural re-organisation, where it plans to consolidate profitability in the retail pharmaceuticals business and hive off 50% stake to a strategic partner. For the quarter ended December 2010, Apollo’s revenues from retail pharma grew 45% on year. Ebitda (earnings before interest, taxes, depreciation, amortisation) losses were contained and Ebitda margins improved by 303 basis points. Apollo’s pharma business is at present the largest organised pan-India player in the segment. Next in line is MedPlus Health Services with 800 stores mostly in south India, followed by Religare with 150 stores.

Indian and American equity firms are reportedly considering buying a 35% stake in the Hyderabad-based MedPlus Health Services for `410 crore. While refusing to comment on whether Apollo had done a valuation of its pharma business, Venkataraman referred to the MedPlus deal as a likely pointer to values.

Organized retail accounts for less than 3% of India’s `45,000 crore pharma retail business and there are about six lakh pharmacies in the country today. Apollo has a projects team that goes out to various locations and consults on a turnkey basis, and sometimes Apollo also manages the hospital. For instance, the hospital in Dhaka is a managed hospital. At present, the consulting business contributes about 2% to Apollo’s turnover and about 8% to profits. Medical tourism contributes 15% to Apollo Delhi’s revenues, and 8% to its total revenues.

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