BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

BUSINESS PLAN for the RETA

MBA First Semester

Name: Rajat Chauhan

ID No.: 31149
Class: MBA 1st Year C
Session: 2021-2022

X
Rajat Chauhan
Date:
 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

Table of Contents
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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

1. Introduction:
Pharmaceutical industry is widely fragmented throughout the country. Association Chamber
of Commerce of India (ASSOCAM) has estimated that pharmaceutical sector will reach to*
USD 55 billion by 2020 and which was USD 28 billion in 2017.
The growth of Pharma market is due to continuous increase in incidences of chronic diseases,
regardless of lack of organization and the corporate discipline. India’s domestic retail
pharmacy market is estimated to be around $6 billion. Retail pharmacy market is in the midst
of changes and there is a need for more efficient organization of retail pharmacies.
The organised and unorganised pharmacies have to operate together as an outstanding
distributor of the drugs as the industry is highly government regulated and their massive
challenges are the manpower and money in unorganized pharmacies. As the industry is
growing rapidly it has created many opportunities for the E-pharmacy-pharmacy models
which is a promising trend and is challenged by the regulatory issues.
The growth of the pharma market in India can be attributed with the better diagnosis of
diseases, improved medicines and networks and availability of healthcare facilities
distribution.
1.1 RETAIL PHARMACY:
Retail Pharmacy market is tremendously practiced across the globe and sells the
pharmaceutical products which includes over the counter drugs, prescription drugs and
FMCG products along with the other pharmaceutical products. It contributes in the welfare of
the humanity and also provides socio economic benefits to the society as it helps in creating
the jobs and community development etc.
There are more than 8, 00,000retail stores in India as of estimated and 2018 data which covers
the 70% of generic drugs, 21% of non-prescription drugs and 9%patented drugs.
1.2 Domains of Pharmaceutical Dispensing:
The dispensing of pharmaceuticals is divided into two domains on the basis of sales volume,
distribution system.
Organised retail pharmacy: They work under the (Central Drugs Standard Control
Organization and State Drugs Standard Control Organization) issue the RDL (retail drug
license), the licence authority under which unorganized pharmacies work. They follow
centralized inventory management system.

List of some retail chain pharmacy are:

 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

• Noble plus pharmacy and skin care: the most trusted and preferred chains in
Mumbai which have the 20+ outlets and the 10,000 customers. The availability of product is
24/7.
• Apollo pharmacy: Asia’s largest healthcare group with 3000+ outlets in key
locations which is accredited with international quality certification. Availability of product is
24/7.
• Med plus health services: the second largest retail pharmacy in a country with
1400+ outlets.
Unorganised retail pharmacy: These are small pharmacies with the inefficient management
system which in turn results in wastage of time and resources. These are major contributors in
domestic pharmaceutical sales. They provide high volume support as they are present in every
corner of India and hence serves as big source of employment in India. It has potential to
drive high market growth due to high base sale.
Operating margin is to be estimated as 20%

OPERATING MODEL used for procuring the product from several distributors and stockiest (who
procure it directly from the manufacturing units).

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

STRENGTH AND WEAKNESS OF RETAIL PHARMACIES

Strength Weakness

• The retail pharmacy is well spread and • High expense of rent

within the reach of the large population • Lowering of profit margin if the expense of
• Undertake delivery to the customers salaries and rent are accounted
• Lower customer acquisition cost • Limited inventory
• Better customer loyalty • Facility problems
• Time saving • Labour problems
• Supplier problems
• Infrastructure

Challenges faced by the Retail Pharmacy:

Low industry margin: Retail pharmacy is highly fragmented and unorganized. They are
established across the country. Drugs are bought in smaller quantities from the drug
distributors by the retail stores at higher prices compared to what E-pharmacies procure from
manufacturers and hence they get lower profit margins.
➢ Sustainability of the retail Pharma industry: The sustainability of the retail pharma
industry is affected by the lower profit margins as the increase in the competition and increase
pressure on the price control as the profit margin for the retail pharma is 15-20%.Adapation of
the technology can increase the productivity of the industry and also serve the services to the
consumers.
➢ Drug misuse: There are significant number of cases regarding dispensing of medicines
without prescription which has increased rate of drug misuse in the country. For example, the
use of addictive substance such as DXM (dextromethorphan) which is being misused and
which can lead to emotional damage and withdrawal symptoms such as depression and
memory loss.
There are many cough suppressants which have codeine, which is also highly addictive and
can be misused.
(CRC Health, “over the counter drug addiction and treatment”2015) ➢ Counterfeit
medicines: Retail pharmacies have been alleged to sell sub-standard and fake medicines
which has increased the risk of adverse effects of medicines. This however we find is rarely
true.
➢ Poor Documentation/Tracking of prescription: Selling drug without proper
documentation of sale causes difficulty in drug recall process as it happens due to selling of
drugs without providing bill/invoice for the purchase, hence no proper buyer records exits and
reporting is affected.

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

➢ Poor inventory management: In India, it is not feasible for a single E-pharmacy to store a
wide range of products, which forces consumers to visit multiple pharmacies for procuring all
their medicines. This is an inefficient method which lead to over stock and increase in cost.
Fluctuations in supply and demand are not properly matched on the system and due to the use
of different platform software’s by the vendors and retailers. Inventory forecasting, pricing,
storing, replenishing the exhausted goods, must not be encouraged.
Strategies adopted by the successful retail pharmacies:
Consumer maintains relationship with the pharmacist based on the mutual trust and the strong
rapport. This proactive approach is essential for fostering the trust and satisfying customers,
retailers need to stock business a good range of product varieties.
Retail pharmacies work on lower margin high sale formula and create discount practises is to
attract customers. Flexibility of payment in any form e.g., debit card, credit card, UPI or cash
etc. to customers and also allows for a quick service and customer satisfaction.
1.2 E-pharmacy
Also known as E-pharmacy, internet pharmacy, cyber pharmacy or mail order pharmacy. They
operate over the internet and sell pharmaceutical preparations to customers who order E-pharmacy
and physical delivery. E-pharmacy availability of wide drugs range is for pharmaceutical companies as
they continue to reshape the future of medicines which are being purchased.

Current market value is 930 Rs. Crore

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

There are more than 290 E-pharmacy pharmacies. They mainly concentrate on chronic disease
market since they operate on high profit and high sales. Their labour and infrastructure costs are very
less compared to the retail pharmacies.
OPERATING MODEL:

They operate by efficient use of Warehouses and tie ups with pharmacies at strategic locations. Once
the order is placed and the prescription is verified then the product is dispatched to the fulfilment
centre where the goods are packed and sent for the delivery.

STRENGTH AND WEAKNESS OF E-PHARMACY PHARMACIES

Strength
➢ Time saving: It takes very less time and effort than travelling to local pharmacy and
sometimes one might have to visit 4-5 pharmacies to get his desired medicine. But in case of
E-pharmacy pharmacies it just takes a second to minutes to log in and get access to E-
pharmacy app or website and buy any medicine by uploading the proper prescription.
➢ Cost saving: it enables to widen the customer base by reducing the working capital,
overhead costs, and increase in margin which translates to cost advantage for the end
customers.
➢ 24/7 accessibility or convenience: It is easy to buy or order medicines E-pharmacy,
provides fast and hassle-free purchasing of medicines. For Individuals who live in a great
distance, elderly or disabled people it is easy to get their medicines delivered at door step
through E-pharmacies.
They also enable the access to rural areas where there is limited presence of the retail
pharmacy and E-pharmacy helps the consumer to choose from the wide range of the products.

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

Easy comparison of medicines: Cost comparison of medicines can be made as they have a
wide range of choices and have a larger stock than conventional pharmacy stores and they
also impart the knowledge of the medications.
Weakness:
➢ Chances of drug abuse, drug misuse, and misdiagnosis: When E-pharmacies fail to read
the prescriptions, which results in improper medication it can affect the patient and lead to
severe drug interactions.
➢ Promote self-medication
➢ Purity and quality of drugs is not assured as there are chance of delivering substandard,
counterfeit, and adulterated products.
➢ Health privacy issues which is very much important and E-pharmacy website should
publish their policies. They should keep the personal information of users safe and should not
share with any third parties.
Limitations for E-pharmacy:
Some drugs cannot be sold under the E-pharmacy pharmacy, comes under the narcotic and
psychotropic category. The E-pharmacy portal has to maintain the confidentiality of customer
information but they are duty bound to disclose the information to the state or central
government whenever it is required for any public health purposes.
BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E PHARMACIES:
The new buzz word in the e-commerce is hyperlocal which is set in the market for delivery of product
in residential area, they cater the need of customers in limited area. Local retail and service provider
are got their lease of life in business. Customers are more satisfied with this hyperlocal platform; they
can get any product which is available in their local area directly to their door step.

Purpose of these collaborations is to increase the consumer base of chain pharmacies as well as to
decrease the customer trust issues of ordering via E-pharmacies.

The market scenario of retail pharmacies is going to be very competitive due to increased
penetration of E- pharmacies. Because of the e pharmacy, retail pharmacies lost some percentage of
customer base, so to increase the customer base for retail pharmacy we came up with a business
plan.
Our business plan is about creating a hyperlocal platform for retail pharmacies.
Objectives:

1. To come up with strategies for retail pharmacies to adapt to the competitive pressure from E-
pharmacies
2. To improve the customer convenience

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

Apps will be created for:

1) Retail pharmacy shops

2) For customers
3) For delivery persons

BUSINESS MODEL:
The app will be interlinked between

1) Retail pharmacy shops to customers

2) Customers to the delivery boys

Customer order details will be sent to preferred retail pharmacy as well as delivery boy. Retail
pharmacist will verify prescription details and order number. Delivery boy will collect the
ordered medicines and delivers it to concerned customer address.
Delivery boy will have the GPS system which can be tracked by the customers to give live
track of medicine delivery.

FEASIBILITY STUDY:
The hyperloop retail pharmacy app which provides a wide variety of FMCG and medications
as well as over-the-counter medications such as cough medicines, pain relievers and personal
hygiene products / supplies.
A retail pharmacy which are licensed and have trained pharmacists will be selected to
dispense the drug and promote safe and effective use of the drugs. Pharmacists advise on
over-the-counter treatments and are an important source of consultation on drug side effects.
The company provide its services through its website on the Internet / or through the phone
application where individuals can submit their requests to it and requests will be delivered to
their homes at any time of the day (24/7 service).
The feasibility study of the hyperloop retail pharmacy app comprise of product, industry,
market, organizational and financial stability.

Types of feasibility study:

 Product/Service Feasibility
 Industry/Market Feasibility
 Organizational Feasibility
 Financial Feasibility
1. Product Feasibility:

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

In order to determine Hyperloop retail pharmacy app product feasibility, The Concept testing
and Usability testing have to be implemented.
 Concept Testing: There is a need for a paradigm shift in the healthcare delivery system in
India. About 75% of India’s population living outside urban cities has access to only 35%
medical facilities and 16% hospital beds. Such disparity has compelled India to neglect
preventive and public health measures. This, among other aspects related to the pandemic,
has pushed the country into the current state marked by limited access to healthcare in a
mass health exigency. Hyperloop retail pharmacy app shows the promise to bridge this
gap in the future by removing many infrastructural challenges and reducing the time taken
by a patient in getting medicines. The industry may see further refinement and
simplification of business models and may eventually lead to consolidation and growth.
Our work force is going to be well trained to operate within the framework of our
company’s corporate culture and also to meet the needs of all our customers. Company
will have a CRM software that will enable us manage a one-on-one relationship with our
customers no matter how large the numbers of our customers’ base grows. We will ensure
that we get our customers involved in the selection of brands that will be on our app and
also when make some business decisions. Hyperloop Retail Pharmacy app will retail a
wide range of prescription drugs from different manufacturing brands to customers
through partnered pharmacies who are based in Kanpur. Company will also engage in the
sale of beauty products, cosmetic, postcards (greeting cards), baby products, convenience
foods and other related products (small scale medical equipment / instruments).
 Usability Testing: Pharmacies across the world followed a basic business model which
underwent a little change over the last few decades. The patient consulted their
practitioner who would prescribe drugs. This prescription would then be shared with
pharmacist who supplied these drugs. With app for retail pharmacies, patients have more
choices and control over managing their health. App offers accessibility to people with
limited mobility and people in remote areas. These provide Medi alerts (personalized
medicine reminder service), discounts, doorstep delivery within a short time, and
validation of prescription through licensed pharmacists. Information about substitutes and
adverse effects is also available on these app/sites.
Hyperloop pharmacies app will be an integrated solution offering teleconsultations, online
diagnostics appointment and home delivery of medicines at the convenience of the
customer. Most of their initiatives revolve around customer experience. Suitable
arrangements will be made to ensure that the medicines are packed, transported, and
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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

delivered in such a way that their integrity, quality, and effectiveness are preserved. The
delivery mechanism will preserve the confidentiality and privacy of the end customer and
the specific drugs ordered / medical conditions treated, etc.
2. Industry/Market Feasibility:
The market trend in pharmacy industry is directly influenced by a country’s healthcare
reform policies. The fact that the pharmaceutical industry is highly regulated means that
any entrepreneur who wants to run a hyperloop retail pharmacy store must be ready to
play by the book. Retail Pharmacies are now making use of technology to effectively
manage their clientele base.
The fact that we are going to open our doors to a wide range of customers does not in any
way stop us from demanding and screening prescriptions as required by the law. Our staff
are trained to effectively service our customers and still play by the rules governing the
industry. Our customers can be categorized into the following households, corporate
executives, business people, elderly people, expectant mothers, sports men and women,
students.
The marketing and sales strategy of hyperloop retail pharmacy app will be based on
generating long-term personalized relationships with customers. In order to achieve that,
we will ensure that we offer medications at lower prices, compared to what is obtainable
in Kanpur. We will also ensure that we have a wide range of drug supplies in our database
for both quick shipment and at partnered store front pick up.
Company will going to explore all available conventional and non – conventional means
to promote our business like placing adverts on both print (community based newspapers
and magazines) and electronic media platforms, sponsoring relevant community
programs, leveraging on the internet and social media platforms like; Instagram,
Facebook, twitter, etc. to promote our brand, install our bill boards on strategic locations
all around Kanpur, engage in road show from time to time, distribute our fliers and
handbills in target areas and position our flexi banners at strategic positions in the location
where our partner retail store is located.
PESTLE Analysis:
Political factors include government attitude to employment, consumer protection, the
environment, taxation, trade restrictions, societal reforms, as well as the burden of
bureaucracy and the level of corruption. Nowadays, the development of government bodies
and the growth of global trade and multinational organization can affect the business
indirectly.
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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

Economic & Socio-cultural factors include demographics, population, employment, income,

education and career trends, social and cultural conventions. These changes can be subtle
and hard to identify.
Technological factors include the development of technology in manufacture and
infrastructure. Change in technology happens more and more frequently. Company will
require to keep up with technology or face the risk of new entrants and competitors.
Environmental factors include infrastructures, energy availability and cost, and the
ecological consequences of company processes.
Legal factors include current and impending legislation that may affect the industry. Similar
to economic and political factors, businesses should also consider legal aspects from other
countries since they may affect the operation.
SWOT Analysis:

STRENGTH WEAKNESS
Customer convenience Awareness for the app
Fast delivery Profit margin
Easy availability of medicines Poor inventory management at retail
Discounts pharmacy
Home delivery Weak promotions
Customer feed back
OPPORTUNITY THREATS
Customer attraction Competitors (DUNZO, SWIGGY store)
Promotions through social media Economical like GST
Providing discounts as comparing to the Changing the regulations
competitors Cultural threats
Improving customer service

3. Organizational Feasibility:
Our hyperloop app business will be built on a solid foundation. From the outset, we have
decided to recruit only qualified people to man various job positions in our organization. We
are quite aware of the rules and regulations governing the pharmaceutical industry which is
why we decided to recruit experienced and qualify employees as foundational staff of the
organization. All our employees will be well trained and equipped to provide excellent and
knowledgeable customer service. Company will hire experts who have good understanding of
the retail industry to help us develop marketing strategies that will help us achieve our
business goal of winning a larger percentage of the available market in Kanpur.
These are the positions comprising in our company leadership;

 CEO (pharmacy owner, superintendent pharmacist and supervising pharmacist)

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES

 Pharmacist Manager
 Pharmacist technician
 Information Technologist
 Sales agents
4. Financial Feasibility:
For our business plan we need funding, so we are approaching some venture capitalists like angel
investors (a US based investors, who help for startups), or from PRADHAN MANTRI YOJANA for
startups.

Total investment for our start up: INR 30 Lakhs

Owner investment (partnership): INR 16 Lakhs
Loan from investors: INR 14 Lakhs
For advertisement in the metro cities: 2 lakhs
Building is on lease: for 2 years 5 lakhs
Registration in licensing authority: 50,000.
Machinery and infrastructure: 23 lakhs
No. employees in a branch: 5
Salary for each employee: 30,000Rs per month
Salary for all employees: 1.5 lakhs per month

Commission to be received from retail pharmacies: 10 Rupees per order generated

Delivery charges on customer: 6 Rupees per delivery

For delivery our company will be collaborating with bike rentals so that delivery can be done at its
minimum cost.

Salary for delivery boy per month: 9,000 Rs.

Forecasting:

First, I will start my business plan in one city then business will run in metro cities like Delhi, Kolkata,
Mumbai, Hyderabad, Bangalore, and Chennai.
Number of targeted retail pharmacies in a city: 100
Total number of delivery boys are 50 in 6 cities
Salary for each delivery person: 9,000 Rs per month. (Basic salary)
Salary for 30 delivery persons per month: 2.7 lakhs
Each delivery will cover approx. 4Km

Per day 30 deliveries will be targeted by each delivery person that will generate 180Rs per day. From
1500 deliveries will generate 9000Rs per day, in a month the profit generated will be 2,70,000 Rs
from delivery charges.
Commission from each retail pharmacy per order will be 5Rs
From 100 retail pharmacies, it will be 500Rs per order
If 30 orders will generate 15,000Rs per day then for a month it will be 4,50,000Rs.
Total profit from the delivery charges and commission will be 7,20,000Rs per month
Profit after paying salaries to the delivery persons in a month will be 3,00,000Rs.

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 BUSINESS PLAN for the RETAIL PHARMACIES IN THE ERA OF E -PHARMACIES
Suggestions for improving functioning of retail pharmacies:

 Retail pharmacies should improve their inventory management by moving from manual
inventory management to computerized inventory management.
 Retail pharmacies should make sure that their order doesn’t bounce back (every customer must
be satisfied).
 Awareness about insurance policies need to be increased in the public with which retail
pharmacies can have their collaborations.
 Retail pharmacies need to tie up with hyperlocal platforms so that they can provide home
delivery of medicines to customers.
 Retail pharmacies should improve relationship with doctors and must revert back to them in any
queries related with patient medication or for any updated information.
 Retail pharmacies should act professionally with the customer and provide better patient
counselling.

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