Pharmacies ready for global chains - Emirates24|7

Pharmacies ready for global chains

 

Pharmacy chains are gearing up for foreign competition by opening new outlets, revamping outdated ones and acquiring smaller units.

 

Global pharmacy chains are increasingly looking at the region as an untapped market and moving in. Medicine Shoppe International, part of the $87 billion (Dh319.5bn) US-based Cardinal Health Co, with around 1,400 shops in seven countries, has already opened outlets in Dubai.

Five Medicine Shoppe and Medicap Pharmacies in the UAE will open under a master franchise agreement with Al Zahrawi Group, which will manage all Medicine Shoppe Arabia operations.

 

Alliance Boots, another global healthcare product provider has also entered the region.


UAE pharmacies are gearing up for the competition. There are currently around 1,400 across the country and nearly 350 in Dubai.

 

Ayman Hanbali, marketing manager for Alphamed, which runs the Bin Sina Pharmacy chain, said the company is investing more than Dh10 million to improve its outlets and open new stores.

 

“We are setting up 11 new outlets in Dubai, especially in areas where new property developments are coming up. Bin Sina Pharmacy has 24 outlets. Initially, we focused on high streets. Now the new trend is to open pharmacies in malls and the property developments in new Dubai,” said Hanbali.

 

Alphamed, which claims 10 per cent market share, has plans to almost double the number of stores it operates within the next 20 months, he added.

 

“Companies like Boots have 2,800 outlets worldwide. They are more than 100 years old and we don’t know what is in store for them in the UAE. They sell not only medicines, but also a wide range of cosmetics and wellcare products. We have already revamped our existing outlets, which were congested and small. No pharmaceutical company is giving exclusive rights for medicine distribution anymore. They want their products to be distributed through as many outlets as possible. Exclusive distribution rights are only for branded healthcare products,” said Hanbali.

 

Dr Moopen’s Group, a healthcare firm with one of the largest pharmacy chains, has already converted its old outlets into a new branded MedShop chain. MedShop will add 15 new outlets by opening new branches or acquiring smaller pharmacies. The group has already acquired 10 outlets of Universal Pharmacy in Sharjah and is negotiating to acquire seven more.

 

Jobi Lal, senior manager of Medshop, said: “Dubai is a modern city where pharmacy standards match European standards. We have been in this market for 20 years. Medicine Shoppe and Boots, which have set up businesses here have not created any impact in the market. However, standards in other GCC countries such as Saudi Arabia or Oman, are not as high, and we are setting up more outlets in Qatar and Oman.

 

“We have around 30 shops, some with 2,000 square feet area. We also have an online drug store. Increasing rents and costs of operation are affecting profit margins. Size or shop area does not matter in this business. There are 350 pharmacies in Dubai and smaller pharmacies may find it difficult to compete with the big players.

 

“The annual rent per square foot is around Dh700 and profit margins are down from 25 per cent to 16 per cent now. The cost of imported items from Europe has gone up by 10 to 15 per cent and pharmacies cannot revise medicine prices without permission from the Ministry of Health. After a couple of years, you will see only four or five major pharmacy chains in the UAE,” Lal said.

 

Julphar too has announced plans to set up 2,000 outlets in the Middle East. The group will launch 150 outlets in the UAE alone.

 
 
 
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