(L-R) Mohan Chavan, Gulshan Bakhtiani, and Ashraf Biran, founders of Wellness Forever
Wellness Forever, the largest organised pharmacy retail chain in Mumbai, is planning to triple its store count in the next three years.
The company has 161 stores, of which more than half are present across Mumbai. The remaining are scattered across big cities of Maharashtra, Goa and Karnataka
"We are planning to add 75 stores by end of FY20, 100 stores in FY21 and 150 stores in FY22. We want to have around 450-500 stores in next three years," said Ashraf Biran, co-founder and Director, Wellness Forever.
All the new store additions will be in the western region.
Wellness Forever was founded in 2008 by three first generation entrepreneurs - Ashraf Biran, a pharmacy businessman, Gulshan Bakhtiani, medical representative-turned pharmacy store owner and Mohan Chavan, a pharmaceutical distributor. The three came together to build a modern pharmacy retail chain - taking a cue from Subiksha.
Subhiksha was an Indian retail chain with 1600 outlets selling groceries, fruits, vegetables, medicines and mobile phones, before winding up in 2009.
So far, most of the stores of Wellness Forever are company-owned and operated, but Biran said they are open to a franchise model for expansion. The company is also taking up operations of hospital pharmacies as well.
It typically costs around Rs 75 lakh to put up a 700-800 square feet pharmacy store, of which real estate costs 20 percent, interiors around 35 percent and the rest is for pharma and FMCG stocks.
"It takes around 6 months for a store to become cash profit, and two years to break-even on the investment," Biran said.
Biran said the expansion will be funded largely by internal accruals and bank debt, and they would be tapping investors if need arises.
Wellness Forever is backed by a consortium of high net-worth individuals (HNIs) and family offices of Adaar Poonawalla, Rajiv Dadlani, Thakral family (Singapore) and Allana Group (Middle East)
Wellness Forever follows a hub and spoke model. The company has 100,000 square feet central warehouse in Bhiwandi, around which it puts up stores. The company uses technology extensively for better supply chain management, and to network the stores and warehouses. The stores of Wellness Forever are open 24x7.
Wellness Forever is expecting to end FY20 with a turnover of Rs 900 crore is growing at over 30 percent. Around 60 percent of the revenues comes from pharmaceuticals, while the rest is from fast-moving consumer goods (FMCG) products.
The retail chain focuses on FMCG and white label products to boost profit margins.
"Unlike other pharmacy chains, we are pharmacy plus lifestyle stores, our approach is wellness rather than curative," Biran said.
Slow pace of expansion
"We have pan-India aspiration, our investors are ready to back us, but pharmacy retail is operationally complex business, and we don’t want to spread thin, and later repent," Biran said.
Biran says that they also followed a linear model of setting up one store after the other.
The complexity of setting up stores in Mumbai, where acquiring real estate is a costly and time-consuming affair, in addition to drug price controls of the government that ate into the margins of the business
“We would have ended up as Rs 1500 crore turnover company in FY20, had there been no price controls,” Biran said.
E-pharmacies and discounts
Indian retail pharmacy is estimated to be worth $18 billion, and is expected to reach a size of $50 billion by by 2025, according to data from Department of Industrial Policy and Promotion.
The total number of retail pharmacies in India are estimated to be 850,000, less than 5 percent or around 6000 come under organized pharmacy stores.
While there is tremendous growth potential, retail pharmacy chains are seeing intense competition from e-pharmacy chains who don't have to invest on setting up brick and mortar stores and employ pharmacists and other staff, are able to pass on the cost saving to customers. Also many of them are flush with PE money are offering steep discounts of 20-30 percent to acquire customers.
On discounts and competition with e-pharmacies, Biran says they are ramping up their omni channel presence in days ahead, to take on the e-pharmacies head on.
The company is providing home deliveries of medicines over phone.
“The e-pharmacies are built on discounts, we are not a discounting pharmacy. There will be partial discounts in the range of 5-10 percent, but our core model will be customer relationship and customer experience,” Biran said.
“In India, we have a chemist shop at every street corner, the chemist knows you, assures you immediate replacement if there is any issue with the product like expiry date, some provide home delivery service and most importantly you don’t have to wait 2-3 days to get your medicines,” Biran added.
What value can an e-pharmacy adds, other than discounts, which may not be sustainable in the long run.