Pharmacy chains activity analysis

Pharmacy chains activity analysis

Russian pharmaceuticals retail chain segment evaluation, both on the level of the state and in particular regions. Pharmacy chains development forecast

Forecasting

Product sales and separate market development forecast, based on unique mathematical models

Business and marketing plan development

Development of detailed business-plans, required to evaluate the reasonability of project start

Search of partners for contract production in Russia

Potential partners search and evaluation, based on their technical opportunities, appropriate experience, and reputation

Monitoring of import substitution

assessment of the main trends of import substitution policies and localization processes in the pharmaceutical market in Russia, the key beneficiaries and companies at risk

The pharm distribution sphere condition, PharmLogic 2014

Wednesday, November 19, 2014

Pharmaceutical market still does not fully feel the crisis effects in Russian economy. Due to this, we can still witness market development in terms of value. The main market stimulating factor is the inflation, boosted by ruble rate fall. Meanwhile, the market shows negative growth rate in real terms, accompanied by growth of package average cost. From the distribution business point of view, this means actual overhead costs reduction, which is good for the profitability.

As well, proposed assortment’s size and structure have a significant impact on wholesale players’ profitability. In the first 9 months of 2014, we mark the non-drug and OTC assortment sales increase in terms of value by most wholesale companies. It is not surprising, since this is the most profitable groups of goods, usually not covered by price regulation. However, along with increasing revenue, the share of shipments in the pharmaceutical segment is also increasing, with rates, significantly higher than the market demand growth. In fact, this leads to retail segment stock increase. Later, this fact may have a negative impact on the growth rates of separate distribution companies.

In the meantime, the wholesalers are making significant efforts to reduce their own costs. And the important fact here is a steady tendency to reduce the number and volume of import operations. Thus, wholesale players partially shift the currency risks to the shoulders of pharmaceutical producers. Another way to reduce costs is logistics expenses optimization, largely through the warehouses. If ten years ago only major federal players could afford that, now even regional companies work closely on this issue.

These trends obviously affected level of distribution segment concentration in the field of direct shipments. In the first 9 months of 2014 top 10 leading pharmaceutical distributors took about 82% of the total end users sales share, which is 3% less than last year. The high level of competition and ruble devaluation definitely had their effects (only for the first half of this year, ruble has lost about 13% against USD). In the future, it can have more serious consequences for the market, but due to price regulation, and other factors, so far there is no pricing policy revision on the market. However, this resource is not infinite and 2008-2009 crisis experience proves it.These trends obviously affected level of distribution segment concentration in the field of direct shipments. In the first 9 months of 2014 top 10 leading pharmaceutical distributors took about 82% of the total end users sales share, which is 3% less than last year. The high level of competition and ruble devaluation definitely had their effects (only for the first half of this year, ruble has lost about 13% against USD). In the future, it can have more serious consequences for the market, but due to price regulation, and other factors, so far there is no pricing policy revision on the market. However, this resource is not infinite and 2008-2009 crisis experience proves it.

Slide show with a presentation is available by the link

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