This is the first acquisition of the Singh brothers after they sold Ranbaxy to Daiichi Sankyo. Ranbaxy Group promoted has acquired 90 percent stake in CRS Health, a Delhi-based pharma and wellness retail chain for Rs 15 crore, reports Economic Times. Fortis is also planning to rebrand itself and the pharma chains it acquires in future as Religare Wellness.
CRS is the drug retailing arm of the diversified Delhi-based SAK Industries. CRS has 30 stores which will help Fortis expand in the South. Currently, Fortis has around 40 stores and plans to expand its presence to over 100 cities in 18-24 months. Ravi Rajan & Company was the advisor to the deal.
Apollo Hospitals also plans to divest 49% stake to strategic investors in the pharmaceutical retailing business which the company plans to hive off. The hospital chain also plans to list the pharmacy vertical on the Bombay Stock Exchange to unlock value.
On Pharma Retail Chains
Acquisition of retail chains have a good potential as they help the hospitals get an access to other markets, they can provide a better value to the investors if the retail chains are able to leverage the supply chain efficiencies of an organized retail operation, says Shankar Saikia
Partner, Highlander Systems, an advisory firm. Saikia adds that apart from a retail business thriving on supply chain management issues such as sourcing and distribution, Indian pharmaceutical retail market has additional challenges such as counterfeit drugs and the space being highly fragmented with an estimated 600,000 (6 lakh) units.
There are other constraints which remain those of regulations over drug pricing and the unions of drug distributors and retailers. Also, the trade is very MRP driven and margins are too tight. But then the advantages of the organised players, like the ability to provide real time data that will probably give them an edge over the unorganised sector.
Financial Activity In Pharmacy Retail Chains
Hyderabad-based MedPlus Health Services, a pharmaceutical products distribution company, received a funding of Rs 23 crore ($5.2 million) from iLabs, a city based $300 million private equity fund co-founded by former Satyam Computer Services COO Srini Raju. ICICI Venture invested Rs 35 crore in diagnostics-chain Metropolis Health Services. There have been news in the past of the Anil Dhirubhai Ambani Group (ADAG) announcing plans to develop pharmacy distribution units in a joint venture (JV) with the Pharmaceutical Wholesalers Association (PWA).
On the other hand the US-based Cardinal Health’s Medicine Shoppe franchise has setup pharmacy retail stores in India (130 as of July 2007, with plans to add another 400). Some estimate that the organized pharmaceutical retail sector has the potential to grab up to 20 percent of the drug market in India.