Planet Health

Planet Health

After significant success of the Sagar group of industries (SGI) which mainly dealt in exports of Dyes, Dye intermediaries, Bulk Pharmaceuticals, Fine Chemicals etc. Rohit Patel who was heading SGI wanted to diversify into a new sector. This decision was influenced by change in the current competitive situation and new patent laws which changed from process patents to product patents. Though initially he considered Software and Retailing, due to various reasons like rapid technological changes, high attrition rate and huge investment required, software was dropped and the focus shifted towards retailing which presented it with huge opportunities. Since SGI had been involved with pharmaceuticals since some time, pharmaceutical retailing seemed to be the ideal option.

The retail sector showed strong signs of modernization. It was worth around 90,000 crores in the year 2000. The organized sector had a very poor share among the entire retail market. In pharmaceutical retailing, prescription drugs accounted for around 14 crore, which over the counter drugs accounted for about 2 crore. Hence an independent consultant was hired to help out with this decision. In the initial assessment of pharma there were many positive signs. Margins as high as 40%, no change even after the implementation of the WTO agreement, only traditional retailers majorly present, organized retailing starting to develop with the advent of H&G, Apollo and many others, consumers becoming more health conscious, change from curative to preventive and no effect of recession. Among the traditional pharma retail practices some of the prevalent features were family run businesses, lack of proper equipment and air conditioning, irregularities and malpractices, no progress in retailing when compared to other healthcare disciplines and retailers being united and resistant to change. But customers wanted change and this is where SGI found the opportunity to decide to enter the market.

When the pharmaceutical retail markets of US and Europe were studied and compared to India, lots of differences were found, but one of the major observations were that Pharma reps were acting as intermediaries between doctors and medicines giving opinions and counselling to the ones seeking them. This concept was lacking in India as most of the times there were qualified professionals missing in the stores. SGI also was recommended to utilize this opportunity. Around 6 existing pharma retail chains were also studied to get a better understanding. Franchising was considered to be an option which could be adopted later on but initially the management of the chain would be by SGI itself to understand the market first hand.

To operationalize this concept there was a shift from current practices to modern and ethical practices, huge investment in human resources and material, state of the art equipment and ambience, international name