New Clicks – Healthcare in changing regulatory environment Healthcare strategy



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tarix01.09.2018
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New Clicks – Healthcare in changing regulatory environment

  • Healthcare strategy

  • Integrated channel to market

    • UPD
    • Clicks Pharmacy
  • Legislative changes

  • Draft pricing regulations



Healthcare strategy

  • Leverage benefits of integrated channel to market

  • Extend retail presence & expertise into pharmacy

  • Establish efficient, compliant & profitable low-cost drugstores

  • Promote co-ownership model

  • Improve front to back shop ratio

  • Synergies from combining pharmacy with current offering - lower overheads & increased footfall

  • Franchise model retained – using compliant format

  • Explore black empowerment opportunities



Wholesale & distribution - UPD model

  • Model tried & tested internationally

  • Largest national wholesaler in SA

  • Efficient working capital management

  • Expertise in fine distribution



Wholesale & distribution - UPD model



UPD

  • Growth in turnover from PM&A & independent pharmacies

  • Retained most independent pharmacy customers

  • Standardised terms on FMCG suppliers

  • Clicks pricing on top FMCG lines available to customer base

  • Two franchise models in the group – Link + Multicare

  • Develop Link offering as premium banner

  • Develop programmes to enhance Link pharmacy loyalty to UPD – new franchise agreement



Clicks Pharmacy

  • Create an experience of pharmacy never seen before in SA

  • Combine the best of what Clicks offers with the best of the pharmacy experience

  • Enhance the Clicks brand qualities of value with convenience & service



Pharmacy in Clicks

  • Regulatory approval for PM&A deal

  • Application for licences

    • PM&A (waiting for approval of licence transfers to be able to consolidate)
    • Additional licences in selected stores
    • Underserviced areas – discuss with government
  • All New Clicks wholly-owned/JV pharmacies to be rebranded Clicks



Learning from Australia

  • Conversions:

  • Converting existing Priceline store (Prahran)

    • Sales growing in excess of 40%
    • Back & middle shop sales already at 18% - should double
  • Converting existing pharmacy (Bentleigh)

    • Script sales grown by 20%
    • Front shop sales up from 10% to 75%
  • New site:

  • Mornington

    • Turnover A$45k per week from 300m²
    • Front shop sales 50%


Legislative changes

  • Original source procurement

    • Levelling of the playing field – ethical standards + transparency
    • Small impact on current wholesale customers
    • Service levels will be the differentiator
  • Generic substitution

    • Single channel distribution - lower market share of branded ethicals - better placed to benefit
    • Currently, margins better
  • Single exit pricing



Draft pricing regulations

  • Support statutory intervention to

  • Concerned about negative impact on viability of pharmacy wholesaling & retailing

  • 90 day period to engage in constructive dialogue – working together with other interest groups

  • Don’t expect regulations to be implemented in current form or by May 2004

  • Aim to achieve the objectives in a constructive & sustainable way that does not undermine the viability of pharmacy & pharmaceutical services



Impact on New Clicks

  • Retail pharmacy

    • Even though reduced pharmacy margin & volumes, will be benefit from increased front shop sales
    • Independent pharmacists under threat – potential to attract them into the group
    • Competitive advantage of discount pharmacies to be eroded


Impact on New Clicks (continued)

  • Wholesale/distribution

    • Viable for UPD because of efficient model, although volumes would be reduced
    • However, may lead to consolidation of other distributors - opportunity for UPD to increase volumes & widen geographical footprint
    • Multinational manufacturers may withdraw from SA – opportunity for UPD to reach distribution & marketing agreements
    • Public/private partnership possibilities in terms of distribution & dispensaries


  • Questions ?



  • Thank You




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