Retail pharmaceutical industry and its challenges

sell pharmaceutic indus bear witness and its challengesIn times of world- great frugal recession, sellers volitioning learn to be much(prenominal) vigilant in brush consumers demands to appease vi adapted in the ever to a greater extent private-enterprise(a) securities industry. retail pharmaceutics in Malaysia argon faced with unique set of challenges deriving from historical past and cultural practices to consumers lifestyle transmutes. Therefore there is a need for retail drugstore operators to re-evaluate existing merchandise plans by heart of understanding current securities industry condition and observing in store(predicate) tailor. indeed recalibrate their trade plans and strategies to reposition themselves securely in the securities industry.1.1 ObjectiveThe report aims to post an everywhereview retail pharmacy industry and evaluate factors that propel and restrain the market, presidency policies, gross revenue trends, potential proceeds and mar ket exposelook. Challenges related to the pharmaceutical retail firmament will be outlined and assessed, and insights into merchandise plans being deployed to bang into available market opportunities in Malaysia will besides be discussed.1.2 Overview retail in MalaysiaMalaysia retailing environment has undergone a continuous and marked change over the years. The nation has been classified by the World Bank as a upper-middle income country with middle-income family line making up more than than 50% in 2007. Between 2004 and 2005, according to the Department of Statistics Malaysia, on an aver board, the urban household spent 1.8 times more than its rural counterparts that is about USD 735 (MYR2,285) monthly and USD 428 (MYR1,301) monthly respectively. By 2015, according to UN data, the urban universe of discourse is forecasted to account for approximately 76% of the core people (Euromonitor 2010). Retail sales will likely realize from this.According to Q4 BMI Malaysia Re tail Report, it projected that retail sales will sum up from USD 43.65 billion (MYR 153.76 billion) in 2010 to USD 71.44 billion (MYR 251.63 billion) by the end of the forecast period. The recognise factors supporting this forecast is due to low unemployment rate, rising disposable incomes and a strong tourism industry.BMI forecasts Over-the-counter (OTC) pharmaceutical sales to turn from USD 404 gazillion in 2010 to USD557million which translates to 38% increase therefore elicit a peremptory force-out on retail pharmacy.1.2.1 Retail Pharmacy in MalaysiaMalaysia total wellness c be expenditure in 2009 exceeded USD 7 billion propose 1.0, and is projected to smite USD 10 billion by 2020. Malaysia ranks fifth among the Asiatic nations in legal injury of wellnessc are expenditure and is projected to grow approximately 13% per annum (Frost Sullivan 2008).Retail pharmacy sector contri hardlyes 17% of the total expenditure erectd due to restrictions pertaining to government policies, profession workforce, and population perception.The retail pharmacy sector mass be described victimisation organization size and output/service mix criteria. Sole units are comprised primarily of in pendant pharmacies, normally owned by pharmacists. Multiple-unit pharmacy organizations, or manacles, can be divided up into small chain and large chain (e.g. 30 or more units).Besides organization size, the retail pharmacy sector can also be characterized by the proceeds/service mix of the organization. Some traditional categories hold, supermarket (e.g. AEON), and, saucer and health care funds (e.g. Guardian, Watsons).Pure drug store is virtually non-existent in the Malaysian retail pharmacy sector because pharmaceutical crops can be sold and dispensed by medical practitioners as well pharmacists. Consequently, this insurance does non encouraged the setting up of pure drug store in Malaysia. Therefore, current retail pharmacies stores unremarkably offer both phar maceutical and non-pharmaceutical harvest-feast/ go to maintain viable in the market.The major spielers in the Malaysian retail pharmacy scene are large international corporations such as GCH Retail (M) Sdn Bhd and Watsons Personal Care Store whereas topical anaesthetic companies include lovingness Pharmacy and Trustz Pharmacy, and a plethora of small individually operated pharmacies Figure 2.0.In 2009, the multinationals, GCHs Guardian and Watsons collectively dominated 54% of the total market mete out whilst 46% was divided among local retail pharmacies as shown above (Euromonitor 2010).Generally experienced in dealing with large industries, these multinational corporations compared to the domestic counterparts, obtain the experties in handling processing, packaging, logistics, line of descent management and so forth In addition, they have the advantages of economies of scale, retailing of in-house denounce, increase in market returns and divide, and wider entailme nt parameter for retail healthcare products.2.0 Current Market consideration2.1 impertinent and cozy Factors Influencing Retailers Marketing StrategiesThe spillover from the subprime mortgage crisis has badly affected the global economies and Malaysias economy has not been spared too. In 2009, retailing current value growth (CVG) showed a decreased compared to 2008 but still at a confirmatory pace (Euromonitor 2010). In 2010, real GDP growth is expected at 5.7% supported by stronger exports. change magnitude spending by private consumers as a result of improving labour market conditions will before long strengthen domestic demand (Euromonitor 2010). GDP forecast was reevaluated in whitethorn 2009 from 4% to 5% (Euromonitor 2010). Though consumer confidence dwindled, spending on health care come ons to be a priority within the consumers household as seen in Figure 3.0. Consumers are still willing to spend a little bit more during promotional period or rancid to cheaper alter natives such as mid- disbursald/economical in-house snitchs or generic medications.Ongoing urbanisation trend, higher education levels and better life-time standards have generated greater chase among consumers regarding self-medication. This further strengthened the importance of retail pharmacy stores as consumers are able to acquire OTC healthcare, nutritional products and prescription drugs from them.Overall trend of the retail pharmacy sector is gearing towards the sales of generics and OTCs. Profit derives from generics is for the most part higher compared to brand/innovator products (Shafie Hassali 2008). However, sales of non-prescription products such as OTCs, TCMs, vitamins and supplements are still the main contributor to the retail pharmacys revenue at 79%.Having said so, retailers still need to employ several(predicate) market strategies to identify themselves from existing competitors and attempt to reposition themselves as market leaders about successful wh ile about struggled. Strategies pertaining to each of the different type of organizations will be further discussed as follow2.2 Strategies industrious by transnational CorporationThe multinationals such as Guardian and Watsons have taken a broad spectrum approach by attempting to diversify from traditional dispensing services frequent to the concept of a pharmacy, into a wider market segments such as command health and beauty care.The retailers responded by engaging in regular promotions and lengthened sales period to encourage spending and offering a conspiracy of both pharmaceutical services with beauty care.Rapid expansion strategies undertaken by leading chain retailers resulted in a substantial escalation in the chained store bites in the nation. 2009 saw a slight forward motion in the average selling space per outlet of beauty and health specia tend retailers especially in larger obtain malls than standalone establishments. Survey has shown that these are the places w here the crowd/consumers prefer. Variety in choices/shops and agonistical price products are some of the factors that attracts them.Most beauty and health specialist retailers launch their retail chains in Klang vale. This is largely due to greater buy power among urban consumers.Nonetheless, beauty and health specialist retailers are also thriveing outside Klang Valley in order to serve the rising population and growing buying power of consumers in East Malaysia and secondary states. Launching of budget in-house brand is to cover a wider range of consumer segment.2.2.1 Guardian Target Market, crossing Services, and advancementGCH Retail (M) Sdn Bhd is a wholly-owned subsidiary of a Hong Kong based Dairy spring up International Holdings Ltd. It is 78% owned by the Jardine Matheson Group, which is listed on the FTSE Stock exchange and also listed on the Singapore Straits and Bermuda Stock Exchanges (Euromonitor 2010).In Malaysia, the friendship is involved in the operation of Guardian pharmacy, Cold Storage supermarket and titan hypermarket outlets. In 2009, as a result of its militant expansion, 20 hot Guardian outlets were added, and promotions including daily specials has boosted the companys pharmaceutical market share to 35% Figure 2.0, occupying the largest portion of the retail pharmacy market segment.Guardian retailing format is gradually becoming popular in Malaysia. For instance, Guardian spearheaded the concept of fresh retail pharmacy by providing professional consultation and service by registered pharmacists, plus holistic health and personal care solution. In receipt to the Malaysian governments support initiatives designed to spur small and medium coat enterprises (SMEs) in Malaysia, most of Guardian in-house brands are source and manufactured locally. Therefore, it is able to offer quality products at very affordable price targeting at all consumer segments and is expected to continue to source and develop wider products range. Guardian is aggressive in promoting its in-house brand products by advertise and promotions. For instance, Guardian dedicated one-half a page or full-page advertisements in their in-store brochures or leaflets for their in-house brand products. GCH Retails share of in-house brand products has been growing steadily largely due to exploitation brand recognition as well as the wider range of items available.External and Internal psychoanalysis (Guardian)ExternalInternalThreatsEconomic slowdown alter marketing function inconsistent brand imageWeaknessesRetracted consumer spendingIncreased rivalry among competitorsOpportunitiesImport/Export Malaysian Ringgit vs Hong Kong long horse reasoned management able to respond to market change readinessChange in consumers spending patternBoth external and ingrained factors how the company decides to operate. The external factors will be akin for all market players.2.2.2 Watsons Target Market, Product Services, and PromotionWatsons Persona l Care Stores (WPCS), being the largest beauty and health retail chain in Asia, is a subsidiary of the AS Watson Group based in Hong Kong and wholly owned by Hutchison Whampoa Ltd. WPCS has been in Malaysia since 1994 and is considered one of the most accomplished personal care chain stores (Euromonitor 2010). by-line the successful merger and acquisition of Apex Pharmacy Sdn Bhd in Jun 2005, WPCS has 211 outlets nationwide.In 2009 due to its extensive stores expansion and merger , its pharmaceutical value share managed to increase to 19% Figure 2.0 of the entire pharmaceutical retailing in Malaysia.WPCS still remains the largest community pharmacy retail chain in Malaysia. To support and reinforce its image positioning Watsons employs promotional pricing, selling list prices then running price-off sales periodically, continuous marketing efforts and promotions such as tv advertisements, complimentary beauty and health schooling to consumers, and storewide 20% discount campaign. Moreover, WPCS products are competitively priced and carry quality in-house brand products which are usually cheaper by 20% to 25% below manufacturers brand in the same product range. Its in-house brand lines consist of a large proportion of skin-care products, haircloth care, OTC healthcare products, toiletries, bottled mineral water, electrical items designed to meet the inevitably of the mass consumers . To further promotes its in-house brands, it has dedicated more shelf space in-store for them. couple with growing brand recognition and wider range of products to cater for all segments of consumers, this marketing trend may continue in future.External and Internal Analysis (Watsons)ExternalInternalThreatsEconomic slowdownOver expansion resulting in dissipated consumer servicesWeaknessesRetracted consumer spendingIncreased rivalry between competitorsOpportunitiesImport/Export Malaysian Ringgit vs Hong Kong DollarExtensive outlet reporting nationwide skillChange in consumers s pending pattern2.3 Strategies Employed by Small Retail PhamacyMarketing model of smaller retail pharmacies counselling on establishing good rapport with its customer base by providing individually customized pharmaceutical services for their clients according to their needs and wants, Furthermore, they also provide extended after working hour services for the convenience of their customers, to admission charge to pharmaceutical items and advice. Loyalty marketing is also introduced to maintain or expand their customer base in light of even more competitive environment. This model is gaining popularity in Malaysia and is already established in Europe, Australia and Canada. Specialized services exclusive to pharmacy such as pre-packed dosettes medications (to ensure better abidance to medicine), insulin dose adjustments for uncontrolled diabetes management and methadone replacement therapy for heroin dependent patient, targeting a unique consumer segment is gradually incorporated i nto their marketing plans.2.3.1 Caring Target Market, Product Services, and PromotionCaring Pharmacy Sdn Bhd is a sort out of pharmacies under one banner collectively shares the same supply and inventory management analogous to that of chain stores, however each outlets are independently owned and operated by pharmacists.Caring Group currently have 46 registered pharmacists operating 40 outlets in Klang valley. Therefore giving the Group the highest number of pharmacist to outlet ratio among retail pharmacy operators in Malaysia.With market share of 12% in 2009 Figure 2.0, Caring is fast emerging as one of the most established local community retail pharmacy. Providing extended hour services from the early hours up to midnight proved to be a potent marketing strategy in establishing its market share as it provides time flexibility to consumers. Caring offers professional consultation by registered pharmacists on uncomplicated ailments and medication management solutions such a s pre-packed medications for consumers convenience.The congregation has been actively promoting its pharmacist consultation service. For instance, public awareness talks by pharmacists on health topics such as hypertension, diabetes, weight-management etc. are oftentimes organized. Launched in 2006, the first pharmacy reward architectural plan as a points accumulation and gift redemption card with Malaysias premier multi-party lealty program BonusLink, enabled Caring to establish closer contact with their regular clients.External and Internal Analysis (Caring)ExternalInternalThreatsEconomic slowdownToo center on domestic/localization growthWeaknessesRetracted consumer spendingIncreased rivalry between competitorsOpportunitiesChange in consumers spending patternGood corporate core value pharmacist service for all consumer segmentsStrength3.0 Marketing Strategies3.0 Strategic Recommendation For the Retail Pharmacy Industry international economy remained sluggish in 2009, likewis e in Malaysia. Even though consumer spending has retracted in Malaysia, where healthcare is concerned, consumers are still spending. Retail pharmacy registered an increment in sales of 0.2% for 2009 against 2008 Figure 3.0.3.1 Marketing intermix StrategyTarget consumersPromotion mixSales promotion publicizingSales forcePublic relationsDirect online marketing assert mixProductServicesPricesAdapted from Marketing An Introduction from an Asian Perspective ( Kotler et al. 2006)3.2 Target Consumers Population Demographic Outlook and Lifestyle bowel movementAccording to United Nations Department of Economic and Social Affairs, in 2007 Malaysias population was just over 27 million and by 2015 it will be more than 30.7 million. In addition, nearly 60% of Malaysian is below the age of 30 in 2007 (Euromonitor 2010).Needs and wants of consumers changes with age. Marketers moldiness use different marketing approaches for different age and life-cycle groups. The mature segment of the popula tion in Malaysia, are usually relatively established in terms of financial, family and home and more aware of their health status. Marketers needs to woo this segment consumer by employing positive images and supplications. This segment will be the key buyers of medical and health-related products and services, including pharmaceuticals and OTC drugs, vitamins and dietetical supplements, health drinks and medical equipment.While there will be modernistic emphasis on products for mature consumers, younger consumers will still remain a potent force since they made up half the population in Malaysia by 2015. They are more savvy, health conscious and more willing to try new products thus exercising operative purchasing power and driving continuing demand for the wide range of young person oriented products. Hence, this will spur demand for core healthcare products and solve sales in tangential sectors such as food and beverages, and healthcare services.3.3 Offer Mix Product Portf olio Adjustment and Pricing play3.3.1 Product Portfolio AdjustmentConsumers remained largely loyal to established brands mainly because these brands are believe names that consumers used to purchase or are just gentle with its effectiveness. Coupled with strict registration containments in Malaysia for all medicines, either branded or generics, in-house brand is unlikely to perform well in indisputable healthcare lines such as oral analgesics, cough, cold and allergy but may do well in other health product category. For example, in-house brand such as wound care, vitamin and supplements are projected to grow due to regional disease outbreak and economic slowdown.As living costs, including healthcare costs increases, consumers will be more adventurous to try out economical in-house brand products and self-medicate. Using the pull and push marketing strategy, potential consumers will come to understand the helpfulness of vitamins and dietary supplements as preventative measures ag ainst environment, diet, importance of taking balance nutrition and age-related ailments such as joint and back pain, immune systems, osteoporosis etc.Personal selling and sales promotion will be expected to heightened awareness of in-house brand products. Marketers need to expand their consumer healthcare product ranges in order to maintain competitive in the market. Figure 4.0 shows that in-house brand product line will continue to grow. Therefore, marketers should focus on marketing in-house brand products such as topical analgesics, antipruritics, other wound treatments, vitamins and dietary supplements, that enjoy strong demand.3.3.2 Pricing TacticConsumers will be obtain around for the best(p) deals. It is not requisite for retailers to cut list prices, but may offer more short termed price promotions, lower quantity threshold discounts, provide credit to long-standing customers, and more aggressively price smaller pack sizes. In tough times, price cuts attract more consum er support than promotions such as mail in offers and sweepstakes.3.4 Promotion Mix Conventional publicise and Online Marketing3.4.1 Conventional AdvertisingDespite the growth of electronic communications, printed newsletter and television still play an important role in Malaysians daily life and their pursuit of information and entertainment. As shown in Figure 5.0, printed adspend dominated 54% followed by television adspend at 37% of the total adspend respectively for the year 2009. Major newspapers include three English-language dailies, two Malay-language dailies, five Chinese-language dailies, and two Tamil-language dailies. The Malaysian has a wide range of magazines covering lifestyle, fashion, business, and special interest topics such as fishing, motoring, health and wellness and childcare. Magazines in Malaysia are usually published on a fortnight or monthly basis and are available via subscription, at retail outlets, convenience shops and small grocery stores. Although there seems to be a slight plateau Figure 6.0, conventional printed media will still be the medium of choice currently to disseminate promotional information for pharmacy retailers.3.4.2 Online MarketingThe internet has had a significant impact on Malaysia over the past several years. The number of internet users grew from nearly five million users in 2000 to more than 12 million users in 2007, reflecting growth of revenue%. Just as significantly, the household penetration rate of personal computers in Malaysia increased from 13.5% in 1995 to 34.7% in 2007. Tethered with such growth, online adspend recorded 72% spike growth from 2007-2009, and is expected to continue capturing readership share at the expense of printed media, in-line with household penetration rate of internet enabled computers increases in Malaysia.Mobile advertizement will be in vogue as internet hand-held devices gains market penetration, particularly among the younger population. Advertising platforms such as Apples iAd is a prime example of cutting-edge mobile advertising where advertisements are not just informative but interactive as well. Advertisements of this kind, can be updated real time by retailers with short-term sales promotion similar to Malaysia Airlines lunch-hour flight deals or provide interactive online shopping experience, will reverse conventional concept of promotional advertising.Pharmacy retailers can tap into this market and formulate marketing plans unique to loyal mobile shoppers. Conventional in-store consumers are bombarded with too much product information creating confusion thus delaying purchases. Retailers and manufacturers should meet to satisfy consumers needs such as using attractive colour and creating simplistic product packaging to facilitate consumers anticipate for healthcare products.Hence, online advertising and internet retailing is expected to increase. This will have an impact on how retailers attempt to reach Malaysian consumers and, i n a less significant but growing way, on how Malaysians shop.4.0 ConclusionConsumers in Malaysia are ever-changing their healthcare shopping behavior in various ways. While many an(prenominal) opted for other more economical retailers, there are some who remained loyal to their preferred retailers. They are more comfortable in seeking out deals and using coupons, and will purchase both in-house brands or branded products whichever provides the best value. Definition of value is also changing. Previously, value is often perceived as quality and options, but now this is synonymous with price, value will intend that consumers get what they want at the best possible price. Pharmacy retailers can capitalize on consumers needs by providing increased personalized marketing and shopping experience. Consumers are also seen shifting towards meaningful and unique shopping experience, particularly in purchasing healthcare items.4.1 Consumer In ChargeConsumers populate what they want and many will go the distance in search of the best offers some consumers, due to their lifestyle fluidity simply require products that satisfy their needs. By giving consumers multiple product choices at different price and benefit levels, brands especially in-house brand, can be capitalized by using different marketing strategies to make them to stand out from the crowd. Mobile shopping, will be the next frontier for retailers to venture into as on-the-go consumers will try on shopping convenience and speed of transactions.4.2 Retailers Diversity and Rebrand to Stay pertinentPharmacy retailers diversifying into in-house product line need to factor in consumers shopping preference on established branded healthcare products when formulating in-house product marketing plans. Many consumers maintained loyalty to established brands due to familiarity to a product or confident with its effectiveness. New and improve in-house product lines with convenience in mind such as topical analgesics an d sachet digestive remedies, will supplicant to consumers particularly the younger customers. Retailers may need to revamp certain product lines with new design, improve in-house brand offers and promote them with a compelling ad-campaign, to appeal to target consumers.4.3 Future of Retail Pharmacy in MalaysiaRetail pharmacy landscape is shifting largely attributed to economic changes, the growth of online retailing and more recently mobile commerce. With increasing use of smart handheld devices in Malaysia, mobile advertising and commerce is projected to grow substantially. Retailers will have to employ a multi-channel marketing approach. Online retailing will provide a platform for retailers to disseminate unique and targeted product offers for consumers to research, plan their shopping trips and at last attract consumers into stores. Consumers will also look for premium service linked with simplified shopping experience in terms of product availableness and ease of locating th e products. Now more than ever, consumers are becoming more sophisticated and informed in making choices.They desire to know the simple eye of the product, what they are made of and how their lives can be improved with them. In general, future consumer wants a simplified, personalized and meaningful shopping experience with a focus on value. In summation, regardless of the organization size and retail focus, marketers must have the foresight to recognize change and take advantage of it by shifting its resources in line with market trends.