Nedcor securities healthcare conference march 2004
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Nedcor Securities Healthcare Conference March 2004. New Clicks – Healthcare in changing regulatory environment. Healthcare strategy Integrated channel to market UPD Clicks Pharmacy Legislative changes Draft pricing regulations. Healthcare strategy.

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Nedcor Securities Healthcare Conference March 2004

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Nedcor securities healthcare conference march 2004

Nedcor SecuritiesHealthcare Conference

March 2004


New clicks healthcare in changing regulatory environment

New Clicks – Healthcare in changing regulatory environment

  • Healthcare strategy

  • Integrated channel to market

    • UPD

    • Clicks Pharmacy

  • Legislative changes

  • Draft pricing regulations


Healthcare strategy

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

Wholesale & distribution - UPD model

  • Model tried & tested internationally

  • Largest national wholesaler in SA

  • Efficient working capital management

  • Expertise in fine distribution

UPD provides distribution for integrated channel to market

  • Pharmacies carry less stock

  • Act as warehouse for pharmacies

  • Distribution & service levels key


Wholesale distribution upd model1

Wholesale & distribution - UPD model

UPD: 43%of other wholesalebusiness


Nedcor securities healthcare conference march 2004

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

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

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

Check this


Learning from australia

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

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 shareof branded ethicals - better placed to benefit

    • Currently, margins better

  • Single exit pricing


Draft pricing regulations

Draft pricing regulations

  • Support statutory intervention to

    • address current medicine pricing anomalies

    • make pricing more transparent

    • make medicines more affordable & accessible

  • 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

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

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

Questions ?


Thank you

Thank You


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