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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Presentation Transcript
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

slide6
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
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