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M Somasekhar Healthcare major Apollo Group has created a separate company called Apollo Pharmacies Ltd (APL) to give a big push to its expanding retail pharma business.
The new entity has the option to raise funds through retail investors or IPO, said Shobana Kamineni, Executive Vice-President of the Chennai-headquartered Apollo Hospitals Enterprises Ltd (AHEL).
Growth target
With a turnover of ₹4,300 crore and a pan-India retail network of 3,187 stores, APL targets to grow into a ₹10,000-crore-turnover company in the next four-five years, she told BusinessLine .
Apollo Pharmacy currently has 3,167 outlets in about 400 cities and towns in 20 States and four Union Territories. Its employee strength is over 21,000. “Our target is to open 5,000 retail outlets in the next four-five years. The strategy is to consolidate in South where we are strong, strengthen in the West and focus on the East and North,” Kamineni added.
“The new structure created by the board gives us the wherewithal to build value in the retail business and tap the big market opportunities unfolding in the online pharma business and be well-prepared in the eCommerce sector,” she added.
Sale transfer
AHEL will make a slump sale transfer of its front-end retail pharmacy business carried out through the standalone pharmacy segment to APL for ₹527.8 crore, the company said in a disclosure to the bourses on Wednesday after the board meeting.
The proposed reorganisation would not have a material impact on the financials of AHEL as the backend business related to the standalone pharmacies which represents 85 per cent of the business economics will continue to be held by AHEL she said.
“We are one of the few profitable retail chains with an existing customer base of two crore. We are mostly optimising on existing resources and expanding unlike our competition,” Shobana said.
Online business
Apollo Pharmacies is strengthening its online business model and also venturing into the private label segment.
“Pharma online business is difficult as Scheduled H drugs, prescription and regulatory issues pose big challenges, but our long experience and widespread network gives us the advantage,” she said.
Asked if the company is looking for acquisition to grow fast, Kamineni answered in the affirmative. Apollo Retail had acquired the strong brand of Hetero pharmacies a few years ago, which was predominantly in Telangana and some major cities. The integration has been completed.
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