Australian Pharmaceutical Industries Ltd
Australian Pharmaceutical Industries Ltd - Retailing - Australia-Dissertation Writing Help
Strategic Direction
·
Australian Pharmaceutical
Industries continues to focus on health and beauty products, with the sale of
non-core franchises and aggressive expansion of pharmacy outlets and private
labels. The company is undergoing the transitioning of its store profile from
corporate ownership to a franchise model, with an aim to open up to 400
Priceline Pharmacy outlets over the forecast period.
Key Facts
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Address:
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11 Grand Avenue, Camellia, New South
Wales 2142, Australia
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|
Tel:
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+61 (02) 8844 2000
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|
Fax:
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+61 (02) 8844 2400
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www:
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api.net.au
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|
Retail formats/channels:
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Chemists/pharmacies,
parapharmacies/drugstores
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|
Retail brands:
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Priceline, Priceline Pharmacy, Pharmacist
Advice, Soul Pattinson Chemist, Health Care Pharmacy, Independent Pharmacies
of Australia (IPA), Chemworld Chemist
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Source: Euromonitor
International from company reports, trade press (includes Retail Pharmacy, The
Age)
|
|
2007
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2008
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Year end April 07/Aug 08
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|
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Net sales 1 A$ million
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1,962.9
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2,478.2
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Operating profit A$ million
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(11.5)
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15.2
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Outlets 2
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534
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521
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Selling space 2 (‘000 square meters)
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210.7
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210.8
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Sales of grocery 2 (%)
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86.0
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86.0
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Source: Euromonitor
International from company reports, trade press (includes Retail Pharmacy, The
Age)
Notes: 1
wholesale sales to pharmacies; 2 Euromonitor International estimates;
annualised figures
Company Background
·
Australian Pharmaceutical
Industries’ (API) dates back to 1910, when it was formed as a chemist
co-operative with the aim of supporting pharmacists in serving the healthcare
needs of consumers and enhancing and protecting public health.
·
The company was listed on the
Australian Stock Exchange in 1997, and subsequently undertook an ambitious plan
to become an integrated healthcare company. By 1998 API had gained recognition
as a national pharmacy distribution network.
·
After a difficult year due to
the hostile and conditional takeover attempt by Sigma Pharmaceuticals during
2006 and the first half of 2007, the company’s performance returned to
profitability. It can mainly be attributed to the gaining of value share with
the aggressive role out of Priceline Pharmacy stores, as well as a focus on its
brand positioning and improvements made to its operational/inventory
management.
·
2007 was also a year of
transformation for the company as it refocuses the retail strategy on health
and beauty with the sale of the House and Price Attack franchises in July and
November respectively. The House franchise targeted homewares, while Price
Attack retailed professional hair and beauty products.
·
API was interested in placing a
bid to acquire Symbion Health’s retail pharmacy arm to gain value share in
chemists/pharmacies. The bid was subsequently withdrawn, however.
Private Label
·
API offers a wide range of
private label products, which includes cosmetics and toiletries. Some of the
company’s private label products are available in all of its various retail
chains, while others are only offered in selected outlets.
·
The Priceline range of private
label products is known for its low-price. Soul Pattinson offers its private
label, “Own Brand” with products ranging from analgesics to household cleaners.
Chemworld Chemist also began offering private label products in 2007.
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Private Label Brand
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Sector(s)
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Comments
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Priceline
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Skin care, bath and shower products,
tissues etc
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Budget
|
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Soul Pattinson
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Analgesics, bath and shower
products, baby products, household products, etc
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Budget
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|
Chemworld Chemist
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Skin care, bath and shower products,
baby products, etc
|
Budget
|
Source: Euromonitor
International from company reports, trade press (includes Retail Pharmacy, The
Age)
Competitive Positioning
·
API retained its second
position in the chemists/pharmacies channel with an 11% in value share in 2008,
behind Sigma Pharmaceuticals Pty Ltd. The company also faces strong competition
from Zuellig Australia Pharmacy Services Pty Ltd, which acquired Symbion Health
Ltd in April 2008.
·
In an attempt to differentiate
its chemists/pharmacies from those of its competitors, API formed a strategic
alliance with pharmaceutical manufacturer Alphapharm in October 2007. The
partnership brings API the benefits of being the preferred provider of
Alphapharm’s generic medicines, which will further expand API’s retail customer
base.
·
With the sale of the company’s
non-pharmaceutical retails brands, House and Price Attack, the company
continues to focus on improving its health and beauty business. API also looks
to redesign its distribution management by investing in distribution centres in
Sydney, Brisbane and Melbourne, as well as automation, to service the
pharmacies and Priceline stores. This will allow the company to improve its
wholesale distribution unit as well as manage operating costs in the midst of rising
fuel prices.
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Channel
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Value share (%)
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Rank
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Retailing
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0.9
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7
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Parapharmacies/drugstores
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100.0
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1
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Chemists/pharmacies
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11.1
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2
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Source: Euromonitor
International from trade press (includes Retail Pharmacy, The Age), company
reports, trade interviews
