Apollo talks to Walmart, Walgreen for pharmacy business

Apollo Hospitals Enterprises Ltd (AHEL), one of the country's largest networks in the sector, said it had initiated talks with global retail chains such as Walmart, the US' largest drug store chain, Walgreen Drugs, and others to expand its pharmacy business.

The development comes in the wake of the recent government decision to liberalise foreign direct investment in the retail sector.

Speaking to Business Standard after inaugurating the Robotic Gastrointestinal Surgery International Congress here, Prathap C Reddy, chairman, Apollo Hospitals Group, said they didn't want to look for venture capital (VC) or private equity (PE) but would prefer a partner who could augment the pharmacy business.

"We are talking to companies like Walmart, Walgreen and another European company," said Reddy.

The company is looking at floating a joint venture with the retailers. This, said Reddy, would make Apollo's pharmacies cost-competitive.

Apollo Pharmacy, a division of AHEL, had 1,357 outlets as on June-end, both standalone and attached to hospitals and clinics. The company earlier said it would expand the total number of outlets to 2,000 over the next three to four years.

In 2011-12, the pharmacy business reported 1.8 per cent in operating earnings, to Rs 16.2 crore (Rs 162 million). The expectation for the current year is 3.5 per cent growth.

The Indian pharmaceutical market posted annual sales of Rs 5,369 crore (Rs 53.69 billion) in 2011-12, said the All India Organisation of Chemists and Druggists.

The pharma retail market has 600,000-700,000 outlets. Of these, only 7,000-8,000 would be the total outlets from all the organised retail companies.

There is plenty of opportunity for the organised players to grow," said Amit Mookim, head, healthcare, with consulting agency KPMG.