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July 2, 2001
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Money > Business Headlines > Report July 2, 2001 |
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Zydus Cadila gets into retailing bizRaksha Hegde Zydus Cadila has decided to step into the lucrative business of drug retailing, to bypass the slowdown in the pharma industry. It is the first Indian pharma company to venture into the retail business, where operating margins are typically higher. The Ahmedabad-based company has already set up two retail outlets in Bombay on a pilot basis, to capture the first-mover advantage. The company is planning to set up five more stores in Bombay by December this year, in addition to spreading out to Delhi. However, the company will only be targeting metros during the initial phase. The retail outlets, under the brand "Dial for Health," will be set up by Zydus group company, Cadila Healthcare through a wholly owned subsidiary Dial for India. The company has already invested Rs 30 million in infrastructure, and intends to spend another Rs 2 million on each store, which will service orders placed through the telephone and the Internet. Harish Sadana, vice president (operations), Dial for India said, "We are getting into a totally new business. We will be moving up in the value chain by introducing the service concept in the pharma industry. The stocks at our stores will not be restricted to Zydus Cadila products. We will be offering around 18,000 products, including those of our competitors." Although Sadana declined to project the company's earnings from the business, industry experts estimate that margins could be in the range of 7-8 per cent. Nicholas Piramal is the only other pharma company which has expertise in the retailing business, though not in the drug-store space. The company's move evoked mixed reactions from sector analysts. While some of them said the move is a step in the right direction, others said it is too early to say if the company's steps will bear fruit. "In view of the strong influence the traders' association has over retail drug sales, it will be difficult for pharma companies themselves to achieve any major expansion in the short term," an analyst at a leading financial institution said. Powered by YOU MAY ALSO WANT TO READ:
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