Apollo Hospitals Enterprise Ltd (AHEL)’s plans to set up large format pharmacy stores would require almost double the capex per store compared with the capex into its current format.
The company is studying the concept and would to roll out the format by the year end, said Akhileswaran Krishnan, chief financial officer, AHEL. The capex would be in the range of Rs 30-35 lakh per store, as against the current investment of Rs 15 lakh.
The healthcare services major is expecting the new format to have 800-1,000 sft on average per store and these would be the flagship stores for Apollo Pharmacy. He said the company was studying the format, including rentals, which had to be factored in before it expands into that investment format.
Apollo, which has 1,399 stores, has set a target to launch 100-120 stores by the end of this year. It had opened around 42 stores in the first half of the current fiscal, according to K Padmanabhan, group president, Apollo Hospitals. It plans to go for more aggressive expansion of stores in the second half of the current fiscal.
The company had shut almost 48 stores in the 2009 batch of stores in the last 24 months, mostly in Mumbai and Delhi, due to unviable operations including high rentals. However, more than 850 stores, which were opened up to fiscal 2010 had shown EBITDA positive, he stated.
The total revenue for the standalone pharmacy business registered a growth of 33.2 per cent to Rs 277.63 crore for the quarter ended September 30, 2012, as against Rs 208.47 crore during the same period last fiscal. EBITDA margin increased to 2.9 per cent compared with 1.8 per cent during the same period of the previous fiscal.
This has come from rationalisation of store network, buying efficiencies due to increased scale of an operating leverage in addition to private labels. “As we have always maintained, we plan to scale up this business and are hoping for a strategic partnership with a global player, which can not only invest but also add value,” said Padmanabhan.
