brunetpharmacies$ health$creates$wealth$ · key’issues’to’tackle targetand) compeon))...

PBS Consul+ng Team

Pedro C. , Ana M. , Alana B. , Pedro S.

Brunet Pharmacies

Health Creates Wealth

Agenda

1 – Key Issues 2 – Analysis 3 – Recommenda+on 4 – Financials 5 – Risks 6 – Implementa+on plan

How can brunet Pharmacies grow in SALES and BRAND

given an industry with decreasing profits and increasing rivalry?

Brunet is facing a challenging task

Key issues to tackle

Target and Compe66on

-‐Many compe6tors -‐New entrants

-‐Varying posi6oning

Industry Condi6ons

-‐Lower profits -‐Lower margins

-‐Changing landscape of profitable products

Consumer Wants and Needs

-‐Aging popula6on

-‐Ecommerce and apps -‐Informa6on security

-‐Convenience -‐Personaliza6on

ANALYSIS KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN

METRO Inc. McMahon Distributeur

Pharmaceu+que Inc BRUNET Group

Brunet Plus Pharmacies

Brunet Clinique Pharmacies

Brunet Pharmacies

Brunet Pharmacies What do you do? Sell medica+on and general use items and offer personalized health advice and services

KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN

The Pharmacy Industry in Quebec is dynamic Increasing Compe++on (Business + Communica+on)

Regular price based on opera+ng costs

Number of pharmacies is growing

Few pharmacies operate independently

Decreasing margins

Pharmacies don’t sell online but can offer an online prescrip+on renewal

service

Bill 41: Pharmacists are able to renew prescrip+ons, prescribe drugs and interpret laboratory results


The level of rivalry is high


Brunet Jean Coutu

Uniprix Pharmaprix Familiprix Proxim

Number Pharmacies

6th +

1st (369) -‐

2nd (359) +

5th +

3rd +

4th +

Media Exposure (%)

18.42 28.95 23.68 15.79 7.89 5.26

Products

Similar

Wide variety

Wide variety

Wide variety

Private Brand No No Yes No Yes

Compe66ve advantage

“MaSante” program

Digital Media

Loyalty (Air Miles

Partnership), Data privacy

Men’s Product,

Credit Card

Adver+se-‐ment

“ProxiSante – Mon dossier en ligne”

Online Website App

Online Shop

Renewal prescrip+on

-‐-‐-‐ Website

And you face different levels of compeDtors


Cosme+c Stores Target

2nd largest distributor in US (volume) Direct compe++on with METRO Inc. Are already sehng up shops in Canada

How does the future looks like? People are living longer

Chronic diseases

Preven+on Vs. Treatment

Development in Gene+c Mapping and Technology

Customiza+on in control and treatment

Mobile in health (privacy)

“Do it yourself”

Need for informa+on: The buyer purchasing process

Lack of +me


You have core competencies that disDnguish yourself

Innova+ve and pioneering spirit

Major player in health promo+on

Ac+vely involved with universi+es



And you need to use them to posiDon yourself more strategically

Innova+ve and pioneering spirit

Major player in health promo+on

Ac+vely involved with universi+es



Consumers’ Loyalty: Proximity Knowledge of pa6ent records Quality of advice received Quick/Personalized service Reduc6on of the bo\leneck within Health Care System Electronic Services Adver6sement

S


WOT

Innova+ve company Pioneering spirit Lab Services MaSante program

Not having own brand for products Low Margins

Bill 41 Ageing popula+on Customized products

Target upcoming arrival

RECOMMENDATION KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN

Key issues to tackle




Industry Condi6ons




-‐Aging popula6on




Is an acquisiDon the way to go?

Acquire a Compe+tor?

Independent Pharmaprix Others






152 Stores 8.6% Market Share

175 Stores 10% Market Share

225 + Stores 13% and up Market Share





152 Stores 8.6% Market Share Too difficult to acquire on large scale. Difficulty in company culture merger.

175 Stores 10% Market Share Unlikely to sell due to na+on-‐wide brand. High cost. Different posi+oning.

225 + Stores 13% and up Market Share Too big of acquisi+on, not financially viable.

An AcquisiDon Is Not The Right Path


Brunet Pharmacies needs to focus on organic growth, by banling the industry and compe++on, while crea+ng consumer engagement

and loyalty.

Strategy 1: Industry and CompeDDon


Products Services Online Physical Stores




Maintain current wide product range Start a Brunet brand

-‐Take advantage of high margins in certain products such as health and beauty, childrens’ food, pregnancy-‐related goods, products for elderly/aging, diabe+c products DNA tes+ng

-‐With follow-‐up services




DNA tes+ng follow-‐up -‐Advice based on results and op+ons -‐Customized treatments -‐Look to former partnerships and posi+on Brunet to offer personalized drugs

Bill 41 -‐Rou+ne immuniza+ons and prescrip+ons -‐Travel clinic and vaccina+ons -‐Prescrip+ons people may not want to see doctor for (birthcontrol, viagra, etc…)

Chronic Disease -‐Focus on prevalent illnesses, especially in aging popula+on (diabetes, heart condi+ons, blood pressure) -‐Specialized products, informa+on and record online and through app




Maintain mobile app, integrate with pa+ents records Ensure high level of data security Online sales of non-‐prescrip+on products Add service on app to take a picture of prescrip+on, for pickup in-‐store




Look at expanding pharmacies into Metro stores Build 3-‐4 new stores in strategic loca+ons which are 24-‐hour, drive-‐thru Review costs and loca+ons -‐ consolidate for maximum proximity Vending machines for emergency non-‐prescrip+on products at non-‐24 hour stores

Strategy 2: Consumers and Branding


Create loyalty program, and integrate with Metro loyalty program What

Why Increase consumer return rate Enjoy benefit of big Metro brand name Anain client data across both retail stores

What

Why and How

Increased focus on data analy+cs

Ability to cross sell and understand customer needs and wants Ability to provide customers with personalized health advice, sugges+ons, products



Increase benefits received for Brunet and customers through app

What

Why and How

Increase customer loyalty and sense of engagement, community In-‐depth client record and informa+on Forums for discussing certain topics (such as chronic condi+ons) App can direct customers to 24 hour stores, scan prescrip+ons, ecommerce Link ability to link family profiles, including DNA tes+ng info Can send reminders for refills, coupons using data analy+cs



Increase Promo+on What

Why and How

Television campaign focusing on health, family and products Video tes+monials that can be shared on app and social media about how Brunet helped (ex: DNA tes+ng, special service, 24-‐hour store) Billboards and ads in high foot-‐traffic areas with direc+ons (ex: “500m to Brunet”) Target consumers online using digital data, online search and social network use

FINANCIALS KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN

Main assumpDons


1.  Opening of 50 new stores in Metro stores (10 per year)

2.  Opening of new 4 regular stores

3.  Investment of 3% of revenues in marke+ng

4.  Increase of revenues by 5% due to marke+ng and vending machines

5.  Increase net margin to 28%

Total investment is $83M


2013 2014 2015 2016 2017 2018

50 new pharmacies in Metro stores (M$) 8 8 8 8 8

4 new regular pharmacies (M$) 2 2

Vending machines (M$) 2.3 2.4 2.6 2.7 2.8

Marke+ng (M$) 3.9 4.1 4.3 4.5 4.7 4.9

TOTAL (M$) 4 14 17 17 15 16

NPV of the investment is $118M


2013 2014 2015 2016 2017 2018

Number of pharmacies 176 184 194 204 212 220

Revenues (M$) 129 135 143 150 156 162

Net profits (M$) 36 38 40 42 44 45

Free Cash Flow (M$) 32 24 23 25 28 30

NPV = $118 M


RISKS & PLAN


Risks & MiDgaDon

Impact

Prob

.

Impact

Prob

.

Impact

Prob

.

Big players might Move first into genomics

23andme have currently The biggest genomic database

People want convenience You are perceived as a trussul brand

Drive-‐thru pharmacy Concept may not be accepted

Brand Damage with outsourced products

Define very rigorous quality plan Invest on sourcing


ImplementaDon Plan

Summary




Industry Condi6ons




-‐Aging popula6on



No acquisi+ons Focus on health and new services 4-‐5 new stores (24 hour and drive-‐thru), and stores in Metro Create private brand Penetra+on market through app and promo+on

brunetpharmacies$ health$creates$wealth$ · key’issues’to’tackle targetand) compeon))...

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