Thursday, August 21, 2014

TGP shakes up pharma market



The Generics Pharmacy CEO Benjamin Liuson



MANILA, Philippines–The high cost of medical care has provided the impetus for more Filipinos to favor cheaper generic medicine. And in this growing field of generics medicine distribution, The Generics Pharmacy has been leading the pack.


In this discussion, The Generics Pharmacy chair and CEO Benjamin Liuson talks about how the company grew and how it intends to hold its own against equally aggressive competitors.


Question: You have been importing medicines for decades. What made you decide to open a retail network via franchising? What was the inspiration?


Answer: In early 2000, physicians from the Philippine General Hospital recommended their patients to our office on Quezon Avenue, but since we were in the business of wholesale, unfortunately, we cannot sell retail to these patients.


Hence we opened our very first drugstore—our very first outlet right at the ground floor of our offices, selling only pure generic medicines. This was in 2001.


In 2006, our regular customers from as far as Bulacan, Laguna, Cavite and other areas gave feedback that traveling many hours just to buy medicines on Quezon Avenue required much time and effort. They quested/suggested “Why don’t you open in our areas?” That was the push. That was the inspiration.


So in 2007, after much consultation and deliberation, we decided to introduce the franchising business model, as I figured franchising is our best route to open more drugstores in the shortest possible time.


Question: I noticed your branding has been shifting from The Generics Pharmacy to TGP, signaling a major shift in direction.


Are you planning to carry branded products and grocery items as well?


Answer: We are moving to TGP for easier recall. Big brands are doing it—Bank of Philippine Islands to BPI. Nowadays, who can recall what IBM means? We are expanding slowly but surely into non-pharma products and have started carrying branded pharma products whose patents have not expired.


Carrying other non-pharma branded products is always a possibility.


Question: You now have more than double the number of stores of the market leader. However, your sales, while growing significantly, are still far from the competition’s nearly P100 billion in annual revenue.


What is the vision of TGP in terms of achieving dominance? What is your measure of success?


Answer: We are catering to the under-served and un-served millions of Filipinos out there.


Our stores are community pharmacies—nearer to their homes and where they flock to all the time like markets and terminals of public transportation. We have made our products very accessible to our kababayan. Somebody has to. We have to. That’s the route we pioneered.


Our measure of success? Acceptance.


Acceptance from the medical professionals—doctors, nurses, pharmacists and allied professions. Acceptance from the pharmaceutical industry. Acceptance from the retail and franchising industries. And most of all, acceptance from the communities and patients we serve, our customers. That to me is the measure of our success.


Question. I noticed you defended your low price positioning following the decision of the market leader to reduce the prices of some of its products. Please share your thoughts on engaging in price wars.


Answer: Our suppliers are from everywhere. Multi-national and national companies. They understand the business model under which we operate, hence, we negotiate for best prices which, in turn, are enjoyed by our consumers and patients. Our overhead is low, hence logically, our price points are lower.


Question: Another generics company is growing fast. What is your competitive advantage?


Answer: We have the first-to-market advantage. We take pride in our first-to-market lead. Our presence can be felt everywhere—from small towns to the big cities, hence entrepreneurs and our current franchisees and partners have chosen us and stayed with us. Our traditional and non-traditional media touchpoints can be felt and seen everywhere. One always feels flattered when other players copy our business model and other marketing efforts. We must be doing something correctly.


Question: You have resorted to franchising but never collected franchise royalty payments. Why?


Answer: This is to further incentivize our franchisees whom we regard as our business partners. We are growing together. We can always implement in the future. It’s not about money all the time.


Question: In the era of mergers and acquisitions (M&A), are you open to buying competition? What about selling the company?


Answer: We are open to acquisitions—buying the competition. Everything is a possibility. We are also mulling over the bricks and clicks of doing an initial public offering. By virtue of being the largest pharmacy chain in the country, we are also the largest retailer in the country, which means we can sell and push practically anything under the sun.


(The author is chair of marketing training firm Mansmith and Fielders Inc. Go to his website—www.josiahgo.com—to read more discussions with other thought leaders.)





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