brunetpharmacies$ health$creates$wealth$ · key’issues’to’tackle targetand) compeon))...
TRANSCRIPT
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PBS Consul+ng Team
Pedro C. , Ana M. , Alana B. , Pedro S.
Brunet Pharmacies
Health Creates Wealth
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Agenda
1 – Key Issues 2 – Analysis 3 – Recommenda+on 4 – Financials 5 – Risks 6 – Implementa+on plan
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How can brunet Pharmacies grow in SALES and BRAND
given an industry with decreasing profits and increasing rivalry?
Brunet is facing a challenging task
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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
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ANALYSIS KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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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
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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
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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The level of rivalry is high
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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And you face different levels of compeDtors
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Cosme+c Stores Target
2nd largest distributor in US (volume) Direct compe++on with METRO Inc. Are already sehng up shops in Canada
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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
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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You have core competencies that disDnguish yourself
Innova+ve and pioneering spirit
Major player in health promo+on
Ac+vely involved with universi+es
“MaSante” program
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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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
“MaSante” program
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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S
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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RECOMMENDATION KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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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
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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Is an acquisiDon the way to go?
Acquire a Compe+tor?
Independent Pharmaprix Others
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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Is an acquisiDon the way to go?
Acquire a Compe+tor?
Independent Pharmaprix Others
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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Is an acquisiDon the way to go?
Acquire a Compe+tor?
Independent Pharmaprix Others
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
152 Stores 8.6% Market Share
175 Stores 10% Market Share
225 + Stores 13% and up Market Share
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Is an acquisiDon the way to go?
Acquire a Compe+tor?
Independent Pharmaprix Others
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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.
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An AcquisiDon Is Not The Right Path
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Brunet Pharmacies needs to focus on organic growth, by banling the industry and compe++on, while crea+ng consumer engagement
and loyalty.
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Strategy 1: Industry and CompeDDon
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Products Services Online Physical Stores
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Strategy 1: Industry and CompeDDon
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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Strategy 1: Industry and CompeDDon
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Products Services Online Physical Stores
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
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Strategy 1: Industry and CompeDDon
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Products Services Online Physical Stores
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
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Strategy 1: Industry and CompeDDon
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
Products Services Online Physical Stores
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
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Strategy 2: Consumers and Branding
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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Strategy 2: Consumers and Branding
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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Strategy 2: Consumers and Branding
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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Strategy 2: Consumers and Branding
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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
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FINANCIALS KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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Main assumpDons
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
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%
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Total investment is $83M
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
2013 2014 2015 2016 2017 2018
50 new pharmacies in Metro stores (M$) 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
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NPV of the investment is $118M
KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
2013 2014 2015 2016 2017 2018
Number of pharmacies 176 184 194 204 212 220
Revenues (M$) 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
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KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
RISKS & PLAN
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KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS 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
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KEY ISSUES ANALYSIS RECOMMENDATION FINANCIALS RISKS & PLAN
ImplementaDon Plan
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Summary
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
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