Private label for pharmacy chains: FITOFARM took part in the XI Pharmacy Summit of Ukraine

The Pharmacy Summit is one of the most important events in the calendar of annual professional events of the pharmaceutical market. Pharmaceutical industry experts and professionals gather to discuss current trends in pharmacy retail in Ukraine and in the whole world, share effective cases and join forces to improve working conditions in the pharmaceutical market. In addition to the representatives of pharmacy retail, distributors and pharmaceutical manufacturers, the XI Pharmacy Summit was attended by the members of the Committee on National Health, Medical Care and Medical Insurance of the Verkhovna Rada of Ukraine; People’s Deputies of Ukraine; the leadership of the National Health Service of Ukraine; officials of the Ministry of Health of Ukraine, the State Service for Medicines and Drug Control of Ukraine and other leading pharmaceutical market players.

At the XI Pharmacy Summit of Ukraine our company was presented by the CEO Vladyslav Malinin.

Traditionally, Ukrainian and international experts spoke about the challenges faced by the pharmaceutical industry during the pandemic and raised issues of interest that are important for all participants of the pharmaceutical market.

The creation of own brands is one of the bright trends in pharmacy retail. Private label is a brand that can be owned by any company engaged in its implementation.  Vladyslav Malinin acted as an expert when discussing the private label trend. He shared his position on this issue with the participants.

From the point of view of the CEO of FITOFARM PJSC, private lable is a fashion trend that does not affect the achievement of such main goals of the business as obtaining operating profit and increasing the capitalization of the business.

Creating private label is very popular in the FMCG segment, but there are other rules of the game. For example, the downgrade of quality works that can help to reduce the price – offer the consumer a simpler package or reduce the length of a roll of toilet paper, etc. For most buyers, the availability of goods, its price and acceptable quality are important.

The pharmaceutical market does not have such a large space where you can “roam around” with private lable. Pharmaceutical specifics make downgrade in quality impossible. The quality of the products must always be high and meet the standards, so it is more difficult to ensure a low price and it is difficult to convey the advantages of private lable to the customers. After all, pharmacy chains do not perform a marketing function like FMCG.

According to Vladyslav’s words, the development of a private label pharmacy chain can be advisable only in the category of unbranded products. To create and promote their own brand in the category of branded goods in the pharmacy chain, there are not enough resources to compete with manufacturers who have a large gap between margin and net profit in P&L (Profit and Loss – income and expense report), due to which they can finance direct communication aimed at end consumers or doctors.

It is especially difficult to compete with media-active market leaders who invest, for example, 10-12 million dollars in TV advertising of the OTC drugs in half a year or in a quarter. And if we are talking about Rx drugs, you additionally need to create an external service for doctors’ business cards. This is also a considerable expense. Considering all this, the private label is more attractive for pharmacy chains in the segment of unbranded drugs.

“FITOFARM PJSC can provide pharmacy chains with the best commercial conditions on the market for private lable. Now we are actively developing this direction, so we have something to offer,” Vladyslav Malinin emphasized.

Summing up, the speaker noted that the most relevant trend, in his opinion, would not be the growth of pharmacy premises, but the development of the delivery service. The largest capitalization will be given to those pharmacy chains that will be able to provide a sales logistics system using electronic orders and safe delivery.

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