Surya to set up ‘Wellness’ Chain of 500 Stores under ‘VIVA’ Brand Name

Source: indiaretailbiz.com

March 25th, 2009

Surya Pharmaceutical, a Chandigarh-based pharmaceuticals manufacturer, owned by Rajiv Goyal, is foraying into Wellness Retail. The company has chosen the brand name of ‘Viva’ for its proposed retail chain of healthcare and medicines stores.

The medicines market in India is highly fragmented with over 500,000 family-owned small sized chemists & drug stores operating across the country.

Only a few organised retailers have entered this business, which together with wellness products (health foods, personal care products, rehabilitation products, devices, etc) offers over Rs 60,000 crore opportunity. Medicines markets alone contributes over Rs 35,000 crore of turnover.

Currently, Apollo Pharmacy and Reliance Wellness are the only retail chains that have pan-India presence, though many big and small regional players like Religare Fortis (ex-Ranbaxy), Med Plus, Guardian, 98.4, Lifecan (now Religare), Medicine Shoppee, Dial for Health, Planet Health, Medi Plus, etc, who have entered the segment with national ambitions. Even trade associations of chemists in several states are trying to form cooperatives/companies to fight the emerging challenge from organised pharmacy chains.

To begin with, the company will set up 100 Viva stores in the next one year. Almost all of these stores will be located in and around Delhi (NCR).

The company will, however, set up a chain of 500 stores, of 150 to 1,000 sq ft size, over a period of next three years. This will entail an investment of Rs 250 crore ($50 million), which will be funded through a combination of equity and debt. The company will also seek induction of private equity in the proposed venture.

While, initially the company will set up company owned stores, later on it will try to extend the network through franchisee owned model.

“The presence of a huge spurious drug market along with an increasing number of lifestyle and stress-related ailments prompted us to foray into healthcare retail,” said Rajiv Goyal, Chairman and Managing Director of the company.

Currently, the company is clocking a turnover of Rs 500 crore. This is expected to grow three-fold to Rs 1,500 crore within three years by 2011. The company has ambitious plans to also enter European and American pharmaceutical markets by 2011.

Apart from organic growth, the company is also seeking growth via acquisition route. It is said to be in talks with an Indian firm and a German firm for acquisition of their businesses.