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1. Hetero Med Solutions Ltd.
January 2013

2. Executive Summary
• Hetero Med Solutions Ltd. is a pharmacy retail chain operating mostly in South India and is headquartered
Company in Hyderabad
Description • It operates as a subsidiary of Hetero Drugs Ltd., an Indian pharmaceutical company
• It provides various pharmacy retail services such as assistance from qualified & trained pharmacists,
Key Products and availability of a wide range of medicines, computerized billing system and patient education leaflets
Services • It provides various benefits to corporate customers and Hetero Family Card holders
• The company’s strong regional presence is one of its major strengths; however, its declining liquidity is one
of the key areas of concern
• The company can reap significant benefits from the attractive profit margins and strong growth in the
SWOT Analysis pharmacy retail segment
• However, the presence of a huge unorganized sector and counterfeit products may have an adverse affect
on the growth prospects of the organization
• Hetero Med Solutions Ltd. generated total revenues of INR a mn in the fiscal year (FY) 20‐‐ registering a y‐o‐
y increase of b per cent. It earned a net profit of INR c mn in FY 20‐‐ as compared to a net loss of INR d mn
in FY 20‐‐
Financial Profile • The financial profile of the company includes the balance sheet and profit and loss account for FY 20‐‐, 20‐‐,
20‐‐ and 20‐‐ and the key ratios depicting the key financial figures for FY 20‐‐, 20‐‐ and 20‐‐, giving an insight
into the company's financial performance
• Pharmacy retail market in India was estimated at INR e bn in FY 20‐‐ and is expected to grow at a CAGR of f
per cent to reach INR g bn by FY 20‐‐
• Market is distinctly fragmented into organized and unorganized players with the unorganized market being
Industry Analysis valued at approximately INR h bn in 20‐‐, occupying i% of the total market, while organized market was
valued at approximately INR j bn representing k% of the market
• There will emerge a significant change in the market segmentation by 20‐‐ when organized retail will
capture approximately l% market from the current m% share
Competitive • Key competitors for the company can be enlisted as MedPlus Health Services Pvt. Ltd., Muthu Pharmacy
Landscape Pvt. Ltd.
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3. Contents
Executive Summary
Factsheet
Offices & Outlets
Pharmacy Retail Services
Key People
Hetero Med Solutions Ltd. SWOT Analysis
Financial Profile
Industry Analysis
Competitive Landscape
Recent News
Appendix
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4. Factsheet
Basic Information Brief Description
• Hetero Med Solutions Ltd. (Hetero Pharmacy) is headquartered
Industry
in Hyderabad and is a pharmacy retail chain operating mostly in
South India
• It is a subsidiary of Hetero Drugs Ltd., an Indian pharmaceutical
Corporate Address company established in 19‐‐ which entered the pharmacy
services in 20‐‐ as part of its integration strategy
• Within a year of its launch, Hetero Pharmacy grew to a network
Tel No.
E
of over a pharmacies across Andhra Pradesh
PL
Fax No. • With the parent company being a leading player in API’s and
AM
finished dosages, Hetero Pharmacy believes it can provide high
S
Website quality services to its customers
Year of Incorporation • It also has outlets at the Nizam’s Institute of Medical Sciences
(NIMS) Punjagutta, Hyderabad and GMR international airport,
Ownership Hyderabad
Revenue • Hetero Pharmacy plans to reach b stores by 20‐‐
Fiscal Year End • It provides special benefits to corporate clients and customers
with ‘Hetero Family Card’
Auditor
• Hetero Pharmacy provides free home delivery of medicines as
well as provides various offers on products being sold
Key Competitors
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5. Outlets – India (x/y)
Region /State No. of Outlets
Region 1 ‐‐
Serial No. Area Phone Address
1 Area 1
Region /State No. of Outlets
Region 2 ‐‐
Serial No. Area Phone Address
1 Area 1
2 Area 2
3 Area 3
4 Area 4
5 Area 5
6 Area 6
7 Area 7
8 Area 8
9 Area 9
10 Area 10
11 Area 11
12 Area 12
SAMPLE 5

6. Ratio Analysis
Key Ratios Key Ratio Analysis
y‐o‐y
• The company’s operating margin increased by a percentage
Particulars change 20‐‐ 20‐‐ 20‐‐ 20‐‐
(20‐‐) points y‐o‐y reaching b per cent in FY 20‐‐; the increase could be
Profitability Ratios attributed to the management’s increasing emphasis on
improving profitability by exercising inefficient cost management
Operating Margin
initiatives compared to that of the previous year
Net Margin
Profit Before Tax Margin • The return on equity increased by c percentage points y‐o‐y
Return on Equity reaching d per cent in FY 20‐‐ indicating the company’s ability to
Return on Capital Employed use the reinvested earnings to generate additional profits
LE
Return on Working Capital • Current ratio of the company decreased by e per cent y‐o‐y
Return on Assets reaching f in FY 20‐‐, indicating poor cash flow management
MP
Return on Fixed Assets
• Its cash ratio decreased by g per cent y‐o‐y to reach h in FY 20‐‐,
SA
Cost Ratios indicating the company’s inability to pay‐off current obligations
Operating costs (% of Sales) with its most liquid short term assets as compared to the
Administration costs (% of Sales) previous fiscal year
Interest costs (% of Sales)
• Debt to equity ratio of the company increased by i per cent y‐o‐y
Liquidity Ratios reaching j in FY 20‐‐, indicating that the company is leveraging
Current Ratio
itself which is likely to increase its interest expenses
Cash Ratio
Leverage Ratios • The company’s asset turnover ratio increased by k per cent y‐o‐y
to reach l in FY 20‐‐, indicating increased ability of the company
Debt to Equity Ratio
to generate sales revenue with its total assets as compared to
Debt to Capital Ratio
the previous fiscal year
Interest Coverage Ratio
Efficiency Ratios • The company’s working capital turnover ratio increased by m
Fixed Asset Turnover per cent reaching n in FY 20‐‐ indicating that the company is
Asset Turnover
being able to finance its day‐to‐day operations efficiently
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Source: Netscribes Analysis Improved Decline Note: y‐o‐y change in Profitability and Cost Ratios is represented in percentage points
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7. Industry Analysis
Pharmacy Retail Industry – Overview Market Size & Growth
• Pharmacy retail market in India was estimated at INR a bn in FY
20‐‐ and is expected to grow at a CAGR of b per cent to reach
INR bn
INR c bn by FY 20‐‐
• Indian pharmacy retail market is ranked cth in terms of value and
dth in terms of volume X%
 There are approximately e stores across the country
• Market is distinctly fragmented into organized and unorganized
players
• In 20‐‐, the unorganized market was valued at approximately INR f bn,
LE
occupying g% of the total market while organized market was valued at
approximately INR h bn representing i% of the market
MP
 Unorganized pharmacy retail market is growing at a CAGR of j% while 0
organized pharmacy retail is expected to grow at a CAGR of k%
SA
 There will emerge a significant change in the market segmentation by 20‐ 2011 2012e 2013e 2014e 2015e 2016e
‐ when organized retail will capture approximately l% market from the
current m% share
• In India, pharmacies are the dominant distribution channel Market Segmentation
generating approximately n% of the overall pharmaceutical sales
• Currently, approximately o% of drug sales is through the retail Category 1 Category 2
markets, while institutional sales are as low as p% %
• Some of the key drivers of this market are growth in the
pharmaceuticals sector, increasing healthcare spending,
changing disease profile and growth in the OTC segment
• Some of the major trends observed in the pharmacy retail
market are loyalty schemes, value‐added‐services, increasing
tracking of counterfeit drugs, tele consultation services, rural
expansion and health insurance plans being made available in
pharmacy outlets 0%
2011 2012e 2013e 2014e 2015e 2016e
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8. Competitive Landscape (/)
Company Name Description
• Player 1 owns India’s first exclusive hospital pharmacy chain – abc, and operates x pharmacies throughout the
Player 1 country
• Outlets are in franchisee model with store formats including high street stores and shop in shops
• Programme offers a premium range of gifts that translate to an effective discount of 20‐30% on medicinal
purchases
• Gives discount of v% on medicines and w% on general products
• Provides free lab test vouchers on purchase of medicines
• Launched an ecommerce site abc.com that provides a catalog of more than m Indian and international brands
• Player 2 has a strong presence in Chennai with s outlets spread across the city
Player 2
• It is the first pharmacy chain store to be approved by Pharmacy Council to give practical training to pharmacist
students under regulation x of Education Regulation 19‐‐
• It has as many as r stockists
• Provides free blood pressure and weight and height check ups at outlets
• Gives free home delivery for all customers
• Starting from early 19‐‐, the company has so far organized u free medical camps till date across Tamil Nadu
SAMPLE 8

9. Competitive Landscape (/)
Competitive Scenario
Company Name Hetero Player 1 Player 2
Financial Information (INR mn – FY 20‐‐)
Total Revenue
Net Profit/(loss)
Number of Outlets
Number of Stores
Geographic Presence
Andhra Pradesh
Tamil Nadu
Karnataka
West Bengal
Maharashtra
Rest of India
SAMPLE H: High; L: Low; M: Medium  Present  Not Present
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10. Appendix
Key Ratio Definitions
Operating Margin (Operating Income/Revenues)*100 Measures company’s pricing strategy and operating efficiency
Net Margin (Net Profit / Revenues) *100 Indicates the proportion of total revenues the company keeps as earnings
Profit Before Tax Margin (Income Before Tax / Revenues *100 Measures pre‐tax income over revenues
Return on Equity (ROE) (Net Income / Shareholders Equity)*100 Assesses a company's ability to generate profits with the shareholders’ funds
Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100 Indicates efficiency and profitability of a company's capital investments
Return on Working Capital (Net Income / Working Capital) *100 Measures company’s profitability over its working capital
Return on Assets (Net Income / Total Assets)*100 Indicates the company’s profitability relative to its total assets
Measures management’s efficiency of using the company’s fixed assets to
Return on Fixed Assets (Net Income / Fixed Assets) *100
generate earnings
Operating Costs (% of Sales) (Operating Expenses / Sales) *100 Measures proportion of operating costs incurred for generating revenues
Administration Costs (% of Sales) (Administrative Expenses / Sales) *100 Measures proportion of administration costs incurred for generating revenues
Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Measures proportion of Interest costs incurred for generating revenues
Current Ratio Current Assets / Current Liabilities Current Ratio measures a company's ability to pay its short‐term obligations
{(Cash & Bank Balance + Marketable Measures a company’s ability to pay off current obligations through most liquid
Cash Ratio
Securities) / Current Liabilities)} short‐term assets
Debt to Equity Total Liabilities / Shareholders Equity Indicates the proportion of equity and debt the company uses to finance its assets
{Total Debt / (Shareholders Equity + Total
Debt to Capital Ratio Evaluates the proportion of debt and equity in a company’s capital structure
Debt)}
Interest Coverage Ratio EBIT / Interest Expense Determines the company's ability to pay interest on outstanding debt
Fixed Asset Turnover Sales / Fixed Assets Indicates how efficiently the company’s fixed assets are used to generate revenues
Asset Turnover Sales / Total Assets Indicates how efficiently total assets are used to generate revenues
Current Asset Turnover Sales / Current Assets Indicates how efficiently current assets are used to generate revenues
Working Capital Turnover Sales / Working Capital Indicates how efficiently working capital is used to generate revenues
Capital Employed Turnover Sales / Shareholders Equity Indicates how efficiently equity is used to generate revenues
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11. Thank you for the attention
Hetero Med Solutions Ltd. is a part of Netscribes’ Healthcare Company Profile Series.
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