Apollo’s pharmacy is a subsidiary of Apollo Hospitals Ltd and is the the largest chain of pharmacy outlets in India, which has grown aggressively to reach 1000+ outlets in the last five years. The pharmacy business contributes about 23% of overall revenue in FY2010E.
Apollo is now deemphasizing growth in the number of its pharmacies and looking to improve margins for the existing outlets. Although until now the pharmacies have been margin dilutive, the trend is gradually improving.
The management is expecting a 600 bp EBIT margin improvement over next two years (by FY12E) as most outlets enter maturity. This will drive stronger EBIT margins going forward.
The Mantra in Retail Sector Today is – Bottomline as the days of Growth at any cost are behind us.