The degree of complexity is 3 (on a scale of 1 to 5).

The volume of primary investment – from 100 thousand USD.

A license is required.

Basic business models:

• discount stores (pharmacy with prices below the market average and usually an average or a wide range of goods);
• community store (a 24-hour pharmacy with a good medicinal and basic parapharmaceutical assortment, with medium or lower average prices – the weakest model, but the most free niche);
• Premium pharmacy (with a wide range of products, including expensive products, consultants, quality service).

Business franchise: in such a saturated market for your own safety, you can buy a franchise or a ready-made pharmacy with well-established traffic. Instead of own franchise, it is recommended to grow to a large pharmacy chain.

The given business is combined with: sale of accompanying parapharmaceutical goods, consulting reception of doctors, clinical laboratory.

Payback period – from 1-2 years.

Time to break-even point: from 6 months from the moment of opening.

The payback period and the break-even point are indicated taking into account that the project has an individual, high-quality business plan.

• Is it worth the “game of candles”?

The pharmacy business has many of its “pitfalls”, despite this, it has a number of significant advantages that make it an attractive investment:

1. Fast payback of business: if everything is correctly done, the pharmacy starts paying off quickly and can show profits in the first year. If this is a new unknown pharmacy and it does not have a flow of customers, then for good positions it will be necessary to go out for 2 years.
2. State support. In April 2018, the government launched the “Available medications” program, according to which patients with cardiovascular diseases, bronchial asthma and type II diabetes can receive drugs for free or with a small surcharge. The program includes 23 active substances, the list of drugs from which is constantly expanding. The government allocated 1 billion UAH. the actualization of the reimbursement system in 2010 is not enough to cover the demand. But since presidential and parliamentary elections are expected in the next 2019, it is likely that funding for reimbursement will be increased.

In addition to this program, there are earlier orders and resolutions of the MLO granting the right to receive drugs free of charge for certain categories of patients. To participate in the program, the pharmacy must sign a contract with the nearest health care institutions.

In general, the government pays no more than 5% of the pharmacy market capacity, but participation in the program for a new pharmacy is first and foremost a good option for free advertising of its services to the target audience.

3. Large volume of the market, wide target audience. Medicines are necessary to all and people are ill, unfortunately, often.
4. Favorable outlook: in 2018 is expected to increase the market of medicines by 18-23% in UAH and currency (forecast “Proxima Research”). Forecasts for the development of the Ukrainian economy and the increase in the incomes of the population also inspire optimism.
5. Small risk: the premises can be rented with the subsequent possibility of repurchase. If the business does not go, some of the invested money can be returned (repair is not specific, you can return about 60% of the equipment cost, medicines can be ordered from the distributor with payment after their implementation).
6. Volume and potential of the market

Over the past 3 years, there has been an increase in retail sales of pharmacy products: by 14-22% per year in dollar terms, due to increased sales in packs and the redistribution of consumption towards more expensive drugs. As a result, the trend in the market structure is the increase in the share of drugs in medium- and high-value price niches.

The average cost of 1 package of chemist’s goods – 49.6 UAH. (including cosmetics – 64.2 UAH., medicines – 61.8 UAH., dietary supplements – 60.9 UAH., Medical products – 14.0 UAH.). The share of medicines is stable and is 85%.

In the first quarter of 2018, the total sales of all categories of goods in the pharmacy basket amounted to 434.5 million packs, 21.5 billion UAH and $ 800 million (data from PharmXplorer and Pharmstandard).

Pharmaceutical market of Ukraine entered the phase of consolidation, when the main players are pharmacy chains. The infrastructure of the market is at the stage of formation, the extensive growth as a result of the glut of the market has been modified into an intensive one. The increase in the number of pharmacy institutions was suspended against the backdrop of actively occurring structural rearrangements: the processes of enlargement of pharmacy chains intensified. However, the level of consolidation is still relatively low, since the existing single retail outlets are represented in a significant proportion and new ones are being opened.

At the beginning of 2018, the market is represented by:

• by 33% – by megasets (more than 50 outlets);
• by 18.9% – by large networks (11-50 points);
• by 8.9% – by medium networks (6-10 points);
• by 24% – by small networks (2-5 points)
• by 15.3% – by single pharmacies and pharmacies.

Most of the outlets belong to legal entities (62%), 12.6% – municipal pharmacies, but the proportion of the latter is gradually decreasing.

The number of outlets is gradually increasing, mainly due to the opening of pharmacies in megasets with a reduction in the number of pharmacy points. Over the past three years, the number of outlets in pharmacy retail has increased by 825 units. As of the beginning of 2018, there were 16,200 pharmacies and 4,300 pharmacy points in Ukraine (79% and 21%, respectively). In total there are 20,500 outlets in the country. On average, there are about 2,000 residents per trade outlet.

Pharmacy networks are mainly regional (only for 1 region), there are 5,200 in Ukraine. Major networks include: interregional – coverage of up to 5 oblasts (161 networks) or more than 5 oblasts (25) and national coverage of more than 15 oblasts (9 ).

The leader among pharmacy chains by the number of outlets is the company Apteka-Magnolia, which already owns more than 550 outlets (brands Low price pharmacy, Blagodiya, Kopeyka). The top 5 largest networks also include: Sirius-95 – the brand “We wish health” (480 points), Gamma-55 – brand 911 (310 points), Med-Service groups (300 points) and Pharmastor – brand “Pharmacy good day “(230 points). In the III quarter of 2017, the top-100 pharmacy chains in terms of pharmacy sales among legal entities in monetary terms accounted for 71.2% of the market’s revenue.

The regional distribution of pharmacies is uneven: the largest number of pharmacies in Kiev (1,600 outlets – 7.7% of the Ukrainian market), Dnepropetrovsk, Odessa, Kharkiv and Lviv regions.

• III. Scope of activities

The assortment to buyers is necessary wide, it is necessary to buy it at 10-20 various suppliers. When you open a single pharmacy you need to understand that the discounts that are given to the networks from distributors do not get, and manufacturers with a single pharmacy will not work directly. It is better not to try to compete with such a pharmacy at a price (be a discounter), but work on expanding the range, providing special services (for example, consulting doctors).

It is also important to take into account the seasonal factor: in summer, sales are reduced by 20-25%, “high season” begins in October and lasts until April.

• IV. Where is it better to open

The success of the pharmacy depends on 50-90% of the choice of location, where the main thing is the high traffic of people and the proximity of hospitals and clinics. Most often people go to the nearest pharmacy. Therefore, the pharmacy in a hospital, a large shopping center or in the cashier’s area of a large supermarket is more successful.

The average vytorg of a pharmacy depends on the scale of the settlement: in the village – 142 thousand UAH., In the city of Hrodna – 247 thousand UAH, in the city – 507 thousand UAH. For the pharmacy, these figures are more than 2 times less (according to the data of the portal apteka.ua for 9 months of 2017).

The format of the pharmacy depends on the parameters of the flow of customers:

– in the center of a megacity the discounter is not profitable, but the concept of a premium pharmacy will work;

– in a residential area a fairly successful model can be a community store with a closed or combined form of trade.

• V. Portrait of a potential client

Depends on the location of the pharmacy. For the pharmacy at the hospital – this will be stationary patients of certain profiles (see the profiles of the departments of a particular hospital). Most likely, surgical departments will bring the main income.

For the pharmacy in the shopping center, the portrait of the potential client will coincide with the target customers of this center.

It is also necessary to motivate other groups of people to cooperate to promote sales:

– medical workers of the nearest public health institutions: doctors prescribing prescription and over-the-counter drugs;

– honey. sisters of hospital departments (we should not forget that patients often trust patients in the hospital to purchase medicines).

– employees of own pharmacy (except for the rate they should receive% of the volume of products sold by them).

To clarify the image of a potential client and determine his preferences, values, the core of the target audience, it is necessary to conduct a questionnaire of clients of a newly opened pharmacy.