Apotek Hjärtat – building the leading pharmacy

Apotek Hjärtat – building the leading
pharmacy offering in Sweden
Anders Nyberg
CEO Apotek Hjärtat
35 Bn SEK Swedish pharmacy market
Market split 2014
SEK bn
5
Traded goods (TG)
3
Over the counter (OTC)
Channel presence
Free pricing
Broad
Free pricing
Selective retail stores
(regulatory approval
needed)
OTC
Fixed pricing
(regulated by TLV)
Prescribed (Rx)
Pharmacies
Rx gross profit primarily
driven by volume, price is
much less important
Retail
Market
Source: Swedish Pharmacy Association (Sw. Sveriges Apoteksförening)
ICA Gruppen CMD 2015
Pricing model
TG
35
26
Sample products
2
Stable market growth and positive gross profit mix shift
Sweden pharmacy market (retail)
Sales development (SEKbn)(1)
‘00-’14
TG
10%
OTC
7%
CAGR
‘09-’14
9%
(a)
Rx
Estimated
growth outlook(2)
3%
1%
(Value)
2%
TG
Around to slightly below 5y
historical average
40-50%
OTC
Slightly below 5y
historical average
35-45%
Rx
In line with 5y historical
average (volume)
20-22%
(a)
4%
Estimated
industry retail
gross margins(2)
2%
(Volume)
Positive mix shift
Note: (a) Historical OTC sales includes both the pharmacy channel and the non-pharmacy channel.
Source: 1) Swedish eHealth Agency (Sw. eHälsomyndigheten) and Swedish Pharmacy Association (Sw. Sveriges Apoteksförening). (2) Management estimates.
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3
New pharmacy establishments are slowing down
Number of new pharmacies(1)
1.242
1.274
1.303
Main drivers
1.331
1.361
More rational market behavior
1.122
Number of pharmacies
929
a
Consolidation has provided
larger players with scale
b
Smaller players experience lower
profitability
c
Fewer attractive locations remain
APH, net openings
Others, net openings
50
14
143
106
7
25
2009
YoY %
change
5
24
2
26
15
15
2010
2011
2012
2013
2014
2015
+21%
+11%
+3%
+2%
+2%
+2%
Note: Please note that the graph is not to scale. Apotek Hjärtat net openings 2012 includes 3 pharmacies opened by Vårdapoteket prior to Apotek Hjärtats acquisition.
Source: (1) Swedish Pharmacy Association (Sw.Sveriges Apoteksförening) and Apotek Hjärtat.
ICA Gruppen CMD 2015
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Apotek Hjärtat well positioned for the future
Background
Player
Owner
Positioning in key strategic dimensions
# of retail
pharmacies/
ICA Gruppen
390
Swedish state
370
Oriola-KD
309
Swedish state/
entrepreneurs
Celesio
167
79
Food retail
cooperation
Brand
awareness(3)
E-commerce
#1
✓
✓
-
#2
✓
✓
(✓)
#3
✓
✓
-
n.a.
✓
-
✓
-
#5
#4
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5
✓
✓
Own
distribution
-
✓
Source: (1) Retail market size
from Swedish Pharmacy
Association; # of retail
pharmacies as of year end
2014. (2) Annual reports, 2014
figures except for Lloyds
(2013). (3) Blue Carrot survey.
Most respected
companies 2014:
1. Ikea
2. Apoteket
3.
4. Arla
5. Google
6. Clas Ohlsson
7. Volvo PV
8. Samsung
9.
10. Stadium
(Sources: Nordic Brand Academy / Dagens Industri)
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Sweden’s leading private pharmacy chain
• Nationwide coverage
with approx. 390
pharmacies and ecommerce
• Approx. SEK 12
billion in sales
• 3,200+ employees,
HQ in Stockholm
• Own product supply
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Our Vision
To be the pharmacy of the future with
Sweden’s leading health offering
Our Mission
Help our customers to better
health and well-being
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Strongest brand development
65%
Awareness
60%
55%
50%
45%
40%
35%
30%
2014
2015
Source: BlueCarrot, 7 weeks’ moving, median value
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Intensifying differentiation of store format
Close to care
(83 units)
Close to homes
(104 units)
E-commerce
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Shopping
(105 units)
Launched
September
2014
10
Close to stores
(98 units)
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Looking ahead
1.
2.
3.
4.
5.
6.
ICA Gruppen CMD 2015
Secure successful integration
Continued growth
Increased investments in our e-commerce
TG development – expanding into new categories
Expanding our test of health care services
Becoming the most attractive employer and
building a culture of engagement
13
New customer club solution with joint bonus
1,300 grocery stores:
390 pharmacies:
1%
bonus
3%
bonus
Monthly bonus statement (all channels)
ICA
Hjärtat
ICA Försäkring
Total bonus:
ICA Gruppen CMD 2015
2,900 points
700 points
4,100 points
7,700 points
14
Club membership numbers continue to grow
2015 (thousands)
1 900
1 850
1 606
Jan
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1 633
Feb
1 660
Mar
1 682
Apr
1 710
May
1 734
1 754
Jun
Jul
15
1 776
Aug
1 800
Sep
Oct
Nov
Opening new pharmacies 2015/2016
29
27
23
21
15
9
7
4
Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016
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Sharp rise in willingness to buy
Response: What was your impression of the store today?
70%
64%
42%
36%
Curiosity
Willingness to buy
Zero measurement 2014
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New concept
19
Source:
BlueCarrot StorePower September
and December 2014.
Base: 202 IP (Sept.) and 204 IP
(Dec.).
”Reference” refers to experience in an
”average Swedish shopping centre”.
This consists of experience from 80
different stores in two Swedish
shopping centres.
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E-commerce increasingly important channel
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21
E-commerce investments in five priority areas in 2016
Competitor analysis
Assortment Supplier ability
ICA Gruppen CMD 2015
Blue Carrot customer study Internal evaluation
Awareness
22
Platforms
Organisation
Investments in the assortment 2016
• New assortment offerings
• New products important
• Focus on basic offering – category project
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Own label development
ICA Gruppen CMD 2015
Apolosophy
Hjärtat
Hjärtat
Skin, hair and facial care
products, and cosmetics
Everyday products
Basic necessities, medtech and special care
24
ICA + Hjärtat = a stronger offering through cooperation
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Expanding our customer offering
Rx
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Health services
26
Private labels
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Hjärtat #1 in Pharmacy Barometer!
2015
Rank
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2014
Employer
%
Trend
Rank
%
1
Apotek Hjärtat
47%
2
39%
2
Apoteket AB
36%
1
42%
3
Kronans Apotek
35%
3
29%
4
ICA Cura Apoteket
18%
4
17%
5
Apoteksgruppen
17%
5
12%
6
LloydsApotek
14%
6
10%
7
Apotea
8%
7
3%
28
Building the leading pharmacy offering in Sweden
• All Cura pharmacies converted by end November
Part of ICA Gruppen –
integration according to plan
• Integration process runs according to plan, loyalty
programs, IT, logistics etc
• Synergies being realized
Developing our value
proposition
Well positioned to become
market leader
ICA Gruppen CMD 2015
• New products, private label range and services
• Growing the business by both bricks and clicks –
continued investments in our multi-channel offering
• Health concept of the future
29