Freedom of choice

Insurance guarantees

– What allows Grand Capital to grow above the market?

– Many steps have ensured success, particularly our receivables insurance program, which was launched five years ago. At that time, only foreign producers worked with this, realising that such a policy existed all over the world.

As a result, we have a favorable situation on the market, it became possible to attract the best teams from competitors, very quickly to form a customer base. We were able to open 13 warehouses in four years. We now work all over Russia.

– Insurance is a tool in great demand today.

– It is, but it's hard to work with an insurance company. Grand Capital remains in a working relationship with СС Hermes only because we have been contractually bound for a long time. When there was panic in the market and distributors started limiting shipments to pharmacies, this insurance helped us. Let me remind you that at that time Protek set a condition: everyone must have a bank guarantee. The market freaked out, and many clients started working with us after getting a limit from the insurance company. It helped us to grow. In addition, we were helped by marketing projects and our Project Capital portal.

– What kind of portal is that?

– Project Capital is an electronic service. Registering with it allows out-of-contract pharmacies to earn additional profits from manufacturers. Now it is used by 32,000 outlets. The terms of the portal are decent for the pharmacy: we do not have a rule that it must work with all manufacturers, it can choose. This allows them to avoid burdening pharmacies with effluent and gives them the opportunity to earn extra money. They are satisfied, and we are happy because we can develop retail, which is not covered by manufacturers' marketing contracts.

In a nutshell, let me tell you about the new Capital Plus project. In this program, we have launched a small set of products and plan to limit the work to 20 categories, each of which we will conduct training for those who have joined. This program includes only products with a high market prospect that can provide high returns for pharmacies. In several regions we have our own pharmacy chains, which we use as a testing ground for new programs. If we understand that it "took off" and gave additional income to the chain, we launch it for others.

Think tank

– It turns out that you claim to be the largest informal association, which consolidates almost half of the pharmacy market?

– It is incorrect to call FC Grand Capital an association. We are more of a think tank. We are open to everyone - big pharmacy chains, small pharmacy chains, and small retailers. Any manufacturer can put out their offers for pharmacy players, and through us, without any commission, they are passed on to the point of sale.

– And working exclusively with other associations, can people join your club?

– We give them complete freedom. We don't care if they are members of other associations or not. Anyone can connect to the promotion if they see it. But they can only see it if the manufacturer wants them to. Manufacturers keep their own lists of exemptions. All TINs that enter them will not see promotion. For example, a company sees a certain association as a customer base, and if it already has a commitment to it, it will of course hide its offer from them.

– Denis, you are a rare case of a top manager in the pharmaceutical market without a medical degree. Is that an advantage or a weakness?

– I hope that sooner or later I can eventually get a medical degree. It wouldn't hurt anyone involved in pharmacy. My primary education is in law. Additionally, I am studying for my Executive MBA at Skolkovo. Knowledge of law helps to build a structure with a certain set of rules and to respond to external factors. I am quick with documents, contracts, regulations.

– What do you expect from 2020?

– I hope its updates will not affect business. From 1 July 2020, labelling comes as standard. The state is interested in controlling the market, and this is the right policy. But such things have to be introduced carefully, so that pharmacy outlets don't close. I hope that pharmacies will still have the opportunity to work under the simplified taxation system, that the state will remember and help them. We are preparing a program that will help pharmacies adapt both to labelling and to the general taxation system, if it becomes a reality.

The Russian thing is not threatening

– Is online commerce a big risk for the offline market?

– I suppose so. But the main risk I see is not even for business, but for citizens. In Russia, self-meducation is already widespread, you can easily buy drugs that are not sold anywhere else in the world without a prescription. And when there is no pharmacist, and when a person can order anything he wants, it's a threat to his health. People will not get the effect of treatment, and in some cases even harm themselves. They still have to go to the doctor and pharmacist, and they'll go offline for a new batch of medication. Unless they start an electronic prescription system.

– Now several large companies are exactly doing this.

– I think the future is not about "online or offline pharmacy," but about the patient-physician relationship. People need to stop self-medicating.

– What trends in consumer behavior can you name?

– A trend of the last few years has been a growing loyalty to domestically produced products. After many foreign companies have localized production in Russia, people are no longer scared by the label "Made in Russia".

In RNC Pharma's rating of Russian pharmaceutical distributors by the end of 2017, FC Grand Capital ranked 8th in the direct supply market with a 2.7% share. In 2018, the company was in 5th place with a share of 4.5%. According to the results of Q1-Q3 2019 in the "comprehensive" rating of pharmaceutical distributors RNC Pharma FC Grand Capital belongs to the group of "federal distributors" with a category of turnover R1. The company takes 4th place, demonstrating the dynamics of gross turnover growth at the level of +17%.

– Is pharmacy marketing right or wrong?

– It is certainly a good thing, but not in the way we have it. It was a great idea to stimulate sales, but now there is no marketing. And there is the extortion of money by pharmacies from manufacturers and the weakness of the latter, who are forced to give this money. There is a whole group of manufacturers who give huge marketing budgets, and the product on the market is sold 15% cheaper than the manufacturer. This means that pharmacy chains are happy to take the marketing budget and resell discounted products on the wholesale market again.

– What turnover do you plan to end the current year with?

– Around 70 billion rubles.

Source: https://pharmvestnik.ru/articles/Svoboda-vybora.html