2021 is a year of rare IPO announcements. First, it was a food aggregator platform, next was an online cosmetic and beauty product marketplace and now the listed healthcare space which is dominated by the pharmaceutical companies is witnessing IPO announcements from retail pharmacy chains Wellness Forever and MedPlus.
The pandemic-induced health-conscious attitude is resulting in a new idea of health that involves being the best version of oneself. This new behaviour is paving the market of nutraceuticals, herbceuticals, immunity-boosting supplements of both domestic and non-domestic brands. Moreover, an increase in affordability is driven by rising disposable incomes, and these retail pharma chains making the fast-moving health goods available on their shelves is the reason behind the growth of these retail pharma chains which otherwise was largely dominated by unorganised players.
Wellness Forever’s revenues grew up to Rs 924.02 crore for the financial year that ended 31st March 2021 from Rs 863.25 crore in 2020.
Similarly, Gangadi Madhukar Reddy’s pharma retail chain Medplus registered revenues worth Rs 3090 crore in 2021 as compared to Rs 2887 crore in 2020 thereby generating profits worth Rs 11.92 crore.
The stocks are turning out to be multibaggers ahead of the festive season.
IPO plans of the retail pharmacy chains
MedPlus Healthcare Services have filed DRHP with SEBI to raise Rs 1639 crore through the IPO. The offer is further segregated into Rs 600 crore as the fresh issue and Rs 1039 for an offer for sale (OFS) by existing promoters. With the funds raised it will strongly focus on expanding its store network. In addition to the expansion, it intends to Rs 467 crore from the IPO funds for working capital requirements of its subsidiary Optival Health Solutions, which is India’s omnichannel retail pharmacy. Under the umbrella of Optival Health, it has an array of businesses such as :
MedPlus Mart: Order medicines and drugs online.
MedPlus ab.com: Quality diagnostic testing within the comfort of home.
MedPlus Lens: Purchase frames, lenses, sunglasses, and contact lenses at affordable prices.
Ritecure: Offers wholesale medical and surgical supplies and hospital pharmacy management to hospitals.
Businesses these days are adopting an omnichannel approach for better customer retention, high customer satisfaction, and improved inventory management.
Beginning from 48 stores in Hyderabad, MedPlus Healthcare now has over 2000 stores spanning across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal, and Maharashtra.
Wellness Forever is the third-largest pharmacy chain in the country with its presence in 23 cities majorly in West India such as Mumbai, Pune, Kolhapur, Satara, Goa, and Karnataka. It houses all the domestic and international nutraceutical and global This omnichannel retail pharmacy through the IPO which is already released in the end-September plans to raise Rs 1500-1600 crore. The IPO offer will consist of a primary issue and an offer for the sale of shares by existing investors. Wellness Forever plans to expand to 1000 stores by 2023 utilising the IPO funds.
Should investors invest in retail pharmacy chains?
The importance of pharmacies has come to the forefront with the outbreak of the virus. Amidst India’s, unorganised and fragmented pharmacy retails these modern retail pharmacy chains are expected to grow steadily, have low business risk and deliver good returns. Also, with the rise in public healthcare expenditure, pharmaceuticals have become more accessible, thereby will fuel the pharmacy retail market, especially in rural areas and tier-II cities.