Selling medicines in single units and private-label toiletries allows GPF to offer high-quality products at affordable prices. © GPF
In Ecuador, the rural poor have long endured limited or nonexistent access to affordable, quality medicines. In response, they have turned to traditional healers, traveled great distances to purchase medicines they could barely afford, or denied themselves treatment. In densely populated cities, many have experienced equally bleak outcomes because urban pharmacies have long catered to middle- and high-income customers, neglecting the urban poor.
In this landscape, pharmaceutical retailer Corporación Grupo Fybeca S.A. (GPF)—owner of the successful high-end pharmacy chain Fybeca—planted the seeds of new business that would ultimately help low-income Ecuadorians. The company launched a second chain of pharmacies, SanaSana, that has enabled poor customers across the country to purchase high-quality medicines and toiletries at affordable prices.
In 2016, IFC invested $30 million in GPF to support this effort. Our financing is helping the company develop a state-of-the-art distribution center that lowers logistics costs and improves storage capacity —important factors to ensure the company can continue to deliver affordable and high-quality medications to hundreds of stores across Ecuador.
SanaSana, launched in 2000, filled a need that had been growing in Ecuador since the mid-1990s, when political and economic events left the economy bruised. By the late 1990s, the country was suffering the worst economic crisis in its history.
In response, the number of poor families grew in cities—and so did their health-care costs. Lack of universal public insurance meant that private spending on health was almost entirely out-of-pocket, with an estimated 61 percent spent on pharmaceuticals. The rural poor had limited or no access to public health facilities and experienced medicine shortages.
GPF saw a way to alleviate the economic hardship of Ecuadorians during the crisis—and beyond—while growing its pharmacy business. It focused on becoming a fair-priced, high-quality pharmacy known for excellent service. The first step was choosing the right products, so company management began by analyzing all pharmaceuticals in Fybeca’s inventory and selecting those that cost the least.
SanaSana has remained sensitive to the needs of its customers, whose unpredictable cash flows require them to make daily small purchases. One way it has proven that the concept of a low-cost pharmacy can work is by selling medicines as single units so they remain affordable. A single aspirin pill, for example, costs around $0.05. Many SanaSana customers can now complete a full course of treatment by purchasing a single pill every day. Corporate initiatives to introduce high quality generic medicines, and the ability to purchase its own inventory in bulk, have also helped lower prices for customers.
Before SanaSana entered the market, there was also a limited local supply of affordable and small unit size personal care products. The company responded by working with local manufacturers to launch the SanaSana private label in 2015. Today, stores stock more than 80 SanaSana private-label products such as shampoos, deodorants, oral hygiene products, and razors. Prices are between 5 percent and 15 percent cheaper than branded equivalents.
In addition to serving its customers, GPF is devoted to developing a workforce that is responsive to national needs. It is especially committed to promoting gender equality: 65 percent of its staff of 4,500 people are women.
These sorts of forward-thinking initiatives and innovations—alongside decades of experience managing pharmacies, a robust distribution infrastructure, and a strong brand name—have helped GPF serve low-income Ecuadorians while improving their financial results. There are currently more than 500 SanaSana pharmacies across Ecuador. In 2016, the chain contributed to over 50 percent of GPF’s revenues.
Today, many of the more than 6,200 pharmacies in Ecuador compete fiercely to serve low-income families. To stay ahead of the competition, GPF is evolving from being a provider of health-care products to one that offers health-care solutions. In 2017, the company plans to pilot partnerships with physicians to add walk-in clinics and labs to its stores.
Learn more about GPF in the report Achieving Sustainable Growth by Serving Low-Income Customers
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Published in February 2017