This article first appeared in Corporate, The Edge Malaysia Weekly, on July 18 - 24, 2016.
MEDICO Holdings Sdn Bhd, the retail and consumer arm of rapidly growing healthcare venture Symbion International Sdn Bhd (SISB), is looking for a partner to take up a strategic 30% stake. It is in discussions with two government-linked investment companies (GLIC) and another government agency.
Medico, which has businesses in retail pharmacy, dialysis centres and clinics, is best known for introducing the mega store or big box pharmacy concept, under the name Super Pharmacy Megastore, to Malaysia in January 2015.
SISB group CEO David Mah tells The Edge that the new partner could take up as much as a 30% stake in Medico and bring in expected investment of no less than RM100 million. “The bulk of the money will be used to expand the Super Pharmacy chain,” he says.
Discussions with the potential partners commenced two months ago but some details need to be ironed out and a deal is only expected to materialise in October.
SISB, which plans to list in the next three years, is a unit of US-based Symbion International LLC, a private investment vehicle of Datuk Dr Jennifer Low. Low is a co-founder of the Quill Group of Companies.
Apart from the Super Pharmacy chain, Medico will also be setting up retail pharmacies under the Medico brand, including stores within supermarkets. The plan is to open 275 branches, 50 of which will be owned by the Medico group and be based within established supermarkets. “The remainder will be via franchise or by converting the licences of existing pharmacies,” Mah says.
Yet another development is a move into dialysis centres. Medico has taken over the management of five dialysis centres and is adding six more at a cost of RM1 million each. The six centres, scheduled to open this October, will be owned and managed by Medico. Two of the centres will offer a three-in-one concept, incorporating a dialysis centre, a pharmacy and a clinic.
The fairly new and unknown Medico Group has also started to make its mark in the hospital business. It is currently in the process of purchasing a hospital in the south, but has already taken over the management. Mah, who declined to name the hospital until the deal is completed, says it will be 70% owned by Medico and 30% by an individual. This venture is expected to be the start of the group’s expansion into the specialist hospital business as it looks into tapping the medical tourism segment.
Aged care management is another area the Medico group is going into. The plan is for the potential partner to invest in the assets to house the aged patients while the management will be by a joint-venture company. “We (Medico) have met a few potential aged care providers in Australia to set up a joint venture here to operate the facility,” Mah says.
To date, the Medico group’s investment amounts to RM20 million — half of it going to Super Pharmacy, 25% for a community clinic in Selayang, and the remaining 25% for the five dialysis centres.
On the performance of the 18-month-old Super Pharmacy in Petaling Jaya, Selangor, Mah says the store broke even in October 2015. “Growth has been fast because big box retail is a new retail concept in Malaysia.”
The store’s revenue has been expanding 10% month on month, reaching RM1.2 million a month, from RM350,000 a month when it started. “I believe Super Pharmacy should be able to reach monthly sales of RM3 million,” Mah says.
He points out that less than a fifth of its customers are currently from Petaling Jaya. Many are still not aware that Super Pharmacy is a retailer, and think that it is a warehouse.
The average spend per transaction at Super Pharmacy is RM120, supported by the sale of bulkier items such as wheelchairs and hospital beds. The retail pharmacy sells 5 to 10 wheelchairs a day and three to five hospital beds each month. Wheelchairs are priced from RM350 to RM800 each while hospital beds cost from RM2,000 to RM6,000. Super Pharmacy derives up to 30% of its revenue from prescriptions.
Super Pharmacy’s success has been attributed to its proximity to the University of Malaya Medical Centre, large 18,000 sq ft retail space, 52 parking bays and longer opening hours of 8am to 11pm. The ease of parking and longer hours result in customers spending more time there and buying more items.
However, the next Super Pharmacy will not be as big. To be opened near a hospital in the Klang Valley, it will be around 8,000 sq ft.
Moving forward, Mah says the group is excited about Medico and wants to establish it as the top- of-mind recall for consumers in healthcare, whether it is for a hospital, clinic, pharmacy or dialysis centre.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.