At a time when most industry sectors are hit by the global financial meltdown and foresee a bleak future in the coming years, the organised pharmacy retail giants in the country are expecting a smooth sail and foresee a better growth in the coming years.

The global recession has no impact on pharmacy retail business in India. Even with the fall of the real estate business to nearly 40 per cent in the recent past has a slight impact for the players who are having big outlets, according to Shobana Kamineni, executive director, Apollo Hospitals Group who is controlling the country's first and largest pharmacy retail chain, Apollo Pharmacy.

"There is not much impact of the global recession in the pharmacy retail chain business in the country. Of course, the decrease in the real estate business will have an impact of around 5 per cent in the performance of big stores with an area of more than 400 sq ft," she said. The phenomenon will not affect the performance of Apollo Pharmacy, as the firm operates mostly on 250 to 300 sq ft area outlets which make the real estate effect ignorable in annual performance.

The Hyderabad-based Apollo Pharmacy, which currently has 740 plus outlets throughout the country, will meet its target of 1000 stores by April and will break even by the next financial year, added Kamineni.

The retail pharmacy chain business in India is recession proof and the performance will not be affected by the global meltdown as purchase of medicines is a necessity, averred Madhukar Gangadi, chief executive officer, MedPlus Health Services Pvt Ltd. The Hyderabad-based Medplus, India's second largest organised pharmacy retail major with around 600 outlets, is planning to set up another 150 shops in various states within next two months, he added.

On the other hand, the financial crisis has reduced the cash inflow from the public and private equity for the companies to invest in expansion. "The slowdown in trading of money has its impact on the organised retail industry. The companies have to rely on internal accruals or loans for expansion, which is very hard to get at this point of time and the growth plans are thus affected," said Gangadi. However, the company will be going forward with its expansion plans without any time delay.

In fact, the slow down in the expansion plans of other players in the segment is supporting the growth of major companies, as they are able to rope in enough space in preferred location at cheaper price due to the lack of competition.

Even as the major players are dismissing any serious impact of the current financial situation in the industry, some experts comment that the companies would hardly be able to register same growth rate they have been making during the last two years.

"Overall in the healthcare industry, there is a slowdown of almost 20 per cent in the last five months and the situation will be much worse in the coming two years. Many of the shops like Medicine Shoppe and Subhiksha are already in trouble due to various reasons and the drop in real estate prices is going to affect the annual performance of existing players," said an industry expert.

The sources also informed that Medplus is planning to close down its 25 outlets in Rajasthan and pointed out that this is a measure to cushion the impact of recession. Responding to the information, Gangadi said that the company is thinking to close down its Jaipur business. "It is difficult for us to manage the stores in Jaipur from our headquarters in Hyderabad. We are planning to analyse the situation for sometime and will take adequate step soon," he added.

Industry experts say that though the industry saw a consolidation spree in 2008, with the New Delhi-based Religare Wellness - a part of Religare Enterprises Ltd promoted by the former promoters of Ranbaxy - announcing the acquisition of some pharmacy retail firms, there was no significant development in the sector for the past few months. Religare has acquired Bangalore-based LifeKen Medicines, the pharmacy chain of Lifetime Healthcare Pvt. Ltd and New Delhi-based CRS Health, which was owned by SAK Industries Ltd in 2008.