Case study: S Buys and SPAR align for pharmacy success
SPAR acquired pharmacy wholesaler, S Buys Group, effective 1 October 2017, seven years after opening the first Pharmacy at SPAR store in South Africa. The acquisition signalled a commitment to grow this format for SPAR through an investment in a wholesaler with a diversified customer base, stable and dependable supplier relationships and the ability to service 95% of medical schemes.
S Buys evolved from a pharmacy that was opened for the mines in Carletonville 25 years ago. The wholesaler was eventually followed by a specialist training academy. Today, S Buys consist of three lines of business:
- A licensed wholesaler, located in Carletonville, with a national reach
- The ScriptWise specialised pharmacy that delivers high-value medication for high-risk, high-cost patients (a courier pharmacy)
- An accredited academy offering specialised training in pharmaceutical services, with about 2 000 pharmacist assistants trained annually
S Buys is an existing supplier to most Pharmacies at SPAR (none of the current distribution centres are licensed to sell scheduled medicines) – a relationship that will now be expanded with a mutual commitment to increase the product range, footfall, number of stores and quality of the experience.
A Pharmacy at SPAR is independently owned and managed by a qualified, independent pharmacist. Stores typically consist of a dispensary, a clinic and a personal care, front-end section. SPAR’s biggest contribution to the success of an independent pharmacist is in retail: we offer front-shop category management systems, store design, reward/loyalty programmes, house brand products and promotions that consumers have come to expect, but which are often lacking in independent pharmacies.
The S Buys product range complements SPAR’s retail expertise to create comprehensive and specialised support offering to community pharmacists. S Buys supplies scheduled medicines, surgical and medical devices, with an expanding range of front-shop house brand, healthcare and beauty products.
The S Buys acquisition mitigated the most significant risks for SPAR associated with this store format through a deep understanding of the industry and associated regulations, combined with the ability to manage and control distribution complexities.
The pharmacy business model is subject to fixed government directed annual price increases (which for 2018 was limited to 1.26%), however, individual pharmacies can set their own service fee structure, and control front-end pricing, which somewhat mitigate the risk of shrinking margins.
SPAR provides S Buys with an anchor customer base and logistics expertise whereas the wholesaler opens access to an additional portion of the retail value chain for SPAR: S Buys will continue supplying and growing its existing footprint in the pharmaceutical sector in South Africa.
Through the S Buys acquisition, SPAR has now created a solid position in a market with resilient and growing demand where it has low current penetration and the ability to scale up quickly.
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S Buys and SPAR align
SPAR commits to growing its presence in the pharmacy value chain in South Africa.