Pharmacy chain continues domination

  • 2003-02-06
  • Darius James Ross
VILNIUS

Lithuania's largest retail pharmacy, Eurovaistine, announced its bold plans for 2003, which envision strengthening its current domination over the retail and prescription drug market.

The company announced Jan. 28 that its gross sales reached 100 million litas (28.9 million euros), a 56.3 percent increase over 2001 results.

A subsidiary of the Vilnius Prekyba group, Lithuania's largest supermarket operator, Eurovais-tine (Europharmacy) presently operates 64 pharmacies in Lithuania.

In addition, the chain boasts 10 stores in Poland and eight in Latvia and plans to continue expanding aggressively in both the Baltics and Eastern Europe.

This year the company expects to create about 400 new jobs in Lithuania alone. To maximize present staff, Eurovaistine is investing 3 million litas in training programs for its 600-person present work force.

According to Jonas Jazbutis, Eurovaistine's marketing director, the company is growing primarily by building new stores in strategic locations. Just under 10 percent of its expansion involves the acquisition of independent pharmacies.

Eurovaistine's stores are modern, bright and make good use of space by offering high-margin consumer products on the shop floor. The chain was the first to offer self-service prescriptions using bar code and scanning technology.

Jazbutis estimates that the market for drugs is around 1 billion litas per year, a number that includes medicines dispensed by hospitals.

"Our first priority is to offer consumers the absolute lowest price," he said, adding that every pharmacy stock every single drug registered and approved for use in Lithuania.

There are presently 1,357 companies in Lithuania operating in the pharmaceutical sector. Over 1,000 of these are independently owned pharmacies that were privatized in the early 1990s according to Linas Mazeika, the newly appointed director of the pharmacy department under the aegis of Lithuania's Health Ministry.

About 150 belong to retail chain operators such as Eurovaistine, Korio and Camelia, while just under 50 are owned by municipal governments, though most of these are on the auction block.

Ownership of Lithuania's pharmacies is unclear as the Health Ministry has not kept accurate statistics.

Over the past two years, however, independent pharmacies have been battered as the government has consistently defaulted on compensation payments for drugs prescribed through the state health-care insurance scheme.

Over 100 court cases were filed by drug wholesalers against small pharmacies who defaulted on payments in 2002. A number of government health officials are under investigation at present, accused of accepting kickbacks from drug companies in exchange for pushing specific prescription drugs.

Saulius Jasiulevicius, owner of two small pharmacies in the small towns of Rokiskis and Zarasai and head of the provincial pharmacy association, said, "I am pessimistic now. I don't think I will survive. I am like an ant going up against and elephant. Sure they can automate the prescription process, but I can offer the human touch. If my customers are short of cash, I know them, I let them pay me later."

Jasiulevicius expects that many of his customers will travel to the largest nearby town, Utena, to fill prescriptions more cheaply.

"The chains can negotiate volume discounts that I can't, so I can't compete on price. But the people still need me for emergencies. I can't survive this way though," he said.

Eurovaistine's Jazbutis said that small pharmacy operators were so unused to competition that they overlooked basic things like offering chairs for elderly customers.

Nevertheless, he said that Euro-vaistine was preparing a franchise strategy so that pharmacists in remote locations can operate under its "umbrella," which offers both lower prices and quality service.

The pharmacy department's Mazeika said that it's too early to draw conclusions as to whether consumers will win or lose.

"The chains offer better inventory, control and prices. It's unfortunate that family-owned business will find it hard to compete."