Proposing the strategic directions of distribution channels in line with product and human resources of business in the new normal operating conditions of the covid pandemic

Structure of the report CHAPTER I: ACTIVITIES OF PHARMACY PHARMACEUTICAL JOINT STOCK COMPANY BEFORE COVID CHAPTER II: ACTIVITIES OF PHARMACITY PHARMACEUTICAL COMPANY AFTER COVID 2.1.. St

HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND FINANCE

ĐẠI HỌC KINH TẾ TÀI CHÍNH

DISTRIBUTION CHANNEL MANAGEMENT

CHANNELS IN LINE WITH PRODUCT AND HUMAN RESOURCES OF BUSINESS IN THE NEW NORMAL OPERATING CONDITIONS OF THE COVID PANDEMIC

Group member: BUM BUM

Tr & Thao Ngan _ 205040006 Mai Ngoc My Quy & _ 205041060 Pham Thai Ngoc Chau _ 205040487 D6 Ha Thanh Van _ 205041100

Lam Gia Han _ 205043537

TABLE OF CONTENTS

INTRODUCTION

1 Reasons for choosing the topic

2 Research scope

3 Structure of the report

CHAPTER I: ACTIVITIES OF PHARMACY PHARMACEUTICAL JOINT

STOCK COMPANY BEFORE COVID

CHAPTER II: ACTIVITIES OF PHARMACITY PHARMACEUTICAL

COMPANY AFTER COVID

2.1 Impact of COVID on the pharmaceutical market

2.1.1 Impact on the retail market

2.1.1.1 Situation

2.1.1.2 The reason

2.1.2 Impact on pharmaceutical businesses

2.1.2.1 Sales operation strategy

2.3.3 Pharmaceutical retail market forecast

CHAPTER III: DISTRIBUTION STRATEGY AFTER THE EPIDEMIC 31 3.1 Strategic planning

3.2 Distribution channel strategy (Place)

3.3 Product strategy (product)

3.4 Human resource strategy (people)

D6 Ha Thanh Van

INTRODUCTION

1 Reasons for choosing the topic

COVID-19 has become the biggest global health crisis in the past 100 years It is affecting everyone in many ways The retail industry, especially the retail of

pharmaceuticals and foodstuffs, is one of the essential service industries with a high risk

of infection due to contact with hundreds of thousands of visitors every day

Looking back at the recent outbreaks of epidemics, the case of zoning FO to shop at wholesale markets and retail stores often occurs, greatly affecting business activities At

wholesale markets such as Thu Duc, Binh Dien, and Hoc Mon, there are 12,000 - 15,000 visitors per day Therefore, once an infection occurs here, the number of related cases is

very large

Medical facilities and pharmaceutical retailers are playing a particularly important role in the long-term fight against the Covid-19 epidemic Therefore, once the medical facilities and pharmaceutical retailers are penetrated by Covid, it can create a "domino effect" that negatively affects many other industries Therefore, this "shield" also needs to receive maximum attention and protection from ministries and agencies

3 Structure of the report

In addition to the introduction and conclusion has three chapters:

e Chapter 1: Activities of Pharmacy pharmaceutical joint stock company before

covid

e Chapter 2: Activities of Pharmacy pharmaceutical joint stock company after covid

e Chapter 3: Distribution strategy after the epidemic

CHAPTER I: ACTIVITIES OF PHARMACY PHARMACEUTICAL JOINT

STOCK COMPANY BEFORE COVID

Mr Chris Black - the founder of the company, is an American pharmacist with many years of experience working in Vietnam With his passion and creativity, he founded Pharmacity and brings the best value to consumers

Owning a network of 1,000 GPP-qualified pharmacies nationwide and a team of nearly 4,600 trusted pharmacists, providing leading medical and healthcare products at the most competitive prices

1.1.1.2 Development process

Through many ups and downs, with constant efforts and determination, Pharmacity has had 100 pharmacies opened in Ho Chi Minh City and Binh Duong with several

professional staff, and dedicated service

March 18, 2022 - Pharmacity, the leading retail pharmacy chain in Vietnam, announced that it is about to open its 1,000th pharmacy in Ho Chi Minh City, marking an important milestone towards its goal of having 5,000 pharmacies nationwide China by 2025

Pharmacity is making great strides on its journey to conquer the fastest-growing pharmaceutical market in Asia today

In the future, Pharmacity will continue to expand the system throughout the country and become a chain of semi-modern pharmacies, bringing the best experience to customers

1.1.2 Vision and Mission

Vision: to build the most modern and convenient pharmacy chain, ensuring a full supply

of medicines to consumers A place where consumers can put their trust and health Mission: Pharmacity aims to help improve Vietnamese health From the way we operate the chain, to serving our customers, the strategy has consistent elements that we always appreciate: convenience; serving the people's health care needs; putting the human factor

at the center, and making a long-term commitment to the public

1.2 Revenue

As of the end of 2021, Pharmacist's equity is VND2,565 billion, compared with only VND405 billion the previous year Equity increased sharply despite the company's continued loss, partly due to the increase in charter capital from VND 528 billion to VND

927 billion and mainly due to the increase in equity surplus from VND 888 billion to VND 3,012 billion

Three years ago, Pharmacity was invested by Mekong Capital but did not disclose the

amount Then by 2020, this chain raised about VND 730 billion in Series C round Next,

at the beginning of last year, the parent company, Maroon Bells, also issued more than

VND 1,000 billion of convertible bonds to have resources for the expansion of

Pharmacity

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1.3 Competitor

In addition to Pharmacity, in the fierce competition to expand the pharmacy chain, the names Long Chau and An Khang are emerging with increasing expansion thanks to the support of businesses with strong financial potential behind Usually, these stores are present in densely populated places, locations near hospitals, and the number of consumers in these areas is high

e Long Chau pharmacy

FPT Retail has announced its plan to enter the pharmaceutical retail industry with the purchase of Long Chau pharmacy and expanding the number to 400 stores in 2022 In addition, before being acquired by FPT, Long Chau established close links with hospitals

in HCMC, allowing pharmacies to more accurately forecast regional demand for each drug

In terms of competitive advantage, Long Chau pharmacy has over 12,000 SKUs, much higher than about 1,000~2,000 SKUs of small pharmacies This allows the company to

meet the growing demand for chronic diseases (diabetes, cardiovascular, and cancer),

which grows with longevity and disposable income The wide selection helps Long Chau pharmacies generate a much higher revenue than other pharmacies

e An Khang pharmacy

Also in 2017, MWG acquired the chain of 14 An Khang drug stores However, it was not

until the fourth quarter of 2021, when the shift from traditional to modern channels

became clearer, that MWG accelerated the opening of a new chain of An Khang drugstores and switched to full ownership in November 2021 - raising ownership rate from 49% to 99%

An Khang pharmacy chain currently has more than 600 stores, covering 33 provinces and

cities across the country MWG aims to have 800 and 2,000 An Khang stores,

respectively, by the end of 2022 and 2023

In terms of competitive advantage, although An Khang's number of SKUs may not be as many as Long Chau's, according to SSI Research's assessment, MWG's financial position

is much safer (MWG's D/E ratio at the time) Q2/2022's score is 1x, while FPT's D/E as

of Q2 2022 is 2.8x), which allows the company to speed up new openings to catch up with FPT

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1.4 Marketing activities of Pharmacy Pharmaceutical Joint Stock Company

1.4.1 Customer Segmentation

- By geographic region: Pharmacity currently focuses on the domestic

pharmaceutical retail market in Vietnam Specifically, in the domestic market, Pharmacity mainly focuses on urban areas, where the population is concentrated

- According to sociological characteristics: Medicine is an essential commodity for everyone, regardless of age, and gender

- According to psychology, and behavior: Pharmaceuticals is a specific industry,

which directly affects the health and life of users Therefore, consumers tend to

choose reputable, original, branded pharmacies that are known and trusted by many people

1.4.2 Marketing- Mix

1.4.2.1.PRODUCT

With the particularity of pharmaceutical retail, Pharmacist's target customers are very wide because pharmaceuticals are an essential and indispensable item in everyone's life, regardless of age, gender, or job.,

Pharmacity operates under the motto: products with a vision, services with a heart The above orientation is demonstrated by Pharmacity in the transparent and clear

management of the pharmacy chain, from the origin of the drug to the stages of preservation according to GSP standards Pharmacity provides a complete and rich range

of pharmaceuticals from Western to Eastern medicine

At Pharmacity, drugs are purchased directly from the manufacturer and have genuine distribution without going through any intermediaries This ensures the quality and origin

of the drug, and at the same time can provide the most reasonable price to customers Pharmacity pharmacists are focused on professional training along with a dedicated attitude to customer service, which is what Pharmacity aims to do, always trying to bring the best experience to customers

1.4.2.2.PRICE

Because Pharmacity imports drugs directly from manufacturers, drug prices at drugstore chains are always stable and reasonable Besides, Pharmacity regularly has discount programs and incentives This is considered one of the strengths of Pharmacity that traditional pharmacies find it difficult to compete with

1.4.2.3.PLACE

In 2021, Pharmacity opened 200 pharmacies, increasing the number to 700 units, but still

did not meet the plan of 1,000 stores set out earlier

By March, Pharmacity reached the milestone of 1,000 stores and currently has increased

to 1,143 pharmacies meeting GPP standards (Good Pharmacy Practices) nationwide

Thus, the Pharmacy's number of stores continues to lead the market and is far ahead of its

nearest competitor, Long Chau, with only 546 stores by the end of the first quarter or 400

by the end of 2021

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In addition to providing rulers directly at the store, Pharmacity also builds its own e- commerce website (pharmacity.vn) to help customers easily order medicines With this e- commerce site, Pharmacity provides nationwide service At the same time, Pharmacity also regularly implements free shipping policies to attract customers

1.4.2.4.PROMOTION

From 2017 until now, Pharmacity has been promoting marketing activities and spreading images closer to consumers Pharmacity implements a variety of communication forms from the press, and TVC advertising to promotions, and public relations

15

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16

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COMPANY AFTER COVID

2.1 Impact of COVID on the pharmaceutical market

2.1.1 Impact on the retail market

2.1.1.1 Situation

The Covid epidemic was first detected at the end of 2019 in Wuhan, China, and quickly spread worldwide with the name "Covid pandemic" WHO has identified COVID-19 as being transmitted from person to person through respiratory droplets To prevent the spread of the disease at such a fast pace that it is difficult to cope with the epidemic, governments have proposed many countermeasures such as blockade measures, travel

restrictions, border closures, and bans declare a state of emergency, impose a curfew or

use social distancing measures to protect the health of individuals and communities However, despite the prevention efforts in various ways by countries along with the appearance of anti-Covid vaccines, the Covid epidemic not only shows no signs of decline but also appears to have more variants new by transforming the structure and spreading speed From the outbreak to December 2022, more than 655 million people

have been infected, including nearly 6 million deaths worldwide In Vietnam, the

Government has issued many strong measures to limit the spread of the disease through

each outbreak, the total number of cases is now 11,523,567 million people with 43,181

deaths

The COVID-19 epidemic has had a strong impact not only on social life but also on the

economy around the world, with an impact that can shake most industries and fields, not

to mention the market retail school However, retail channels are still asserting an

important role in making the connection between production and consumption required, contributing to attracting the attention of supply chains in production and consumption, especially What kind of goods and equipment elements in the shop scene was forced to

close

The survey results of Vietnam Report Joint Stock Company (Vietnam Report) for businesses in the retail industry showed that nearly 42% of businesses were seriously affected by the Covid-19 pandemic; 50% of enterprises rated the impact as moderately severe and more than 8% of enterprises had little or no significant impact

from accommodation and food services reached VND 21.2 trillion, down 22.4% and down 53.8%; tourism revenue reached 133 billion dong, down 4.8% and down 92.6%; other service revenue reached 26.3 trillion dong, down 22.4% and down 43%

In the first 7 months of 2021, the total retail sales of consumer goods and services

reached VND 2,791.3 trillion, up 0.7% over the same period last year (decreased by 0.5%

in the same period in 2020) , excluding the price factor, it decreased by 0.74% (in the same period in 2020 it decreased by 5.20%)

2.1.1.2 The reason

During the period of the COVID-19 epidemic in the developing phase of the outbreak, the Vietnamese government took many measures to limit the spread such as blocking some areas with many cases, restricting travel, and ordering Number 16 to implement social distancing across 4 regions of the country to protect people's health Along with the reduction in spending of the majority of employees when they have to quit their jobs due

to the outbreak, leading to reduced income, tight spending, and less shopping, it has a significant impact on the revenue of businesses in the retail industry In addition, many internal difficulties of each enterprise such as shortage of business capital, and the order

to close the border, hinder the supply chain when most of the sources of goods and raw materials for production are mostly of origin from China or the interruption of businesses importing goods from other countries

2.1.2 Impact on pharmaceutical businesses

In the first 8 months of 2021, SSI Research estimates that total pharmaceutical sales in

Vietnam have decreased by 11% compared to the same period last year, of which revenue from retail drug stores decreased by 3% over the same period and sales in hospitals down 16% compared to estimates from listed pharmaceutical companies and drug tender data from the Vietnam Drug Administration

Tight distancing measures, especially in the southern provinces, have caused disruptions

in drug supply and distribution Southern pharmaceutical companies such as IMP, DHG, and OPC had to cut production by 20-30% in July and August to comply with the government's "three places” social distancing requirements

In addition, many hospitals in the South have been converted into Covid-19 treatment centers, causing a significant drop in pharmaceutical revenue, as the hospital channel accounts for more than 60% of the industry's demand

The prolonged wave of the COVID-19 epidemic has more or less affected all businesses, employees, and social life However, a part of businesses is still “driving” through the epidemic waves with flexible, timely, and creative response strategies

Pharmacity, the leading pharmaceutical retail chain in Vietnam, has maintained its leading position throughout the epidemic period, in addition to being continuously committed to accompanying the Vietnamese government and people to overcome the epidemic period disease with many practical actions

2.1.2.1 Sales operation strategy

Faced with challenges from the speed of disease spread and tight distancing measures, Pharmacity is always looking for a flexible and timely response to maintain the

pharmaceutical supply chain operation Accordingly, this business diversified sales channels via phone, Extra Care application, website, and chat application At the same time, Pharmacity also cooperates with the militia to deliver goods to people At the same time, responding to the call of the Hanoi Department of Health, this pharmacy retail chain also increased its opening hours 24/7 at 5 major pharmacies in the capital to serve people during the peak period