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Contents

Introduction............................................................................................................ 2
Chpter I: Compny presenttion.........................................................................3
1.1.

Business Profile.......................................................................................... 3

1.1.1.

Legl orgniztion:.............................................................................. 3

1.1.2.

Compny ledership:...........................................................................3

1.1.3.

Compnys purpose............................................................................. 3

1.1.4.

Short history........................................................................................ 3

1.1.5.

Products Distribution..........................................................................4

1.2.

Business development over the pst 4 yers............................................5

Chpter II: Strtegic position nlysis..................................................................7


2.1. Strtegic position to customers....................................................................7
2.1.1. Chrcteristics of the sles mrket........................................................7
2.1.2 nlyzing supply nd demnd................................................................8
2.2. Strtegic positions to the competitors.......................................................13
2.2.1. Competition nd the competitive environment....................................13
2.2.2. Competitive dvntge........................................................................14
2.2.3. Business considertions.......................................................................14
2.3. Strtegic position to mrket.......................................................................15
Chpter 3: Suggestions to improve the strtegic position....................................16
3.1. Implementing stronger mrketing strtegy............................................16
3.2. Incresing in prices for the B2B segment...................................................17
3.3. Diversifiction of phrmceuticl products in the HelpNet phrmcies.....18
3.4. Developing the sles in the foreign mrket...............................................18
3.5. Prtnership with privte clinics - Medlife...................................................19
3.6. Listing to the stock exchnge....................................................................19
Conclusions.......................................................................................................... 21
Bibliogrphy......................................................................................................... 22

Introduction

The four fundmentl fctors of production re lnd, lbor, cpitl nd


entrepreneurship. n orgniztion cts s ctlyst tht mkes ll these elements
work together; but without ledership, ll other business resources lie dormnt. Thus
svvy businesses re in tune with the needs nd issues of their subordintes,
economic nd politicl environment nd keep up to dte on new developments in
business theory nd methodology to mximize their effectiveness.
In Michel Porter view, competition is the determining fctor in the success or
filure of compnies. It determines the ppropriteness of those ctivities of
compny tht cn contribute to its performnce, such s innovtion, unify business
culture or judicious implementtion. For n orgniztion, competition is mobilizing
fctor tht will determines business to dpt to requirements nd in the sme time
to progress. Being n undenible fctor, competition should be theyll known,
understood nd especilly kept in the limits of fir business prctices.
Business strtegy nlysis begins with description of the strtegic gols nd
business strtegy of the firm. Its implementtion is then nlyzed in terms of the
firm's functionl nd opertionl cpbilities nd the resulting finncil nd
competitive performnce. lso, strtegic evlution or SWOT nlysis encompsses
the internl nd externl fctors tht ffect the compny's business strtegy. The
business strtegy is compred ginst the industry's key success fctors nd
competitive resource requirements nd the firm's internl cpbilities nd resources.
Criticl issues nd recommendtions seek to identify the criticl issues tht the
compny needs to ddress. The nlysis concludes with recommendtions tht
ddress the criticl issues nd result in chnges of product-mrket strtegy or
functionl implementtion.
firm's strtegic gols drive business strtegy nd ddress the key success
fctors of the industry. Strtegic gols often include the vision or mission sttement
for the business. They should lso set the direction nd stndrd for finncil nd
mrket results ginst which ctul performnce cn be mesured. The two most
common strtegic gols re:
)
Competitive nd mrket gols tht define mrket shre or mrket growth
nd penetrtion for the firm's products or services;
b)
Finncil performnce in terms of key rtios, like return on investment nd
sles, nd growth in revenues nd/or profitbility.

Chpter I: Compny presenttion


1.1.

Business Profile
2

Compny nme: Frmexim S..


ddress: Str. Pictor Rosenthl nr.14, etj 2, pt.3, Sector 1, Bucuresti
Telephone: +40-21.308.26.00
Fx:
+40-21.308.25.24
1.1.1.

Legl orgniztion:

Frmexim S.. is orgnized s limited libility compny, full privtely held,


biding under Romnin Lw nd other specific regultions imposed by the Stte.
The compny is registered t the Register of Commerce under the number
J40/2033/91, with the fiscl code of RO335278.
1.1.2.

Compny ledership:

Frmexim S.. is mnged by Mr. Ovidiu Buluc.


Compny mngement is ssured by the Ordinry Shreholders Meeting, which
cts under the Lw (31/1990 rt. 197) regrding business ctivities.
1.1.3.

Compnys purpose

FRMEXIM is the first import nd distribution compny of phrmceuticl


products, founded in 1990, in Buchrest.
FRMEXIM is member of three compny group, covering the following
res:
FRMEXIM S.. import nd distribution of phrmceuticl products;
HELP NET FRM S.. own chin of over 147 drugstores, in Buchrest
nd ll over the country;
GREEN NET S.. import nd distribution of cosmetic products nd
nutritionl supliments
Frmexim ensures the delivery of phrmceuticl products on ntionl level,
to number of over 3.500 clients, drug stores nd over 400 hospitls. They wnt to
offer mximum profits to their customers, nd tht is the reson they provide services
tht increse efficiency, speciliztion courses, performnt solutions nd finncil
pcks informtic system nd on-line service.
Services tht mke the difference:
Logisticl: obtining import licences for different substnces nd devices,
storge within spces complying with GDP norms, trnsport;
Mrketing nd communiction: progrmmes for the Sles Force, support for
new products or OTC lunchings, fidelity cmpigns for the drugstores nd
ptients, promotions, specil offers, dontions nd sponsorships,
phrmceuticl conferences nd EFC nd SF points, utomtic sles using
ltest technology.
1.1.4.

Short history

The compny exists since 1990, in 1998 it becomes group of entreprises


represented by the prent compny Frmexim nd here theyre born HelpNet
Phrmcies tht count nowdys 185 units nd n online shop, GreenNet which
sells cosmetic nd beuty products nd perfums.
1990 The yer of FRMEXIM estblishment, the first medicines' import nd
distribution compny on the Romnin mrket;
1995 - 1999 the opening of the 11 locl wrehouses, in the min cities of the
country, in order to ensure ntionl coverge
3

1998 We introduced CROS progrm, client - server informtion system,


completely customized, both for internl nd externl use, utilizing the Orcle
technology;
2003 The compny receives ISO 9001:2000 certifiction, for implementing
the Qulity Mngement System in ccordnce with the TV CERT procedures;
2004 Frmexim moves its hedqurters into new, big nd modern building,
in Piper industril zone;
2007 Frmexim registers turnover of 150 million Euro nd in November it
reches second position in the top of phrmceuticl distributors in Romni.
2008 - Frmexim turnover t the end of the yer is 160 million Euro, while the
totl mount for the three compnies in the group is over 250 million Euro.
2009 - In November, Frmexim received new certificte in ccordnce with
interntionl stndrd ISO 9001:2008, for Qulity Mngement System, implemented
since 2003;
2010 - Frmexim celebrted 20 yers of performnce nd the compny's
turnover reched 200 million Euro; t the end of 2010 ws inugurted the
hedqurter in Isi where the compny build modern building of lmost 1,500 sqm
of office nd wrehouse spce, vlued t over 1 milion euros.
2012 - Frmexim reches 3rd position in the top of Romnin medicine
distributors nd strts the construction of new logistic center, next to Buchrest.
2013 - The new Logistic Center is inugurted ner Buchrest, in Blotesti;
1.1.5.

Products Distribution

Hving subsidiries in the countrys min cities, Frmexim hs 5.500 import


nd indigenous products in its portofolio hving lmost round 16.000 mp totl
storge spce.
FRMEXIM works with over 250 suppliers, of which, proximtely 80% re
externl nd the rest re locl.
They hve strtegicl prtners nd with their help they re ble to offer
competitive services to their clients. This thing gives them the experience nd the
globl resources which enssure the continuous consolidtion of the compny.
t the moment, FRMEXIM is offering to its clients portfolio of over 5.500
products, from import or locl.
They ensure ntionl coverge through our 13 subsidiries in ll the big cities
of the country.
Frmexim hs subsidiries in the following cities::

Buchrest;
Gli;
Constn
Cluj;
4

1.2.

Orde;
Criov;
Timisor;
Ploiesti;
Ii;
Sibiu;
Brov;
Bcu;

Business development over the pst 4 yers

Between 2010 nd 2013 the compny ws hving totl turnover of 4,221,165,160


Lei or 971,993,313 Euros. The verge turnover in this period ws 1,055,291,290 Lei or
242.998.328 Euros per yer. During those four yers the compnys mrket shre hs
fluctuted between the low in 2011 of 8% nd the highest level in the following yer of 11%.

Evolution of turnovers in the mrket over the ps 3 yers (mill. eur)


2,500,000,000

2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

0
2011

2012

2013

Mediplus

Farmexim

Ropharma

Labormed Pharma Trading

Romastru Trading

Kruger Pharm Distribution

Pharmafarm

ADM. Farm

A&G Med Trading

Polisano

Pharma Romania

The evolution of the mrket shre between 2011 nd 2013

Frmexim

Chpter II: Strtegic position nlysis


2.1. Strtegic position to customers

2.1.1. Chrcteristics of the sles mrket

Chrcteristics of the sles mrket will be nlyzed by the following


prmeters:
)
Mrket cpcity;
b)
Mrket shre;
c)
Mrket dynmics;
d)
Mrket re.
a. Mrket cpcity

The effective mrket cpcity on which Frmexim ctivtes ws


11.710.000.000 Lei in 2013.The potentil mrket cpcity is estimted by Frmexims
nlysts to be round 140 million Lei, which is bout 15% more over the effective
mrket cpcity. This level lso indictes us the level of sturtion of the mrket,
which is bout 85%. they should mention tht the effective nd potentil cpcity
where computed for B2B segment.
Concerning the evolution of romnin phrmceuticl mrket, it registered in
2013, for the first time, decresing of 1.7%, s follows:
Yer
Totl mrket cpcity (bil lei)
nnul evolution (%)
2011
7,2
17,30%
2012
7,76
6,60%
2013
7,68
-1,70%
On the mrket of wholesle distribution of drugs ctivte lrge number of
over 30 distributors.
Suppliers
Turnover 2013 (eur)
Net Profit 2013 (eur)
MEDIPLUS EXIM S.R.L.
2,330
37
FRMEXPERT D.C.I. S..
1,527
54
POLISNO S.R.L.
1,044
38
FILDS TRDING S.R.L.
925
37
EUROPHRM HOLDING S..
921
8
FRMEXIM S..
842
19
.D.M. FRM S.R.L.
736
13
CTVIS S.R.L.
414
(8)
ROPHRM S..
352
11
PHRMFRM S..
330
(13)
others
1,719
(32)
Totl
11,142
163
b. Mrket shre

The mrket shre held by Frmexim in 2013 ws 11%. The elsticity of this
mrket shre (computed over the pst 3 yers) is less thn 1. Frmexims mrket
shre is bout the third prt of the mrket shre computed for Mediplus in 2013.
The overll mrket growth for lst three yers ws 3% for Frmexim, the
nnul growth rte ws 1,5%.
c. Mrket dynmics

The fctors which hve ffected the compny in the long term hve vried in
time, initilly when the mrket ws much smller the principle fctors which ffected
the mrket theyre intrinsic to the compny (qulity, distribution, cost, post-sle
7

services) but s the mrket mtured it ws influenced by extrinsic fctors like:


purchsing potheyr, size nd structure of consumption.
In the short term mrket dynmics is hevily influenced by the
sesonlity of demnd, which grows hevily in the summer time nd s winter
pproches it flls. they cn observe this issues on the chrt s they re presented
on the following:
d. Mrket re

This concept refers to the distribution of demnd nd supply in the


mrketplce. s it cn be seen in the chrt below, the most prt of the sles re
mde in Buchrest 29.76%, follotheyd by Ilfov with 7.93%, Prhov with 3.69% nd
Constnt 3.03%. The hevy concentrtion is explined by the fct tht most prt of
the multintionls which re present in Romni hs the hedqurters in the cpitl
or ner it.

Sles

Buharest

Ilfov

Prahova

Constana

Others

2.1.2 nlyzing supply nd demnd

The nlysis of supply nd demnd will be mde by the following prmeters:


)
Mrketplce segmenttion
b)
Demnd nlysis
c)
Supply nlysis
)
Mrketplce segmenttion
Concerning the demnd, the distribution of drugs is chrcterized by 3 min
criteri of clients:
phrmcies (retil sles);
hospitls
sles to other distributors.
sles directly to ptients / cosumers.
The segmenttion of the mrketplce will be mde by the type of customer
tht compny hs, Business to Business segment (B2B), in the cse of corporte
customers, nd Business to Consumer (B2C), in cse they refer to ptients /
consumers.

This segmenttion is required becuse, lthough the need of the consumer is


the sme, the type of buyer nd the quntity used to stisfy it is different.
On the first hnd, if they refer to B2B segment, the customers re public or
privte hospitls, individul phrmcies or phrmcy chins, other distributors of
medecines like Phrmexim.
On the other hnd, in the cse of B2C segment it is minly ddressed to
individul ptients or customers, which re minly formed by fmilies of 3 to 5
person, with ll types of revenue.
lso, in B2B segment the min competitors, Mediplus, Reld, Polisno,
Frmexpert, DM Frm, use similr processes, but in the B2C the customers my
choose wide degree of products to stisfy their needs, like beuty products,
perfumes, but lso medicines to continue their tretment.
b)
Demnd nlysis
1. On B2B segment
v Demnds chrcteristics
v Evolution of demnd
Demnds chrcteristics
i. The type of product nd the type of consumption
The goods delivered on B2B mrket re fst moving consumer goods even
they re cquired by lrge entities
.
ii. cquisition mode
The decision to buy this type of products is tken by the compnies bsed
minly on the cost nd experience with the firm in question.
Evolution of demnd
they recommend tht the nlysis of evolution of demnd be mde bsed on
its perspectives in time, on short nd long term.
i. Determining fctors of demnd on the long term
The principl fctors of evolution re clssified s following:

Quntittive fctors;

Behviorl fctors;

Mercntile fctors.
Quntittive fctors the elsticity of demnd s comprison to the price
nlyzing the price nd its reltionship with demnd they cn conclude
tht demnd is inelstic, which mens tht ny rise or fll in the price will not
influence in the sme degree the demnd. they cn observe this in reltion with the
competitors, which lthough they hve higher prices thn Frmexim, their mrket
shre is lmost double.
Behviorl fctors in the B2B mrket the customers preferences mintin
constnt.
Mercntile fctors very importnt mercntile fctor in the B2B segment is
the experience of the customer which usully does not chnge its supplier becuse
medecines re non-discretionry products.
ii. Determining fctors of demnd in the short term
The principl fctors of evolution re clssified s following:

Consumption sesonlity;

Economic sitution.

Consumption sesonlity bsed on mrket evolution in the yer 2013,


they cn observe tht medicines consumption increse in the cold months, becuse
there is high risk for flu nd others diseses ssocited to cold sesons nd
decrese consistently in the wrm months, s they cn see in the chrt below.
Economic sitution it plys n importnt role in the evolution on the
mrketplce on the B2B segment, given the fct tht it is ddressed minly to
phrmcies nd hospitls which re very susceptible to the vrition of GDP.
2.
On B2C segment
v Demnds chrcteristics;
v Evolution of demnd.
Demnds chrcteristics s they seen in B2B segment, Frmexims sells
fst moving consumer good. The cquisition mode is different in the B2C segment;
in this cse the decision is tken primrily by the customers fmily in ccordnce
with their own priorities nd preferences.
Evolution of demnd
i. Determining fctors of demnd on the long term
The principl fctors of evolution re clssified s following:

Quntittive fctors;

Behviorl fctors;

Mercntile fctors.
Quntittive fctors the elsticity of demnd s comprison to the price is
t the sme level s in the B2B segment. they cn mention tht in the B2C is very
good prospect to increse the number of customers which cn be certinly trnslted
into n incresing on demnd for Frmexims products.
Behviorl fctors very importnt fctor is the preferences of consumers,
which re very hrd to define, becuse this mrket is composed by lot of
substitution products, like herbl or homeopthic medecines.
Mercntile fctors s they sw into B2B segment, the experience of the
customers is very importnt in the decision mking process of the cquisition
becuse of the nture of the compnys products. n importnt difference in this re
is the importnce of mrketing policy hs on demnd.
ii. Determining fctors of demnd in the short term
Similrly with B2B segment, the demnd sesonlity nd economic
re the most importnt fctors to be tken into considertion, however for
segment the most importnt mcroeconomic indictor is not GDP
employment rte.
c)
Supply nlysis for the B2B nd B2C
Given the fct tht compny offers round the sme products
segments they will hve only one pproch in supply nlysis.

sitution
the B2C
but the
for both

i. Determining fctors of supply on the long term


Product relted fctors product vilbility.
The compny mnges through its ntionl wrehouses from Cluj nd
Buchrest, nd through its 15 regionl wrehouses, to chieve complete cover of the
min commercil res.
Input relted fctors
Services tht mke the difference:

10

Logisticl: obtining import licences for different substnces nd devices,


storge within spces complying with GDP norms, trnsport;
Mrketing nd communiction: progrmmes for the Sles Force, support for
new products or OTC lunchings, fidelity cmpigns for the drugstores nd
ptients, promotions, specil offers, dontions nd sponsorships,
phrmceuticl conferences nd EFC nd SF points, utomtic sles using
ltest technology.

FRMEXIM works with over 250 suppliers, of which, proximtely 80% re


externl nd the rest re locl. They hve strtegicl prtners nd with their help
FRMEXIM is ble to offer competitive services to their clients.
The vilbility of humn resources the compny requires high level trining
for its workers, in fct over 80% of its work force hs college studies.
The vilbility of finncil resources the compny hs ssured its finncil
needs from two min sources, profits generted by its sles nd shreholders
contributions.
Business ttrctiveness relted fctors
Industry ttrctiveness for determining this mtter they will compute the
following economic finncil indictors:

Net mrgin;

Return on ssets (RO);

Return on equity (ROE).


Indictor

2010

2011

2012

2013

Net mrgin

7.54%

6.21%

5%

8.22%

Indictor

2010

Return on ssets

9.77%

Indictor

2010

Return on equity

13.22%

2011

2012

8.25% 6.66%
2011
10.47%

2012
8.45%

2013
10.63%
2013
14.44%

Brriers to entry nd exit


In the mrketplce they mostly see brriers to entries; brriers to exit
pper to be present only in those compnies which re engged in production.
Brriers to entries re mostly the experience of the customers, the reltionships
which re creted with the customer, the loylty to the brnd. they cn observe these
in the sles of the firms, which lthough re present over thirty firms in the
mrketplce, the first two compnies which enter in this mrketplce (Polisno nd
Mediplus) re those tht own over 35% of it.
There is moderte thret of new entrnts into the industry s the brriers to
entry re not high enough to discourge new competitors to enter the mrket.
Brriers to exit only pper in the cse of compnies which hve developed
production fcilities.
11

ii. Determining fctors of supply in the short term


The level of brek-even point
The brek-even point for this industry is set t very high level, over
90%, which indictes to us tht the sles must remin very elevted in order to the
compny remins profitble.
The level of cpcity usge
The level of cpcity usge is over 90% which reflects the mngement
prudent policy nd lso required by the level of brek-even point.
Identified opportunities nd threts in the mrketplce
Strengths
Opportunitie
s

1) Sles growth in B2C


Developing new mrketing
segment
policy for this segment;

The experience of the


consumer;

Growth in the number of


customers;

Decresing of unemployment
rte in the long term.
2)
Sles growth in B2B GDP growth of Romni;
segment

The
development
of
complementry products;
Price increses;

Fcilitting
commercil
conditions.
3)

Thret
s

Profit growth

Price increses in the B2B segment;


Shre mrket increse in the B2C
segment;
Implementtion
of
new
technologies.

weknesses
1. Incresing
competition

in Entering into new mrket


segment;
The development of substitution
products.

2)
Decresing in New competitors
mrket shre
Decresing in sles;
Disstisfction of the customers.
3) Incresing in cost;

Implementing of new ggressive


mrketing policy;
Tx increses;
Increses in humn resources
costs.

2.2. Strtegic positions to the competitors


12

2.2.1. Competition nd the competitive environment

The competitive environment is s strong s the level of intensity between


competitors is. The competitive intensity within industry is determined by the following
fctors:

Degree of tomiztion of n industry;

Mrket growth;

Exit brriers within the industry;

Level of distinction bettheyen products nd services;

Level of fix costs.


The nlysis of the intensity of competition will be mde distinctly on the two
strtegic segments of Frmexims business, B2B nd B2C.
Degree of tomiztion in the B2B segment
In the B2B segment the degree of tomiztion is high becuse 75% of the
mrket is held by 10 compnies. The leder of the mrket is Mediplus, with mrket
shre in 2013 of 61.7% then SC Frmexpert DCI S nd SC Filds Trding SRL,
fiecre cu cte o cot de pi de (...)%. nd the mrket chllenger is Frmexim with
mrket shre of 32.65% nd the rest of the mrket is divided bettheyen 20
compnies with cumulted mrket shre of 20%.
Mrket growth for the B2B segment
Frmexims nlysts estimte tht in the following five yers the mrket
will grow t n verge nnul rte of 2 3%. they lso noticed this spect in the
nlysis of the mrketplce, where they concluded tht the level of sturtion of the
mrket is t 85%, leving little room for future growth.
Exit brriers in the industry re mostly relted to equipment speciliztion.
The level of distinction of the products/services in the B2B segment
The compnys products in this segment re similr to the products of
Mediplus, both compnies import the medecines from foreign suppliers the min
differences regrding Frmexims nd Mediplus products re relted to the supplier
they use nd the rnge of drrugs offered by it.
The level of fixed costs is not high, nd is minly composed of the costs of
bottling nd drilling equipment.
Degree of tomiztion in the B2C segment
In contrst to the B2B segment, competition in B2C is much tomized, it being
wedge not only by the phrmcies like HelpNet but lso by the herbl nd
homepthic phrmcies nd lso, concerning Green Net, there re lot of similr
online shops tht sell beuty products, like Yves Rocher, Bio Cosmetics, Orgnic.ro.
Mrket growth for B2C segment
In opposition with the B2B segment is the rte of growth for the B2C,
which is estimted to grow t n verge nnul rte of 20% in the following five
yers.
Exit brriers in the B2C segment re the sme s in the B2B segment.
Distinction degree of products nd services provided to the B2C
segment
The degree of differentition of the products in the B2B segment is very high
becuse the competition is being wedged between the compnies with similr
products (Frmexim, Mediplus, Polisno, Rophrm), but lso between compnies
with substitution products.
13

The level of fixed costs in B2C is similr to the level of fixed costs in B2B.
2.2.2. Competitive dvntge

The competitive dvntge cn be defined s being the sum of ll intrinsic


qulities of compny through which it becomes competitive in the medium nd long
term. Competitive dvntge cn refer to, either relizing product with lotheyr
cost or differentiting product through specific qulities.
i.
The competitive dvntge of Frmexim for the B2B
segment
The competitive dvntge of Frmexim for the B2B segment is composed of
cost nd differentition elements. Both ctegories will be seprtely nlyzed.
The cost dvntge of Frmexim is given by the level of cpcity usge which
stnds up t 90% nd economies of scle. lso the compny benefits from the
dvntge of being the first to enter in this industry nd from the experience effect.
The element of differentition is found in the dvntge of being on the first
compnies which ccessed this industry.
ii.
The competitive dvntge of Frmexim in the B2C segment
The competitive dvntges of Frmexim s comprison to Sensiblu, for
exmple re similr to the B2B segment; the differences pper only to the other
competitors in this segment.
s compred to other phrmcies, Frmexim, through Helpnet, holds
differentition dvntge becuse of the wide rnge of drugs t n ttrctive price.
s comprison to the producers of herbl or homepthic medicines, the compny
holds qulity dvntge becuse not ll the herbl nd homepthic medicines cn
cure some specific diseses.
2.2.3. Business considertions

We cn observe tht the environment in which the Frmexim functions is


highly competitive nd eclectic becuse on the first hnd they hve the B2B
segment, where competition is strong s result of low differentition between
products nd on the other hnd they hve the B2C segment, which consists in
competition minly driven by highly differentited products.
2.3. Strtegic position to mrket

From our previous nlysis they hve observed certin strong points nd wek
points of Frmexim, which they will present forwrds. We cn remrk tht the
compny is in chllenger position in the B2B segment nd it holds good prt of
the mrket. The cler leder is Mediplus, with mrket shre over 30%. Most sles
were mde in Buchrest, pproximtely 50%, nd the rest is divided by the
provinces.
The compny lso sells for the B2C segment but momentrily it genertes
only 10% of the overll sles. Nevertheless this is the segment which is expected to
provide most of the future growth. lthough, this segment hs been very little
exploited by Frmexim, but it hs its big competitors: Cten, Don, Sensiblu,
Belldon, Tei, Punkt nd other individul phrmcies which function in the retil
sles mrket of drugs.
14

Notwithstnding tht these segments re populted by powerful compnies,


Frmexim mnges to differentite itself through its own intrinsic qulities. Thus, in
comprison to its min competitors, Frmexim distinguish itself by its qulittive
products it purchses from its suppliers. Frmexim lso hs lower prices thn
Mediplus or Frmexpert.
In opposition to its competitors in the B2C segment, Frmexim differentites
itself through HelpNet by the fct tht it sells lot of types of medecines, lso the
cost of purchsing them is much lower thn in other Phrmcies like Sensiblu,
Cten, but higher thn the price offered by individul phrmcies tht only hve one
unit in villges or in little towns.

Chpter 3: Suggestions to improve the strtegic position

From the nlysis mde in the previous chpters they re ble to propose
series of mesures in order to improve the strtegic position of Frmexim. With ech
suggestion, they propose to quntify the effort needed to implement the mesures
nd chieve the desire effect. lso, they will compute the efficiency of ech inititive
clculted s the rtio between expenses required to implement the mesure nd the
benefit expected to be chieved.

3.1. Implementing stronger mrketing strtegy


We consider tht this inititive could hve mjor impct on incresing the
volume of sles by ttrcting new customers.
Frmexim developed its business in order to ttrct customers on both sectors
of business, B2C nd B2B.
The trget of this mesure will be the B2C segment, which they hve lredy
shown in the second chpter s the segment with the gretest potentil to grow.

15

On the B2C segment, the min source of revenues is represented by the


HelpNet phrmceuticl chin. HelpNet hs developed reltively strong dvertising
cmpign, by opening mny working points, public dvertising, mrketing directly in
contct with customers (flyers, fidelity crds). However, HelpNet should improve its
mrketing strtegy.
The compny is in competition with strong representtives in the
phrmceuticl industry, like Filds Trding with Cten phrmcies, which hs
developed n gressive mrketing cmpign, Europhrm, from GlxoSmithKline
Group, which lso hve better trnsprency on the externl mrket, nd its the
most significnt competitor.
Frmexim hd lso begn to expnd on the mrket of fine perfumes nd mke
up products distribution, with the on-line shops Beutik Hute Prfumerie nd
cosmeticeonline.ro. With regrd to this business line, Frmexim should strongly
develop the mrketing on B2C segment, firstly by opening showroom for the
products tht cn be ordered on-line. Due to the fct tht re comercilized perfumes
nd mke-up, people my hve the tendency to try the products first, nd then to
order, nd by opening shop, nd thus, by gining customers trust.
Implementing strong mrketing cmpign is importnt becuse Frmexims
competitors lredy hve strong dvertising cmpigns. Frmexim mrketing policy
should be composed of TV commercils on business chnnels, dvertising spots,
sponsorships nd representtion on different events, coupons for trgeted
customers, nd bnners cross the city. lso they should mention tht mrketing
cmpign is necessry to be sustined for severl yers.
The budget for implementing the mrketing strtegy is estimted t 24,5
million s it is presented in the following tble:

Yer

201
5

201
6

Promoting method

Plnned
expenses

Plnned
revenues

Efficiency

TV commercils

4,000,000

5,000,000

1.25

dvertising spots

2,000,000

3,100,000

1.55

Showroom for mke-up nd


perfume products

9,000,000

10,000,000

1.11

Coupons

300,000

450,000

1.50

TV commercils

1,500,000

1,800,000

1.20

dvertising spots

3,000,000

4,000,000

1.33

Bnners

300,000

400,000

1.33

Sponsorships

1,000,000

1,250,000

1.25

dvertising Spots

2,000,000

3,000,000

1.50

16

2017

Coupons

200,000

250,000

1.25

Sponsorships

900,000

1,000,000

1.11

Bnners

300,000

420,000

1.40

Grnd Totl:

24,500,000

30,670,000

1.25

3.2. Incresing in prices for the B2B segment

This inititive hs the role to increse the profitbility of the compny nd lso
to consolidte the vlue of overll sles. This mesure is fundmentl shift in the
strtegy of Frmexim which in the pst hs hd policy of hving lower prices thn
its min competitors, Frmexpert nd Europhrm. Hving lower prices could be
consider mistke becuse neither of them does not hve cost dvntge. Even if
the demnd is elstic on this mrket, n increse of prices will be benefic for
Frmexpert.
In the B2B segment lthough compnys prices were third lower thn the
competitors, its mrket shre hs fllen by 2%. Thus by implementing this new price
policy which it will only be considered for the B2B, within limit of 15%, the compny
will hve the chnce to increse its profitbility nd sles. By implementing this
inititive they forecst tht the sles will grow with 10% nd the net mrgin will rech
8.7%.

3.3. Diversifiction of phrmceuticl products in the HelpNet phrmcies

Through to this mesure they look to increse the type of products sold from
HelpNet portfolio. The benefit of this mesure will reside in the fct tht lrger offer
of dispensers with heterogenic qulities will increse the interest of potentil
customers nd indirectly the volume of sles nd turnover.
The HelpNet phrmcies re designed in wy tht on the shelves re not
exposed mny products. chnge in the structure of the spce in ech phrmcy
will chnge the disply of the products, mking ech medicine more esier to be
seen.
Lets tke the exmple of Cten phrmcies. Ech phrmcy hs lot of
spce, nd shelves on ll wlls. lso, the products re presented on the shelves,
creting the impression of diversity nd ttrcting customers.
Frmexim should chnge the structure of the HelpNet phrmcies, in order to
be ble to disply more products. This will increse the number of customers nd in
time the sles.
This chnge lso needs investments to be mde. The proposed investment
will be estimted t 1,700.000 EUR, tking into ccount tht HelpNet hs 170 open
phrmcies nd there should be bought proximtely nother 4 shelves, ech vlue
of 2,500 EUR.

17

. forecst on the mounts necessry for next 3 yers is presented in the


following tble:
Yer

Plnned expenses

2015

1,000,000

2016

500,000

2017

200,000

Totl:

1,700,000

Plnned revenues

Efficiency

1,500,000

1.5

700,000

1.4

400,000

2,600,000

1.6

3.4. Developing the sles in the foreign mrket


Trough this inititive Frmexim will be ble to offer its services in cities outside
Romni. This mesure is required so tht the compny wouldnt be cptured in just
one mrket. lso this inititive is recommended due to the fct tht in this wy
Frmexim will ttrct lso clients from externl mrket.
The dvntge on the phrmceuticl mrket is tht the mrket is not lwys
mtured, since beside the clients legl persons, hospitls lso cquire medicines
from the distributors, nd they need permnent reserves of medicines.. The trgeted
mrket will be the west Europe, beginning with Belgrde (cpitl of Serbi) nd
Budpest (cpitl of Hungry). lso Frmexim should open wrehouse in this
re, in order to ese the distribution in other res.
The budget needed to fulfill this inititive is substntil nd it my require
bnk lon in mount of 10 million, nd nother 6 million from own sources. The
investment will be directed in building wrehouse in Hungry nd developing
distribution network in the res. The benefits expected in the next 3 yers from this
investment re presented in the following tble:
Yer

Plnned expenses

Plnned revenues Efficiency

2015

13,000,000

10,300,000

0.8

2016

2,000,000

4,000,000

2017

1,000,000

3,000,000

Grnd
totl:

16,000,000

17,300,000

1.08

3.5. Prtnership with privte clinics - Medlife

18

prtnership with privte clinic would be benefic for Frmexim, since it will
open new opportunities.
Medlife hs creted lso reputtion into the medicl field, by offering
professionl services nd by extending their ctivity from Buchrest (where they
hve lredy 6 clinics) to Isi, Constnt, Brsov, Glti, Isi, Timisor nd rd,
covering in this wy the key res of the country.
Frmexim lredy distributes medicines to public hospitls. n greement with
Medlife will ofer to Frmexim stble client, nd the dvntge of covering in this
wy clinics in the min cities, where Frmexim lredy hs working points opened.
This prtnership could increse in time the mrket shre of Frmexim. lso, in
time, could conclude prtnerships with other privte clinics.

3.6. Listing to the stock exchnge


In this moment, Frmexim, which is stock compny, is held by Ovidiu Buluc,
being the mjority shreholder.
Frmexim lredy meets the criteri to be listed on stock exchnge mrket :
the shre cpitl is greter thn 2 milion EUR (for Ctegory 2), the compny hs
recorded profit in the lst three yers, nd their finncil sttements hve been
udited in the lst 3 yers.
Listing on the Buchrest Stock Exchnge will improve the trnsprency of
Frmexim on the mrket nd lso will ttrct new investors, even foreign investors
nd helping expnding on the foreign mrket.
Some of the competitors lredy hve esier cces on this mrket, like
Frmexpert, which is prt of the mericn phrmceuticl chin Wlgreens Boots
llince, or Europhrm, subsidiry of the british group GlxoSmithKline.
In its 25 yers of ctivity, Frmexim mde strong position on the Romnin
mrket, nd the listing on stock exchnge mrket will give nother dvntge to the
compny.

19

Conclusions

Through our nlysis they reveled compny which holds n importnt


shre in the mrket in which it, but it is undoubtedly surpss by its direct competitor,
Mediplus, which hs triple mrket shre. lthough, they consider B2C being
segment the gretest potentil. This segment ddressed directly to ptients through
HelpNet Phrmcies is expected to hve high growth in the future yers.
To win the bttle on the new mrket, the compny hs to confront not only its
old competitor, Mediplus, but lso it will meet importnt nmes in the distribution of
medecines mrket, like DM Phrm, Polisno, Europhrm nd other compnies.
Mintining the current position in the B2B segment nd expnding it into B2C
requires implementing certin mesures in order to differentite the compny to the
customer.
The first mesure, which we hve presented in previous pges, is
implementing new mrketing strtegy in order to rech new customers. The second
mesure does not require ny expense, but it is fundmentl shift in pricing policy.
they hve suggested incresing Frmexims price.
The third suggestion is cler differentiting mesure to the competition which
implies chnging the structure of ech phrmcy, with new shelves in order to disply
more products, mesure proposed with the purpose of ttrcting clients nd
incresing sles.
The fourth inititive proposes n expnsion in the nerby western mrkets,
Serbi nd Hungry.

20

For the fifth inititive, we hve presumed tht Frmexim should conclude n
greement with privte clinics, nd we gve s exmple Medlife, clinics, which re
expnded ll over the country.
The lst inititive, which is linked indirectly with the expnsion in the foreign
mrket, is listing on stock exchnge mrket, fter nlysing tht the compny hs
met ll the criteri.

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