Chemists
Data pertaining to the Chemists sector
Chemists sell medicines prepared at the chemists according to a doctor’s prescription and prepared medicines. In addition, chemists sell medical devices, cosmetics, hygiene-related accessories and so forth.
In recent years a number of significant changes have occurred in the chemists sector:
• A cross between a chemists and a department store has been created (the drugstore)
• The trend of buying medicines without a prescription has increased (OTC – Over The Counter)
• Finding a characteristic area of specialisation (medicinal herbs, homeopathy, mixing drugs on the premises and so forth)
• Opening chains (the “Pharm” chains) or operating more than one chemists, in order to obtain preferential purchasing and payment terms
• Opening chemists inside supermarkets
• The health funds have reduced prices and even strengthened their relationships with some of the private chemists
Sub-division of the sector
The primary purpose of the chemists is to dispense medicines. However, and in addition, there are specific areas of specialisation, and this is widespread primarily at the large chains specialising in the following market segments: prescription medicines, OTC medicines (non-prescription), para-medical products (contraceptives, bandages), medicinal herbs, homeopathy, mixing drugs on the premises, cosmetics and food and natural products.
Market characteristics
• The market is relatively stable and varies according to urban development.
• There is an upward trend in the consumption of non-prescription medicines and in the willingness to consume supplementary products that aren’t medicines.
• Brands – attributes importance to the non-medical product brands
Customers
The target market includes the entire population of the country, segmented by the following criteria:
1. Members of health funds that have contractual arrangements with the chemists (those that have entered into an agreement with the health fund) for the purchase of prescription medicines
2. Random customers purchasing OTC products or other products that do not require a prescription.
Competition
Competition in the sector has increased in recent years, mainly because of the annulment of the law that required a minimal distance of 500 meters between chemists. Medicine prices are set by the Health Ministry. Inter alia, there is competition over service, the degree to which the medicine is in stock, the time it takes to supply a medicine that is out of stock, the range of auxiliary products that the chemists offers and the discounts offered on these products.
The Health Ministry is considering permitting the sale of non-prescription medicines as over the counter products at commercial shops.
Suppliers
They can be divided into two main groups:
• Suppliers of the equipment for setting up the chemists: equipment for the sales counter, shelves, a refrigerator for storage, a cash register, a computer, various types of precision scales, dedicated tools, etc.
• Goods suppliers: medicines and other products sold at the chemists. The large manufacturers in Israel (Teva, Abik and CTS) market their products directly to chemists. In addition to them, general suppliers and medicine importers operate in the market and must obtain approval from the Health Ministry. Competition makes it possible to enjoy quick delivery, exchange and returning products, bonuses, special offers and gifts, advertising products and supplying stands by the supplier, the use of sales promoters and free samples by the companies.
Marketing methods
Chemists are not permitted to advertising themselves. The large chemists, which also operate as department stores, operate indirectly to advertise all the products and devices sold at the chemists, apart from medicines. Another method is having the supplier advertise the product, and raising awareness among the physician public.
Entry barriers in the sector
• The long process of obtaining a licence from the Health Ministry
• The high cost of the initial investment
• Recruiting suitable manpower (a head pharmacist) with high employment costs
Manpower
There are four ranks of persons employed at chemists: apprentice, pharmacist’s assistant, certified pharmacist and head pharmacist. All are subject to regulations, examinations and approval by the regional pharmacist and the Health Ministry. A certified pharmacist must be on the premises during working hours. Professional liability and a business licence require a head pharmacist.
Investment required
Renovating and adapting the building NIS 50,000 – NIS 70,000
Equipment (furnishings and equipment for the chemists) NIS 45,000 – NIS 60,000
Inventory NIS 60,000 – NIS 80,000
Total NIS 155,000 – NIS 210,000
The cost pertains to a 60 square meter chemists
Licences and certification
• A business licence from the local authority. In addition, a detailed plan of the intended location must be submitted.
• Approval by the district pharmacist at the Health Ministry
• Approval from the police
Insurance
Building insurance for the chemists, inventory insurance and professional liability insurance.
| Chemists
Chemists sell medicines prepared at the chemists according to a doctor’s prescription and prepared medicines. In addition, chemists sell medical devices, cosmetics, hygiene-related accessories and so forth.
In recent years a number of significant changes have occurred in the chemists sector:
• A cross between a chemists and a department store has been created (the drugstore)
• The trend of buying medicines without a prescription has increased (OTC – Over The Counter)
• Finding a characteristic area of specialisation (medicinal herbs, homeopathy, mixing drugs on the premises and so forth)
• Opening chains (the “Pharm” chains) or operating more than one chemists, in order to obtain preferential purchasing and payment terms
• Opening chemists inside supermarkets
• The health funds have reduced prices and even strengthened their relationships with some of the private chemists
Sub-division of the sector
The primary purpose of the chemists is to dispense medicines. However, and in addition, there are specific areas of specialisation, and this is widespread primarily at the large chains specialising in the following market segments: prescription medicines, OTC medicines (non-prescription), para-medical products (contraceptives, bandages), medicinal herbs, homeopathy, mixing drugs on the premises, cosmetics and food and natural products.
Market characteristics
• The market is relatively stable and varies according to urban development.
• There is an upward trend in the consumption of non-prescription medicines and in the willingness to consume supplementary products that aren’t medicines.
• Brands – attributes importance to the non-medical product brands
Customers
The target market includes the entire population of the country, segmented by the following criteria:
1. Members of health funds that have contractual arrangements with the chemists (those that have entered into an agreement with the health fund) for the purchase of prescription medicines
2. Random customers purchasing OTC products or other products that do not require a prescription.
Competition
Competition in the sector has increased in recent years, mainly because of the annulment of the law that required a minimal distance of 500 meters between chemists. Medicine prices are set by the Health Ministry. Inter alia, there is competition over service, the degree to which the medicine is in stock, the time it takes to supply a medicine that is out of stock, the range of auxiliary products that the chemists offers and the discounts offered on these products.
The Health Ministry is considering permitting the sale of non-prescription medicines as over the counter products at commercial shops.
Suppliers
They can be divided into two main groups:
• Suppliers of the equipment for setting up the chemists: equipment for the sales counter, shelves, a refrigerator for storage, a cash register, a computer, various types of precision scales, dedicated tools, etc.
• Goods suppliers: medicines and other products sold at the chemists. The large manufacturers in Israel (Teva, Abik and CTS) market their products directly to chemists. In addition to them, general suppliers and medicine importers operate in the market and must obtain approval from the Health Ministry. Competition makes it possible to enjoy quick delivery, exchange and returning products, bonuses, special offers and gifts, advertising products and supplying stands by the supplier, the use of sales promoters and free samples by the companies.
Marketing methods
Chemists are not permitted to advertising themselves. The large chemists, which also operate as department stores, operate indirectly to advertise all the products and devices sold at the chemists, apart from medicines. Another method is having the supplier advertise the product, and raising awareness among the physician public.
Entry barriers in the sector
• The long process of obtaining a licence from the Health Ministry
• The high cost of the initial investment
• Recruiting suitable manpower (a head pharmacist) with high employment costs
Manpower
There are four ranks of persons employed at chemists: apprentice, pharmacist’s assistant, certified pharmacist and head pharmacist. All are subject to regulations, examinations and approval by the regional pharmacist and the Health Ministry. A certified pharmacist must be on the premises during working hours. Professional liability and a business licence require a head pharmacist.
Investment required
Renovating and adapting the building NIS 50,000 – NIS 70,000
Equipment (furnishings and equipment for the chemists) NIS 45,000 – NIS 60,000
Inventory NIS 60,000 – NIS 80,000
Total NIS 155,000 – NIS 210,000
The cost pertains to a 60 square meter chemists
Licences and certification
• A business licence from the local authority. In addition, a detailed plan of the intended location must be submitted.
• Approval by the district pharmacist at the Health Ministry
• Approval from the police
Insurance
Building insurance for the chemists, inventory insurance and professional liability insurance.
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