Rami Levy's Good Pharm doubling number of branches

Good Pharm Photo: Rafi Levinson

The discount pharmacy chain will invest NIS 15 million, and will also increase its non-retail activity.

The Good Pharm discount pharmacy chain, controlled by Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI), which acquired it last year, is moving in on city centers, and will double its size in the coming year, sources inform "Globes." The chain, founded by Adam Friedlier and Ohad Sandler, has 12 branches, mostly in central Israel. The company is planning to almost double the number of its employees and move its offices and logistic center from Rosh HaAyin to Rami Levy's new headquarters in Modi'in. The sources added that Good Pharm is also increasing its revenue from non-retail activity, and will soon enter the insurance and cash withdrawal sector in its branches.

Good Pharm yesterday inaugurated its 12th branch in a neighborhood center in Nahariya next to a Shufersal branch. The new branch covers 300 square meters, making it larger than the chain's regular branches. The chain is expanding to more cities in which it did not previously operate: it signed contracts to open branches in Kiryat Gat, Kfar Saba, Ashdod, Ariel, and another branch in Tel Aviv, and is on the verge of signing contracts to open branches in north Tel Aviv and Bat Yam. At the same time, the chain is negotiating for two additional locations. Good Pharm will nearly double its size to 20 branches by the end of 2019.

In addition to physical expansion, Good Pharm will increase its workforce by 170 employees in the coming year, including 10 headquarters staff. The rest of the new employees will join the company's current 200 employees in its branches.

Increasing the number of visitors and benefiting from commissions

In addition to its physical expansion, Good Pharm is also diversifying its products. The chain will soon launch a new private makeup brand and expand its existing categories. For example, in personal care and toiletry products, Good Pharm will extend its private brand to new products, such as deodorant, shampoo, and soap, as well as paper products.

Good Pharm recently decided to focus on an independent private brand, "Good," instead of relying on Ram Levy's private brand.

Good Pharm is also interested in finding more growth engines beyond retail sales. As Super-Pharm and other retailers did, Good Pharm recently added charging points for Rav Kav public transportation cards to its branches, and is also planning to enter the insurance sector, and is holding talks with two concerns for this purpose. The chain will soon add cash points to its branches. These measures will on the one hand increase the number of visitors to Good Pharm's branches and on the other provide the chain with revenue from commissions.

A small player in the market

The pharmacy sector has been arousing considerable interest in recent months, following the launching of the Be chain (formerly New Pharm) by Shufersal and its expansion measures, together with plans by Super-Pharm controlling shareholder Leon Koffler to hold an offering for his chain on the Tel Aviv Stock Exchange (TASE).

Despite its projected expansion, Good Pharm is still a small player in the pharmacy market in comparison with Super-Pharm, which has 243 branches in Israel. At the same time, when he acquired Good Pharm, Rami Levy announced that he would open 40 branches of the chain within 18 months. Levy is simultaneously negotiating to acquire the Coop supermarket chain, which recently entered a stay of proceedings, and is likely to provide him with attractive locations in the food sector within cities. Levy took over the Cofix chain in early 2018, making him the owner of a chain of urban supermarkets with 30 branches and over 100 coffee sales points.

The uniform price was changed, but it is still cheap

Good Pharm is a young pharmacy chain founded in August 2016. It was originally branded as a discount pharmacy chain focusing on the sale of products at a uniform price of NIS 10 per item, similar to the Cofix brand. Since Rami Levy acquired the chain, however, the uniform price has been changed. Good Pharm now sells a wider variety of products at different prices, but is still significantly cheaper than its competitors, due to its reliance on parallel imports, among other factors.

Before the deal with Levy, Good Pharm's sales turnover was estimated at NIS 60 million, one tenth of Super-Pharm's turnover. In April 2018, Levy completed his takeover of Good Pharm by acquiring 50.01% of it for NIS 16 million, NIS 7 million of which was paid to the chain's existing shareholders in exchange for their shares, while NIS 9 million was paid to Good Pharm in exchange for an allocation of shares to Rami Levy.

Published by Globes, Israel business news - en.globes.co.il - on February 20, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Good Pharm Photo: Rafi Levinson
Good Pharm Photo: Rafi Levinson
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