Business Plan for New Venture

Introduction

In the Britain, traditional pharmaceutical wholesalers act as intermediaries, mainly playing role of distribution in whole value chain. On the other hand, pharmacy retailers only did work of dispensing medicines. In case of Musa, Alliance Unichem as one of the most successful pharmaceutical wholesalers owned Britain’s second largest market share. However, Musa believed that there could be changes at Alliance Unichem, so that all stakeholders could win. His initiative ideas concentrated on changing the business from product focus to service focus. We concerned that why this successful business organisation should take risk and invest in this new venture.

This article has five main sections to discuss this issue. In section one, we will have a brief outline of pharmacy market and pressures on pharmacies. Musa’s initiative ideas included building up a web-based services company. Therefore, we considered whether the opportunities facing to Musa was high or low innovation opportunities in section two. In section three, we will present two situations, i.e. inside or outside Unichem. We concerned about which situation stand more chance through summarising their advantages and disadvantages. According to ideas form Musa, he proposed to add value to existing products and service. Therefore, we attended to pay a close attention to how does he add value to pharmacists in section four. SWOT analysis will be adopted in this section. In the final section, based on information in Exhibit 1 of the case, we would like to add complementary background research of market opportunities. Then, a proper evaluation will be given to Musa’s business idea.

Section One – Changes in Pharmacy Market and Pressures on Pharmacies

Alliance Unichem

Alliance Unichem, which Musa worked for, was the second largest both in Britain and Europe pharmaceutical wholesaler. It owned a chain of 700 pharmacies, with a 30% market share in the UK (Vandermerwe and Atun, 2002). Another top pharmaceutical wholesaler was German Gehe, which owned largest retail chain Lloyds Pharmacy in the UK. The Alliance Unichem can be defined as a successful entrepreneur in pharmaceutical industry. On the other hand, although it was a successful entrepreneur, Alliance Unichem was right behind German Gehe. Obviously, German Gehe was its main competitor in the market. Historically, the basic competition was around discount. In fact, it was hard to beat price because of pressures of government price regulation.

Changes Taking Place in the Market

The UK pharmacy market kept stable growing. There were around about 12,000 retail pharmacies with contracts to dispense National Health Service (NHS) prescriptions last years. But the revenue of UK market kept growing gradually. Moreover, in retailing, the proportion of outlets owned by chains of over 50 stores has risen from 20 per cent in 1991 to 28 per cent in 1995 (Competition Commission, 1996). Thus, the pharmacy market for the UK was a steady increasing and potential market.

At the same time, although the UK pharmacy market was steady growing, an important change in perception to pharmacists happened in the market last years. As known, pharmacists mainly sell products to customers in tradition. But nowadays pharmaceutical wholesaling had been suggested moving from a product to a customer focus. Since 1995, Musa had fought to try to introduce services for pharmacists. Since it was difficult to defeat price, Alliance Unichem as a wholesaler started to offer services to those professionals (Vandermerwe and Atun, 2002). A method applied to tie them up into a trading relationship. In that case, products as well as service tied up would be supplied by Alliance Unichem.

The idea from Musa was pharmacy would shift from dispensing medicines to helping patients use their medicines. It fundamentally changed retail pharmacy practice. In 1999, he continued to try to sell his ideas to change the business from product focus to service focus. But all corporate effects were then on making the merger with Alliance Santa, which had wholesale network in France, Italy and Spain. At the same time, there was a significant policy change by government. It encouraged pharmacist to get more involved in the management of patients, especially of medicines management.

Pressures to Pharmacies

Further, since wholesalers play a very important role in the supply chain, it delivered products to pharmacies every day. In fact, pharmacies did not expect thirty deliveries a day. Many times deliveries cost much. More importantly, it led to low efficiency and great pressure both to wholesalers and pharmacies. Another issue undertaking by pharmacies