CEPD N.V. is a holding company registered in the Netherlands, established for a specific purpose of developing a retail distribution network for pharmaceutical products across Europe, and is currently one of Europe's top five players on the retail pharmaceutical distribution market.
The company operates on local pharmaceutical markets through local subsidiaries: DOZ S.A. in Poland and UAB NFG in Lithuania, as well as DOZ UK operating a pharmacy in London. CEPD N.V.'s distribution model is based on multiple channels, with pharmaceuticals sold through a country-wide network of pharmacies (company-run, franchise and partner pharmacies), and also online via web portals.
In 2013, DOZ S.A., a CEPD N.V. Group company, was certified to the Global Standard for Workplace Gender Equality as the first of four organisations from around the world to have been awarded the certificate.
In 2014, as part of its strategy to diversify operations and consolidate relations with customers from the health and beauty sector, CEPD N.V. acquired Polbita Sp. z o.o., owner of the Natura beauty supply store chain, thereby making an entry into the new cosmetics market. The purpose of the transaction was to strengthen the CEPD N.V. Group’s position in the Polish market and to drive further revenue growth.
DOZ S.A. manages Poland's largest and one of Europe's largest pharmacy networks under the Dbam o Zdrowie brand, comprising nearly 600 company-run pharmacies, 320 franchise pharmacies, and approximately 80 partner pharmacies. In total, the network consisted of nearly 1,000 pharmacies as at the end of 2014. As a result, pharmacies under the Dbam o Zdrowie logo can be found throughout Poland, in large cities and shopping centres, smaller towns, and villages. In line with the motto 'Patient in the Centre of Attention', the Dbam o Zdrowie pharmacies build their sustainable competitive advantage in the market based on the tailored offering, attractive prices, top-quality customer service and professional pharmaceutical care, the broadest product mix, as well as the most convenient locations and patient-friendly formats.
DOZ.PL was established to manage the www.doz.pl website, which is Poland's largest and most advanced health-related website, combining expert knowledge on disease prevention and pharmaceutical and medical care with the most extensive portfolio on the market of more than 20 thousand products offered at affordable prices. The website reports more than 6.5 million unique visitors each month.
DOZ S.A. engages in projects that popularise knowledge in the areas of medicine, pharmacy and disease prevention, also by issuing the 'Dbam o Zdrowie' bimonthly.
The Jan Muszyński Pharmacy Museum in Łódź, opened seven years ago, is a prime example of the commitment to cultivating the Polish pharmacy traditions. An extensive collection of books and growing number of exhibits, as well as original 19th century furniture, attract those who want to gain insight into the history of pharmacy as a profession. The company also supports museums in Lublin and in Bydgoszcz, as well as a number of historic pharmacies. To date, it has published 15 monographs as part of the 'Poland's Famous Pharmacies' series.
CEPD N.V.'s 2014 financial performance in Poland was far from satisfactory, chiefly due to lower-than-expected sales volumes and margins. To reverse the negative trend, the company launched two large long-term projects in 2014. First, CEPD N.V. acquired 100% of shares in Polbita Sp. z o.o., a company managing the chain of Natura beauty supply stores. The decision to acquire the chain was based on an analysis of the Polish cosmetics market and the fact that the market has continued to grow rapidly at an average annual rate of approximately 5% in the last seven years. On top of that, the difficult situation on the Polish pharmaceutical market was an incentive to diversify operations to improve efficiency and meet the changing customer needs.
The Natura chain, which comprises 258 locations, including 240 proprietary stores and 18 agent-operated stores, is one of the largest retail networks on the Polish cosmetics market, employing nearly 1,500 people. In a survey conducted by PMR, in which consumers were asked to spontaneously name their cosmetics store of choice, the Natura chain ranked third.
The Central Warehouse is located in Błonie near Warsaw and dispatches more than 4,500 packages every day; the company also has 14 regional operational centres used as transit warehouses. In total, the Natura chain offers more than 11,000 products. As of 2013, customers of the Natura stores can collect points while shopping under the PAYBACK bonus programme and redeem them for prizes. The Natura portfolio includes both proprietary brands (My Secret, Sensique and KOBO Professional make-up cosmetics, as well as Sensique and Seyo body care products) and popular brands of cosmetics. Since the inception of the Natura beauty supply chain in 1997, the company's focus has always been on its customers. Highest customer service standards and personnel training programmes are consistently promoted and implemented across all levels of the organisation. With this approach, the chain is continuously growing and ensures premium customer service quality. The company's consumer-oriented approach has been recognised four times to date with a prestigious Customer Service Quality Emblem (Godło Jakości Obsługi Klienta) award.
In 2013, the Natura chain was distinguished, for the first time ever, by the independent body Rada Marek (the Brands Council) with the 'Superbrands - Created In Poland' title, awarded to Polish brands which enjoy the highest repute among consumers in their respective categories. Every year, 2,400 brands take part in the certification process. In 2014, Natura received this prestigious accolade again.
The Natura beauty supply chain also engages in community outreach and charity projects. In 2014, the chain became a partner in the charity campaign 'Buy Soemeone's Happiness for the Change', organised jointly by Mennica Polska S.A. and the TVN’s Foundation ‘Nie jesteś sam’ (You are not alone). For the past three years, the Natura chain has actively supported the ‘Dziecięcy Uśmiech do Świata’ (Children’s smile to the world) Foundation, putting up collection boxes in the Natura stores to raise money and provide assistance to children under the Foundation's care.
The other material event in Poland was the launch of the 'doz direct' distribution system, supported by the newly built warehouse in Łódź and representing a unique supply system for pharmacies. 'doz direct' is an innovative platform for centralised management of the product portfolio, stocks, prices and sales, providing tight and fully secure system of pharmaceuticals distribution from the manufacturer to the patient. Set to achieve its mission to provide patients with a better and faster access to the most widely bought medicinal products, and recognising the need to adjust the management of its distribution system to the evolving market conditions, the company has developed a new distribution platform to support the sales of key product groups.
The 'doz direct' platform guarantees access to the widest available range of pharmaceuticals, ensures safety of drug therapy, and provides means to confirm that no drug leaves a pharmacy without a prescription. In addition, a centralised stock replenishment system ensures product availability and continuity, and the tightly-controlled distribution network and continuous stock monitoring guarantee effective management of shortages. 'doz direct' also provides a foundation for building effective partnerships with manufacturers of pharmaceuticals – with their interests in mind, the system includes an analytical centre which provides all-inclusive up-to-date reports on their products.
To respond to the growing problem of unavailability of prescription drugs at pharmacies, in 2014 DOZ S.A. launched the '100% Prescription Filled Guarantee' programme, under which every Dbam o Zdrowie pharmacy undertakes to deliver a prescription drug to the patient as soon as possible, and not later than within 24 hours.
In 2014, DOZ S.A. also continued the development of its franchise network. The company adopted a long-term growth strategy for building a market-leading network of franchise pharmacies (in terms of the number of pharmacies and their sales volumes). Franchising provides a ready-made pharmacy management model and an opportunity to leverage the experience and know-how of a large network. The franchising agreement covers training, marketing tools, incentive schemes, and assistance provided by a micromarketing manager. In November, the company organised the 2nd Franchising Forum, bringing together 700 pharmacists, including current and prospective franchisees. For years, DOZ S.A. has provided special care to patients aged 60 or more, understanding their needs and the problems they must tackle every day. With the elderly and the disabled patients in mind, most pharmacies have access ramps to provide mobility aids and ensure easier access to a pharmacy without the need to ask for help.
In 2014, the company opened the first ‚Apteka 60+’ (Pharmacy 60+) in Łódź, with the interior designed specifically to meet the needs of seniors. The pharmacy was equipped with special amenities such as: anti-slip floors; rails at the counters to lean on while queueing; magnifying glasses at each cash desk to make it easier for seniors to read the prescription, receipt, or product information; as well as armchairs next to counters to sit down and rest while waiting to have the prescription filled. All prices and product labels on display are written in large and legible print. Inside the pharmacy, there are special pharmaceutical care points, i.e. dedicated zones where seniors can consult a pharmacist on an individual basis. Moreover, the quarterly magazine ‘Magazyn 60+’, designed for people over sixty years old, was continued to publish. Readers can find there different advice, interesting articles and interviews. A specialized health guide is attached to each number. An appropriate large font is used for the readers’ convenience. The publication encourages all seniors to integration and communication through new technologies.
The quarterly magazine ‘Magazyn 60+’ for the young at heart was named a Best Practice in 2014 and featured in the ‘Responsible Business in Poland. Best Practices 2014’ report published by the Responsible Business Forum.
As regards online sales, the doz.pl website partnered with Samsung to implement another innovative technology: the Dbam o Zdrowie application on the Smart TV platform. It proved to be another milestone for doz.pl, giving access to patients who are Samsung Smart TV owners to the largest online database of pharmaceuticals, with an option to order products online and collect them at a pharmacy of their choice. In addition, the doz.pl website was revamped in 2014, receiving a new, more user-friendly graphic design.
The strategic objective for DOZ S.A. in 2015 is to increase revenue and improve profit margins. The company will also focus on
optimising the cost of supplies to pharmacies on the back of the 2014 investment projects. Considering that franchising is the second key area of development for the Dbam o Zdrowie pharmacy chain, DOZ S.A. also plans to further develop this segment, in keeping with the principles of business security. The company will also continue to develop the e-commerce sales channels. As a general rule, all plans and initiatives will revolve around the mission statement: 'Patient in the Centre of Attention'.
The plans for the Natura beauty supply store chain include the development of a long-term growth strategy, enhancement of the product and services portfolio, development of proprietary brands, strengthening of the cooperation with suppliers, as well as exploitation of synergies with the CEPD Group's other business areas
In Lithuania, retail sales are handled by a local company UAB NFG, controlling approximately 330 own and franchise pharmacies under the Gintarine Vaistine and Norfos Vaistine brands, and nearly 140 BVG partner pharmacies. The company has a market share of approximately 22% in terms of the number of operated pharmacies, and over 34% together with partner pharmacies, which makes it the leader of the Lithuanian market.
In addition to the retail network, UAB NFG is the owner of Limedika, a leader in wholesale distribution of pharmaceuticals with a market share of nearly 24%.
The offering on the Lithuanian market includes unique sales and marketing programmes aimed at improving the availability of pharmaceuticals for selected target groups, such as young mothers and their kids (the Mazylio programme) or people suffering from cardiovascular diseases (the Cardio programme). The Gintarine Vaistine pharmacies also participate in Lithuania's largest loyalty scheme (Milimausia). The sale of drugs in traditional pharmacies is combined with online sales via the vaistine.lt virtual pharmacy, through which patients can order products (including prescription drugs) online and collect them at a Gintarine Vaistine or Norfos Vaistine pharmacy of their choice. Under such a model, the company can offer one of the lowest drug prices on the market. Alternatively, all products available at the online pharmacy can be delivered directly to the patient's home.
For UAB NFG, 2014 was yet another year of stable growth in terms of the number of pharmacies, market share, sales volumes and margins.
The key 2014 milestone was the opening of a modern logistics centre, which replaced the former warehouse located in the centre of Kaunas, whose capacity had become insufficient. The new facility was equipped with a modern distribution line, which significantly shortens delivery times, guarantees secure, safe and high-quality drug deliveries to pharmacies and hospitals, and broadens the range of services for manufacturers. In addition, it has a very convenient location, in direct vicinity of the Vilnius-Klaipėda motorway. The new centre comprises a warehouse with an area of 8,400 m2 and office space of nearly 1,200 m2. With the overall capex of approximately EUR 5m, it was one of the largest investment projects completed in Lithuania in the last five years.
In 2014, UAB NFG implemented the marketing strategy 'Closer to the Patient', based on two pillars: full customer satisfaction and tailored product offering (based on purchasing habits). A new logo was designed for the Gintarine Vaistine chain in the form of two hearts, symbolising care provided to patients and the open hearts of the pharmacy personnel listening to the beat of patients' hearts. The effectiveness and premium quality of the company's proprietary products was recognised with the award of two medals to the proprietary brand Ziede in the 2014 Lithuanian Product of the Year competition: gold medal for the age repair cream (for mature skin) and silver medal for the anti-wrinkle serum.
Expected amendments to Lithuanian laws will determine the course of action taken by UAB NFG in 2015. As of 2016, a new law will impose an obligation to employ at least one person with a Master of Pharmacy degree during the opening hours of any pharmacy. This means that all pharmacies operating in Lithuania will need to employ a sufficient number of pharmacists with an M. Pharm. degree to replace pharmacy technicians, which will drive up personnel costs. In addition, the company must face growing regulatory pressures towards the reduction of drug prices (and, by extension, retail margins), as well as strong competitive pressures from two largest pharmacy chains operating in Lithuania. UAB NFG is determined to meet those challenges and enhance its position in the retail segment based on premium quality, unique services, and dedicated programmes tailored to the needs of customers.
With the launch of the new logistics centre, the company intends to improve the efficiency of its processes, set foot on new markets, and extend the scope of cooperation with manufacturers, which should drive the growth in revenues from manufacturers and improve availability of products in pharmacies for patients.
