The FINANCIAL -- Against the background of the 35% devaluation of the Georgian Lari against the USD during the past year, PSP Pharmacy is giving up its own profit in order to maintain a minimum increase of prices. The company ended the year 2014 with 15% growth. During 2015, more than 30 new stores are planned to be opened. The group is working on expansion of its hospital. New products of health and auto insurance are scheduled to be launched soon.
“We plan to open twice as many stores in 2015 than we did in 2014. During the first four months of 2015 we have already opened 12 new pharmacy stores. We are actively working on expanding the range of assortments and implementing innovations of modern medicine on the Georgian market. PSP is trying to expand its export area and find new destinations. The company is actively registering GMP medicaments in various countries, including Europe,” Gocha Gogilashvili, Director General at PSP Group, told The FINANCIAL.
According to Gogilashvili, PSP is working on the implementation of new insurance products, in terms of health and auto insurance.
PSP has started the expansion of its multi-profile clinic, New Hospitals. It will be completed in summer 2016. The hospital will have 400 beds, instead of the currently-existing 150. It will be the largest hospital in the Caucasus.
PSP was established 20 years ago. In 2000 the company started drug production within its daughter company GMP. Medicines produced in Georgia are already exported to more than ten countries.
Currently the average number of daily consumers at PSP is 60-70,000. Over 2 million customers a month choose PSP as their family’s pharmacy.
PSP ended 2014 with 15% growth, as had been planned. “Network expansion is actively continuing, not only in Tbilisi, but in various regions and cities. In 2014 we opened 16 new pharmacy stores, including Tskaltubo, Khashuri and Batumi. The number of employees has been increasing in line with the activity of the company. We hired 770 workers last year. The total number of employees exceeded 4,500. PSP is one of the largest employers in the country. We are proud that such a big number of workers represent one cohesive team. The qualified, professional, cohesive team contributes to the success of PSP Group,” Gogilashvili said.
PSP offers more than 10,000 medicaments, including a wide variety of patient care, child nutrition, hygiene and cosmetic products. “PSP is much more than a pharmacy. We offer the best solutions for health and beauty. Highly qualified consultants assist consumers in selecting their desired products. This year we implemented an innovative project for our customers. During the first week of each month we are arranging French Week’s Days. The campaign involves discounts on French brands’ products, as well as free cosmetic and diagnostic procedures. The French ambassador, Rene Salens, opened the first week of French Cosmetic days at PSP and it has since become a tradition. We are constantly working on broadening our assortment. Our goal is to make all medical innovations affordable for Georgians.”
Over 10% of medicines sold at PSP are produced locally.
“PSP has been distributing medicaments for more than 20 years. PSP was the first company that started importing medicaments from European factories into post-war Georgia. Our company was the first to sign contracts with world leading pharmaceutical factories. Today, PSP is a distributor of more than 100 pharmaceutical factories globally. All our partner procedures are meeting the international standard of GMP quality. It means that PSP is a distributor of products with guaranteed quality. The drug distribution warehouse is also in accordance with international standards, meeting GDP quality. PSP is the only pharmaceutical company to have an ISO 9001-2001 standard in all pharmacy chain, out of all the post-Soviet states. All of this contributes to the image of PSP, which is a guarantee of quality for consumers,” said Gogilashvili.
Q. In 2014 Georgia implemented a new rule whereby drugs can only be sold with a doctor's prescription. What has been the impact of this new regulation on your company?
A. The new regulation had an impact on the pharmacy market across the board. PSP was no exception. We have been witnessing a reduction in the sales of those drugs that are sold with prescriptions. Currently we are seeing that the major part of the population is still getting used to the new regulation.
Q. Did you increase prices due to the dramatic devaluation of the national currency against the USD?
A. The Georgian Lari has been devaluated against the USD by 35% in comparison with the previous year. We made price changes of 7-8% on just some medications, not the full range. We have been mostly distributing medicines that are mainly from Europe. PSP has not changed the prices since November 2014, when the national currency started its sharp devaluation against foreign currencies. 7-8% growth on the part of medicaments was made later. Otherwise it would have been impossible to import a new shipment of medicaments. There was a risk of creating a shortage of some medicaments. In addition, the company refused to gain a profit during such a time. It means that the company is still working on the minimum threshold and not making a profit.
Q. Besides medicaments, PSP is well-known for its childcare and cosmetics lines. What is the share of sales of these directions out of the total portfolio?
A. The share of non-pharmaceutical products in our portfolio is constantly growing. We regularly add new assortments. We are bringing in new products due to the demand from consumers. Non-pharmaceutical products currently make up more than 30% of our portfolio.
Q. The recently-launched mobile application has been an additional innovative offer of PSP. What benefits is it offering its users?
A. PSP was the first company that launched its online-pharmacy years ago. We offered another unique technological innovation this year - our mobile application. The PSP mobile app allows consumers to purchase our products from the office or home. Downloading the app is very simple. Consumers need to search for the PSP app ‘My Pharmacy’ on the Appstore or Playstore.
When purchasing a product via PSP app, consumers will collect “smiles” on their “smile card” and receive a lottery ticket. Customers can browse the constantly-updated My Family Card catalogue. From it they can choose their desired gifts. Checking the number of collected “smiles” is also available here. The app keeps a record of the health history of family members. It reminds one when it’s time to take their medicine. Prescribed medicaments will be calculated. The PSP app will become a daily support for its owners and will become a useful extra addition to any family.
Q. What are your expectations of 2015?
A. Due to the current economic crisis, we do not expect huge growth this year. We know that there will be a shortage in foreign currencies. Prices on medicaments are directly linked to the strength of our currency. PSP has exhausted its resources for containing prices. Prices will change in accordance with the exchange rate. Otherwise no one will be able to import drugs into the country. On its side, it will result in a shortage of medicaments. We should hope that a rapid change of exchange rate will not take place on the global market, and, accordingly, in Georgia.
Q. What are the main advantages of PSP in comparison with your competitors?
A. Taking care of customers and offering products and services in line with their demands has always been the main priority of PSP. Smile Card, which allows customers to collect scores per each individual purchase is good proof of it. Smile Card holders can choose the gifts they want from our frequently-updated catalogue. Our gifts include such products as fairly expensive electronic devices, equipment and others. For additional encouragement, since 2008 we have been annually arranging a PSP prize draw. This year we gifted 4 new car, 4 prizes of a GEL 2,000 salary per month during 1 year and 4 three-bedroom apartments in Tbilisi to lucky winners.
In order to better understand consumers’ demands, complaints and wishes, we constantly order researches to be conducted by leading research organizations. This helps us get closer to our consumers and create a direction which will facilitate taking care of health and beauty. This is exactly what we consider to be our main mission.