Q&A with TGP The Generics Pharmacy Chairman & CEO Benjamin Liuson on Competing with Giants

Q1: You have been importing medicines for decades. What made you decide to open a retail network via franchising all of a sudden? What was the inspiration?

A1:   In early 2000, physicians from PGH would recommend their patients to our office in Quezon Avenue, but since we are in the business of wholesale, unfortunately, we cannot sell retail to these patients. Hence we opened our very first drugstore – our very first  outlet right at the ground floor of our offices, selling only pure generic medicines. This was in 2001.  In 2006, our regular customers from as far as Bulacan, Laguna, Cavite and other areas gave feedback that traveling many hours just to buy medicines in Quezon Avenue required much time and effort and requested/ suggested “Why don’t you open in our areas?”. That was the push. That was the inspiration. Making our products accessible to wider public. So in 2007, after much consultation and deliberation, we decided to introduce and open franchising business model as I figured, franchising is our best route to open more drugstores in the shortest possible time.

Q2: I noticed your branding has been shifting from The Generics Pharmacy to TGP, this signals a major shift in direction. Are you planning to carry branded products and grocery items as well? What is the story behind the shift.

A2: We are moving to TGP for easier recall. Big brands are doing it – Bank of Philippine Islands to BPI. Nowadays, who can recall what IBM means? We are expanding slowly but surely in to non-pharma products and have started carrying branded pharma products whose patents have not expired. Carrying other non-pharma branded products is always a possibility.

Q3: You now have more than double the number of stores compared to market leader. Your sales while growing significantly, is still far from their nearly P100B per annum revenue. What is the vision of TGP in terms of achieving dominance? What is your measure of success?

A3: We are catering to the under-served and un-served millions of Filipinos out there. Our stores are community pharmacies – nearer to their homes and where they flock to all the time like markets and terminals of public transportation. We have made our products very accessible to our kababayans. Somebody has to. We have to. That’s the route we pioneered and shall continue to do so.

Our measure of success? ACCEPTANCE. Acceptance from the medical professionals – doctors, nurses, pharmacists and allied professions. Acceptance from the pharmaceutical industry. Acceptance from the retail and franchising industries. And most of all, acceptance from the communities and patients we serve, our customers. That to me is the measure of our success.

Q4. I noticed you defended your low price positioning immediately when Mercury dropped some of their prices before. Please share your thoughts about this particularly on engaging price wars.

A4: Our suppliers are from everywhere. Multi-national and national companies. They understand the business model in which we operate hence, we negotiate for best prices which in turn, is enjoyed by our consumers and patients. Our overhead is low, hence logically, our price points are lower than Mercury.

Q5: Generika is now growing fast. What is your competitive advantage to Generika?

A5: We have the first-to-market advantage. We take pride in our first-to-market lead. Our presence can be felt everywhere – from small towns to the big cities, hence entrepreneurs and our current franchisees and partners have chosen us and stay with us. Our traditional and non-traditional media touchpoints can be felt and seen everywhere. One always feels flattered when other players copy our business model and other marketing efforts. We must be doing something correctly.

Q6: Do you see the day Mercury will launch their own generic medicine version at low price? How would you be affected?

A6: They can do anything. As you say they are giants. But they must balance their current portfolio and their current suppliers – mostly branded – with their future growth plans should they decide to carry their own generic house brands. Should they do, that will strengthen even further our business model of carrying generic medicines. That would be a validation of the journey we have started several years back.

Q7: You  have resorted to franchising but never collect franchise royalty payment even if they are published and indicated in your contract. Why is this so?

A7: This is to further incentivize our franchisees whom we call and regard as our business partners. We are growing together. We can always implement in the future. It’s not about money all the time.

Q8: In the era of mergers and acquisitions (M&A), are you open to buying competition? What about selling the company? Who can create value buying TGP?

A8: We are open to acquisitions – buying the competition. Everything is a possibility. We have also recently mulling over the bricks and clicks of doing IPO. By virtue of being the largest pharmacy chain in the country, we are also the largest retailer in the country, which means we can sell and push practically anything under the sun.

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