Novosibirsk based Melodiya Zdorov’ya pharmacies acquires Moscow’s Stoletnik pharmacies

Melodiya Zdorov'ya
Melodiya Zdorov'ya

Katren’s (pharmdistributor) pharmacy retail business “Melodiya Zdorov’ya” finishes the transaction on purchase of “Stoletnik” pharmacies which owns 57 pharmacies in the Moscow region. “Melody of health” one of the few national players who actively use M&A for development, making up to six transactions for purchase of regional networks. Stoletnik will continue operations under the same name. Financial terms of the deal were not disclosed.

“Stoletnik” pharmacies founded by Oleg Solodovnikov and Inna Lomovtseva operates stores in Moscow suburbs and has several outlets in Moscow. According to mister Solodovnikov it includes 57 pharmacies. According to Vademecum, the chain’s revenues for the first half of 2017 amounted to 806 million rubles, the average revenue per pharmacy — 2,6 million rubles. Managing partner of the Association of independent pharmacies Alexander Kondratyev believes that the owners of “Stoletnik” could not withstand the growing competition with large Federal pharmacy networks widely opening their own pharmacies, and were forced to exit the business. The approximate cost of the transaction, he estimated at 260 million rubles.

Novosibirsk based “Melodiya Zdorov’ya” belongs to one of the largest pharmdistributors in Russia “Karten” represented in 53 regions of Russia. According to RNC Pharma, at the end of the third quarter of 2017, the network consisted of 1180 pharmacies with a market share of 1.4% (the 13th place among all pharmacy networks). The revenue of the retailer in the first half of 2017 amounted to 8.1 billion rubles.

The development model of “Melodiya Zdorov’ya” provides both organic growth and mergers and acquisitions, as per “Karten” 2016 report. In recent years, “Melodiay” really started to expand by buying smaller regional players. In 2016 the company acquired six pharmacy chains, as follows from the their report. Last year “Melodiya Zdorov’ya” bought Tyumen based network of “Dobryi Lekat” (16 pharmacies) and Kursk based “Tselitel” (39 pharmacies). Pharmretailer also expected to purchase the Chelyabinsk based network “Klassiki” (180 pharmacies), but it eventually went to Samara sabed “Implosiya”.

Official website of “Melodiya Zdorov’ya” says that the company is interested in purchase of pharmacy chains and single stores regardless of their locations. The retailer is looking for assets in which the average revenue per pharmacy is not less than 1.5 million rubles with a long-term rent and profitability.

Growth through M&A is not common to all major participants of Russian pharmaceutical retail market. For instance, “Marathon group” of Alexander Vinokurov and Sergey Zakharov “Mega farm” (owns pharmacies “Azbuka Life”, “Da Zdorov” and “A-Mega”) in 2016 started to open pharmacies in checkout areas of the stores of the largest Russian food retailer X5 Retail Group (“Pyaterochka”, “Perekrestok”, “Karusel”) and “Azbuka Vkusa.” “Rigla” pharmacies (belongs to another major pharmdistributor Protek) at the end of last year declared intention to develop franchising in regions where the network doesn’t have its pharmacies.

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