Is private label growth a threat?

Is private label growth a threat?

A propitious context ūüí°

Against a backdrop of high inflation, pharmacy groups are developing their own brands to keep up with the competition.

Does this strategy have a direct impact on laboratory sales?

To cut costs, these groups launch their own brands, marketing directly in pharmacies and sometimes reserving specific areas for these products.

In this way, pharmacies can achieve margins of up to 50% on the sale price, boosting their profitability.

Faks has taken a long, hard look at the subject, and we've summed it up for you in this article!

What does the future hold for private labels? ūüĒģ

In recent years, private labels have become the norm in most French pharmacies. In 2021, the LPC (Labo Pharma Conseils) observatory announced that 81% of French pharmacy groups had a private label.

And the trend is set to continue. In fact, some of the biggest national pharmaceutical groups have been tackling this issue for some years now, with considerable resources at their disposal.

The case of Pharmabest is probably the most striking. After a 15% increase in private-label sales in 2023, the group is announcing the launch of its new Puret√© brand, which will expand its private-label range in 2024. After a financial year 2023 that ended with ‚ā¨11 million in private label sales for the group as a whole, David Abenhaim declares that he wants to reach ‚ā¨50 million within 2 to 3 years. The message is clear: PharmaBest is giving private label an important place in its development over the coming years.

The Lafayette group has no limits either... With a private label already firmly established in its pharmacies (700 references), Lafayette also wants to rely on its private label for its development. Last November, Christiophe Bernard, Lafayette's Network and Operations Director, declared that the group's objective was to achieve 10 to 15% of sales per pharmacy for private label within 5 years (compared with 5% today).

Regards crois√©s: what the market thinks ūüí≠

Grouping side :

Géraldine Crombez

Santalis Brand Manager

Does your private label carry weight in your relations with your partner laboratories?

"More and more, because we have more and more products (20 products will be launched this year = 50 in all).

We take into account the products we have so that they don't clash with other labs in terms of animation.

We prefer private label. We don't have the same sales, we don't compete with the big labs in terms of value, but our brand plays a role and we favor it in certain months."

Do you feel that your members are taking sufficient advantage of private label?

"The vast majority of our members are taking advantage of it. Some still don't get enough out of it because they don't have enough exposure, training, visibility in the pharmacy... That's where the CDO needs to spend time in the pharmacy.

When we look at our members' cash outflows, we see that if they play the game, it works, and the figures show it. We just need to communicate more about these private label benefits."

How do you see private-label pharmacy sales evolving?

"For Santalis, the potential for development is significant, even if inflation has eased off in early 2024. Private label is a weapon. It's an attractive proposition for patients, both in terms of quality and breadth of choice, and in terms of price. At Santalis, we're only at the beginning, and there's still a lot to do. Private label is a major contributor to pharmacy sales, and we're going to continue to work in this direction.

Pharmacist's side

What advantages does your group's private label offer you?

"There are many advantages to belonging to a group. Private label is one of them, particularly in terms of access to the group's platform, which lists numerous products at attractive prices.

The group's private label is a real plus for the pharmacy, as the products are exclusive."

Does the group take measures to promote private labels?

"Yes, they have many measures to highlight their products.

Visits to pharmacies to present products, train teams and pass on samples."

Have you noticed any change in patients' perception of private label?

"Yes, consumers tend to turn to our private label products, mainly because of their low cost.

Feedback on the products is good, customers like them because the products are cheaper and the perception of quality remains more or less equivalent."

In conclusion

The rise of private label in the pharmaceutical sector is proving to be more than just a trend.

This development poses new challenges for pharmaceutical companies, but also offers significant growth opportunities for pharmacies, thanks to attractive margins and a strengthened relationship with patients.

As private label continues to grow in importance, it's essential for industry players to understand and capitalize on its benefits.

From these enlightening testimonials, it's clear that private label is not just an economic concept, but a genuine opportunity for innovation and differentiation, in the service of a more competitive pharmacy attentive to its customers' needs.

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