Project Briefings: The proposed project is a well-built medical store with all of the product range in stock for

sales. The proposed Size of the medical store should be around 800 sq. feet, with electricity and 1 telephone lines. The proposed project is based on well-established Pharmaceutical Retail Chains of Pakistan. As such there is no specific time required for the entry time in pharmaceutical sector. As the need is increasing day by day due to the increase in population and diseases, investment in this sector can be made any time in the year. Sector and Industry Analysis: The review of Pakistani pharmaceutical market shows that there are around 450 companies, which are registered with the Ministry of Health. Out of some 350 manufacturing units operating in the country include dozens of multinationals. Multinational pharmaceutical companies have played a vital role to provide the base for the growth of the pharmaceutical industry since the emergence of Pakistan. They have been enjoying the bulk of the business and are still enjoying after so many years, though their collective market share has dropped significantly during last 18 years. In 1985, the MNCs enjoyed 65 per cent of the market share while the national companies had 35 per cent of it. The national pharmaceutical companies have improved their market share by an average of 1.2 per cent every year. This percentage share increased up to a level of 53% in the year 2000 and this 18 per cent gain has come at the cost of MNCs whose collective share has dropped by an equal percentage to 47 per cent during the same period. Thus in 2000, the share of national companies stood at 53 per cent, 6 per cent more than that of the MNCs. The Pharma Industry has experienced major growth in recent years. As per an estimate the Pharma industry is growing at 18% annually. The Pakistan s harsh climate provides more favorable business opportunities in pharmaceutical business. Market Information: The review of Pakistani pharmaceutical market shows that there are around 450 companies which are registered with the Ministry of Health, some 350 manufacturing units operating in the country including dozens of multinationals. Healthcare in Pakistan is still in the early stages of development. Widespread poverty and a weak health system underlie the poor health status of the population. Government funding continues to be minimal, equal to around 3% of GDP and achieves little more than maintaining the status quo, while the problems of poor nutrition and sanitation are compounded by Pakistan's large and fast growing population. However as the economy improves, the level of spending may well begin to rise. Other issues at the heart of the problem include the continuing prevalence of communicable diseases, low health manpower levels and the under- utilization of primary health facilities. The National pharma industry has shown a progressive growth over the years, particularly over the last one decade. The industry has invested substantially to upgrade itself in the last few years and today the majority industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as international Guidance. Currently the industry has the capacity to manufacture a variety of product ranging from simple pills to sophisticated Biotech, Oncology and Value Added Generic compounds. Although Pakistan 's pharmaceutical and healthcare sectors are expanding and

evolving rapidly, about half the population has no access to modern medicines. Clearly this presents an opportunity, but much more work needs to be done by the government and industry's stakeholders. The value of pharmaceuticals sold in 2007 exceeded US$1.4bn, which equates to per capita consumption of less than US$ 10 per year and value of medicines sold is expected to exceed US$2.3 B by 2012. Pakistan is a developing pharmaceutical market, with a large population and economic progress evident, but per capita drug spending was rather low at around US$9.30 in 2007. Private spending accounts for 65% of total healthcare expenditure sourced through out-of pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1% of the country's GDP, comparable to levels in some neighboring countries but above that in some of the South Asian countries. The forecast period is likely to witness the marginal strengthening of the generics sector, albeit more in terms of volumes than values. The share of generics is also likely to increase further as major drugs come off-patent in the near term, to the likely benefit of the generics-dominated local industry. The Pakistan pharma industry is relatively young in the international markets with an export turnover of over US$ 100 Million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authorities all over the world. Like domestic market the sales in international market have gone almost double during last five years. The pharma industry is focusing to an Export Vision of USD 500 Million by 2013. In the meantime, exports are also likely to be boosted by new regional and global opportunities. Target Customers: The major target market for the facility consists of residential areas in the vicinity of the medical store. Major Players: The pharmaceutical industry is growing in Pakistan day by day. Out of the national and multinational companies operating in Pakistan the major players in this sector are: Name of the Company Fazal Din & Sons (Pvt.) Ltd. Fazal Din Pharma Plus Zaka Pharmacy Clinix Servaid Guardian No. of retail stores in Lahore 2 15 11 15 15 10

Project Capacity: The product range offered on a Medical Store is blend of both multinational and national companies products and General Products (Toiletries, Shampoos, Soaps, Diapers (sanitary napkins) and Cellular Prepaid Cards). The proposed medical store will remain open for 24 hours (3 shifts). It is recommended to start with one retail outlet and expanding the operation by one outlet after every 5 years.

Proposed Location:

A medical store should be easily accessible and should have considerable population concentration. It is proposed that the outlets may be opened in the big cities of Punjab i.e. Lahore, Faisalabad, Multan, Rawalpindi, Sialkot, etc. But specifically in this pre-feasibility study some locations are proposed in Lahore. Considering the spread of new well developed residential areas some of the suitable locations in Lahore are: Main Boulevard Allama Iqbal Town Near Akbar Chowk, Faisal Town Johar Town Near Doctors Hospital DHA EME Colony Tech Society Jail Road Mughal Pura Chowk Chauburji Or any locations near any new hospital or emerging clinics. Key Success Factors: Some of the Key Success factors that will determine the success of this project include: Availability of complete product range Availability of regular medicine supplies. A well trained Pharmacist Reasonable and competitive prices. Inventory control to avoid any pilferage. Project Cost: Total project cost 6.679 million decided by the member after the project servey of different pharmacy. Detail is given below: Capital Investment Rs. 2,895,000 Working Capital Requirement Rs. 3,784,828 Total Investment Rs. 6,679,828 The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity. However this composition of debt and equity can be changed as per the requirement of the investor.

Debt Equity Total project Investment

Viability:

50% 50% Rs. 6,679,828

3,339,914 3,339,914

IRR NPV @25% Pay Back Period (year)

Proposed Product Mix:

% Rs. Yrs.

2603076 48.83

The proposed medical store will be offering a blend of different products. Percentage quantity of each item offered on the store is based on survey of distribution companies. Following is the list of products, which are to be offered on medical store. Product Category Products of Multinational Companies Products of National Companies Toiletries Pre Paid Cards
Major Suppliers:

Percentage In Total Sales 42.35 51.76 2.35 3.53

Productts off Mullttiinattiionall Companiies Abbott, GSK, Aventis, Novartis, Pfizer, ICI, Squib, Schering, Lilly, Rackitt & Benckiser, BD, Searl, Hilton, Roche, Park Davis, Up John (Pharmacia)
Productts off Nattiionall Companiies Sami, Getz, Highmount, Wythe Schazoo, Eferoze, Reko, Atco, Nabi Qasim, Highnoon, Woodwards, Servier

Toiillettriies Rose Petal, Flying, Lever Bros. Etc. Prepaiid Cards Jazz, UFone, Warid, Telenor, Zhong
Profiit Margiins The sales prices charged for each item would be competitive and will only be earning a certain percentage of revenue. Percentage margin charged on each type of product is as under: Item Margin on Multinational Sales Margin on National Sales Margin on Toiletries Margin on Mobile Cards Estimated Sales: Total amount of sales is based on survey and observation. Total sales assumed for the first year are as under: Profit Margin 10% 15% 10% 4.0%

Estimated Sales
% of Sales 42.35 51.76 2.35 3.53 2012 12,960,000 15,840,000 720,000 1,080,000 2013 14256000 17424000 792000 1188000 2014 15681600 19166400 871200 1306800 2015 17249760 21083040 958320 1437480 2016 18974736 23191344 1054152 1581228

Multinational Products National Products Toiletries Pre-paid Cards

Total Sales For The First Year

100

30600000

33660000

37026000

40728600

44801460

Above mentioned sales are assumed for the first year on the basis of survey. Annual growth rate in sales is taken as 10%. Other Income: Other income includes revenues from diabetes tests, blood pressure checking and any sort of intra muscular injections. Such income is taken as 1% of the total annual revenues. Office Equipment:

Details of Office Equipment

Refrigerator Split Units Computers UPS Printers Software Chairs Counter & Show cases Gluco meter & BP apparatus Fax Total Cost

Quantity 2 4 2 2 2 1 6 1 1 1

Price (Rs.) 40,000 40,000 25,000 20,000 7,500 100,000 1,500 1,243,500 8,800 15,000

Total (Rs.) 80,000 160,000 50,000 40,000 15,000 100,000 9,000 1,243,500 8,800 15,000 1721300

HUMAN RESOURCE REQUIREMENT:

Medical Store will run for 24 hours in three shifts (i.e. 8 hours per shift). Shift timing will be: Shift 1 Shift 2 Shift 3 8:00 am to 4:00 pm 4:00 pm to mid night midnight to 8:00 am

The staff will include Pharmacist who will have B-Pharmacy degree. Accounts officer must be B. Com and having two to three years experience in related field. Computer operator will be one year diploma holder having knowledge of proper inventory control. Human resource requirement for the proposed project is as under:

Staff Requiirement (3 shiifts)

Positions Administrative Staff: Owner Accounts officers Pharmacist Sales man Cashier Security Guards Grand Total: Number 1 2 1 13 2 3 22 Salary/month 50,000 15,000 20,000 8,000 8,000 8,500 109500 Annual salary 600,000 360,000 240,000 1,248,000 192,000 306,000 2946000

PROJECT COSTS:
Project Costs
Capital Costs Office Equipment Preliminary Expenses Pre-operational Expenses Total Capital Costs Working Capital Inventory Accounts Payable Total Working Capital Project Cost Rs. 1,721,300 75,000 1,100,000 2,896,300 3,823,000 -37,697 3,860,697 6,756,997

Key Assumptions:

14 KEY ASSUMPTIONS
Tablle 14-1 Operatiing Assumptiions Hours operational per day Days operational per month Day operational per year 24 hours 30 days 360 days

Tablle 14-2 Revenue Assumptiions Revenue assumption Revenue classification Sales growth rate Other Income (%age of revenues)

Survey of Distribution companies & Pharmacy On the basis of diseases 10% 1%

Tablle 14-3 Expense Assumptiions Printing & Stationary Entertainment Communication Expense Consultancy Charges and Audit (Annual) Electricity cost growth rate Electricity rate / unit Kilo Watts Consumed per day Depreciation Method Depreciation Rate on Furniture Depreciation Rate on Electric Equipment Computers and printers

1% of Revenue 0.1 % of Revenue 0.1% of Revenue Rs. 20,000 10% Rs. 15 5.7 Written Down Value 10% 10% 20%

Tablle 14-4 Cash Fllow Assumptiions Accounts payable cycle Inventory

7 days 45 days

Tablle 14-5 Fiinanciiall Assumptiions Project Life Debt Equity Debt Tenure Interest rate Income tax rate Discount rate (weighted avg. cost of capital for NPV) Minimum Cash Balance

10 Years 50% 50% 5 Years 16% 25% 25% Rs. 0.5 Million