Drogaria São Paulo accelerates investments and can open nearly 200 shops in two years

Drogaria São Paulo accelerates investments and can open nearly 200 shops in two years

Privately held company stands firm after “boom” of IPOs of pharmacy chains throughout the pandemic

After a “boom” of initial public offerings (IPOs) of drugstore chains on the Brazilian stock exchange throughout the pandemic, the DPSPowner of the brands Drugstores São Paulo and Pacheco, has remained firm as a privately held company.

But that didn’t stop it from growing. The company will invest BRL 450 million this year, a figure BRL 100 million more than in 2021. As a result, it should close 2022 with 77 new stores open and the network’s debut in its ninth state, Mato Grosso.

According to the president of DPSP, Jonas Laurindvicius, who has just completed one year at the helm of the company, arrival in Mato Grosso surprised the network. The numbers proved that the decision was right.

Revenue per store in the state far exceeds the national average, which is currently R$850,000 per month, said the executive, without giving further details.

And the plan is to accelerate. For 2023, the opening of 120 new stores is mapped – and even then there is no IPO or the attraction of a strategic investor on the horizon.

“Our company is very profitable and generates good cash, which is enough for strong growth”, says Laurindvicius. The projection is that revenues reach R$ 13 billion this year, compared to revenues of R$ 12 billion last year.

In Brazil, the sector leader is RD, from the Raia and Drogasil chain, according to data from the Brazilian Association of Pharmacy and Drugstore Chains (Abrafarma), with a turnover of around R$ 25 billion last year.

DPSP, on the other hand, ranks second, but is already closely monitored by the Pague Menos chain, which gained more size with the acquisition of Extrafarma. According to data from Varese Retail consultancy, the five largest chains have a 35% share in the sector as a whole.

With 1,400 stores – 900 of them under the São Paulo brand and the rest Pacheco -, the president of DPSP says that, after entering Mato Grosso, the strategy will be to grow in the states where the chain has already set foot.

With presence in nine states plus the Federal District, according to him, there is still space for 600 new stores in these regions. Even with the acceleration of growth, the company will still follow well behind RD, since the first in the ranking has more than 2,500 stores and has been opening 250 units a year.

Laurindvicius explains that in Mato Grosso, however, the logic of the debut was different. An internal study of the company showed that there was an opportunity for entry due to the proximity of the company’s distribution center, in Goiás, which would guarantee easy logistics. Three stores have already been opened and another five will come off the ground this year.

market gain

With an outbreak of flu out of season in Brazil, many pharmacies were out of stock this year, with a lack of various types of medicines, such as antibiotics and antipyretics.

DPSP, benefiting from contracts with pharmaceutical industries and with logistical flexibility to transfer medicines from one unit to another, was able to better circumvent the problem of market supply, which translated into market gain in São Paulo, says the president of network.

As it is privately held, the executive does not open up the market share gain, claiming to be a strategic fact. The total revenue of the sector in Brazil, per year, is more than R$ 64 billionaccording to a survey carried out by Abrafarma.

Alberto Serrentino, a retail specialist and partner at the consulting firm Varese Retail, explains that publicly traded companies have more oxygen for rapid expansion, such as RD, now the isolated leader in the country. “The sector still has room for expansion and consolidation and the large chains are getting stronger in the countryside”, he comments.

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