This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023

ALPRO Pharmacy Sdn Bhd is in the middle of a six-year expansion plan to quadruple the daily footfall of 50,000 at its community pharmacies across Malaysia. It is also exploring joint-venture opportunities with regional players to widen its footprint in Southeast Asia.

“We are a community pharmacy with a focus on preventive medicine and how we dispense it. I believe in a complete healthcare ecosystem, and Alpro is expanding aggressively to hit the target of 200,000 patrons a day in three years’ time. We largely cater to the elderly as Malaysia is an ageing nation,” its group CEO Low Swee Siong tells The Edge.

“As a pharmacist, I have found my involvement in hospitals to be limited. I had patients with gangrene plead with me to save their lives but despite my best efforts, some died because medicines [alone were not the answer]. I realised that our involvement should be in educating the wider community on prevention. That is far more effective.”

Low started the first Alpro pharmacy with his partner Hiew Fei Tsong in Port Dickson, Negeri Sembilan, in February 2002 after they completed their compulsory service at a local hospital. Low focuses on growing the business while Hiew is involved in the day-to-day operations of the business.

Alpro has been on an aggressive expansion plan for the past three years and intends to enlarge its network of 280 outlets in Malaysia to 300 by the year end. The upcoming outlets will be in Negeri Sembilan, Johor, Penang, Sabah, Sarawak, Perlis, Kedah and Selangor, giving the company access to all the states in the country.

Alpro’s business is divided into three segments: pharmacy and prescription medicine, which contributes 35% to group revenue; preventive healthcare, including supplements and health food (30%); and medical devices and rehabilitation equipment for the care of the elderly (silvercare), as well as mothers and babies.

Contributing significantly to the business segments are sales from Alpro’s pharmacy outlets; its physiotherapy arm, which has 11 centres in Seremban, Kuantan, Melaka, Ipoh and Kota Kemuning in the Klang Valley; its distribution segment; as well as corporate panel pharmacy service clients.

The last segment is a professional pharmacy service that aims to reduce companies’ medication expenditure. Alpro started this business segment six years ago and now has more than 200 corporate clients.

Low refutes the notion of Alpro being in direct competition with large pharmacy players such as Guardian, Watsons and Caring, which collectively appear to dominate the retail scene.

By the World Health Organization’s standards, the ideal pharmacist-to-population ratio is one to 2,000, he points out. “Therefore, with a population of 35 million in Malaysia, we should have 8,750 pharmacy outlets [with two pharmacists at an outlet] in the country. By industry estimates, there are only 3,000 pharmacies in Malaysia. We have a wide community who need the pharmaceutical services that Alpro provides,” he adds.

Alpro’s website lists a wide array of healthcare consultation services such as audiology, birth control teleconsult, men’s health teleconsult and medication disposal services. Its silvercare services include hearing aid assessment, rental of wheelchairs, hospital beds and oxygen concentrators, as well as the repair of selected items.

Low says the group does not charge for consultations by its pharmacists and healthcare professionals at its pharmacy outlets or via e-pharmacy consultation.

“I’ve seen one of my pharmacists sketch on a piece of paper explaining the relationship between blood vessels and statins [a type of medication to treat high cholesterol] to an elderly patient in order to help him understand his body’s needs and how the medication can help him. When he understands, he will commit to his medication so that his illness is managed or contained,” he adds.

“We hire a wide network of 350 dietitians. Each outlet has one. We monitor our patients’ health progress without charge. By having a pharmacist and a dietitian at Alpro outlets, we are able to provide more holistic healthcare services to customers seeking our service.”

Alpro intends to leverage its partnership with Sugi Holdings Co Ltd, a Japan-based pharmacy chain with which it formed Alpro Sugi Venture Sdn Bhd on July 6 last year to exclusively offer Japanese healthcare and personal care products in Malaysia.

Last month, the joint venture launched its maiden Alpro Sugi Pharmacy at Starling Mall in Petaling Jaya, Selangor, followed by Paradigm Mall Johor Bahru in Johor. Another three Japanese-style outlets are expected to be launched by the first quarter of 2024. One will be in Kuantan, Pahang, while the locations of the other two are being replanned due to the positive response to the flagship outlet in PJ, says Low.

The joint venture aims to expand its pharmacy business across Southeast Asia, bringing Japanese-style pharmacies to countries in the region such as Brunei, Singapore, Vietnam and Indonesia, which is its priority.

Low explains that the collaboration came about when he wrote to industry leaders in the elderly care business in Japan and Taiwan at a time when he was deepening his knowledge of the field.

“The owners of Sugi responded, and I found the thinking of its founders, a husband-and-wife team who are pharmacists themselves, to be very much aligned with that of Alpro. Although we can have an impressive array of products at our partnership stores, we are not just selling merchandise. We believe in service and being able to sustain and stabilise the health of customers — and the Sugi family gets that,” he says.

“We would like to serve 200,000 people every day. Currently, we serve about 50,000 patients a day at our outlets. If we’re able to serve 200,000 individuals every day and they return every month, Alpro will be able to serve about 20% of the Malaysian population, in order to contribute significantly to the local healthcare sector.”

Alpro makes a “decent profit margin of 27%” as the majority of the group’s offerings are sourced directly from the respective principals for better rates, thanks to high purchase volumes, says Low.

A company search on Alpro at the Registrar of Companies (ROC) reveals that no financial records or data was recorded in the past few years. When asked about this, Low explains that he had sought an exemption from ROC to not publish the company’s financial data as it invited too much attention from venture capitalists in the past.

Even so, he points out that during the Covid-19 pandemic, Alpro’s revenue ballooned by 38% in 2020 and it has maintained an average annual growth rate of 30% thereafter.

A back-of-the-envelope calculation shows that based on the collective 50,000 patrons a day across its 280 outlets, with an average basket size of let’s say RM80, the company would derive a revenue of at least RM120 million a month. At a gross profit margin of 27%, its gross profit before tax would work out to RM32.4 million a month.

According to Low, the capital expenditure per new outlet comes up to about RM600,000 to RM700,000, inclusive of inventory, renovations and set-up, and operating costs for the first three months. Break-even is possible by the end of the second year, or sooner, with a return on investment of more than 60%, he reveals.

Low is not at all keen to have Alpro listed on the stock exchange and is emphatic about keeping the company private to preserve his “time and freedom to pursue the company’s expansion plans”, notwithstanding the proposals by investment bankers to consider a flotation exercise.

He recalls the first time the notion was proposed was during the initial public offering of Caring Pharmacy Group Bhd in November 2013. The group was delisted after 6½ years on Bursa Malaysia following the completion of a mandatory general offer by 7-Eleven Malaysia Holdings Bhd in May 2020. The convenience chain store operator subsequently decided to exit Caring and is disposing of its 75% stake in the group to Big Pharmacy for RM675 million.

“Our team explored the possibility of listing at length, more than once, and came away with the decision that it is not for us. I would like to maintain 100% focus on growing Alpro’s platform to provide a healthy and vibrant world to our community,” Low stresses. 

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