Vietnam-focused private equity firm Mekong Capital on Tuesday said it has provided financing to pharmacy chain Pharmacity out of its Mekong Enterprise Fund III.
According to a report by Deal Street Asia, this is the eighth company to receive financing from the fund, after it invested in mattress firm Vua Nem in June 2018.
With 200 outlets retailing both traditional Vietnamese and Western medicines, Pharmacity is the country’s most widespread network of pharmaceutical products stores, with 1 million subscribers to its loyalty program. The firm is targeting 1000 outlets in Vietnam within two years.
“Our partnership with Mekong Capital will empower us to continue improving healthcare for the Vietnamese people,” said Pharmacity founder and CEO Chris Blank, “and help accelerate our growth while better positioning us to execute on our vision and mission to build the most convenient pharmacy chain where customers fully entrust their health and wellness.”
Chad Ovel, Partner at Mekong Capital, added: “The company was the first retailer in this sector to demonstrate that all of Vietnam’s regulations and compliance thresholds can be met and still generate a healthy store level profitability.”
The company retails both Vietnamese traditional and Western medicines, as well as beauty products and vitamins.
The pharmaceutical sector in Vietnam was estimated at $5.2 billion in 2017, according to a BMI Research study. Of that, the retail segment remains fragmented. Modern pharmacy chains represent only about 1.5 per cent of the total number of licensed pharmacies, according to corporate services firm DKSH. However, modern chains have already taken up 5.5 per cent of the total sales value.
Mekong Capital has been known for its strategy of backing private businesses in fragmented markets. Electronics retailer MobileWorld is a notable example. Mekong Capital first invested in MobileWorld when it was a small company and exited the firm for a 57x return in 2018. Now the largest electronics retailer, MobileWorld has also branched into pharmacy retailing by acquiring Ho Chi Minh City-based chain Phuc An Khang.
Deal Street Asia