Generika Drugstore 2008

Abstract

Generika Drugstore is a Filipino drugstore chain focused on the sale of generic medicine. Tackling the country’s challenge of unaffordable health care, Ted Ferrer and his business partner Julien Belo developed Generika’s concept in 2004: to provide access to safe, affordable and quality generic medicines for the less fortunate Filipinos. With their offer of low-cost, quality medicines and healthcare service for the poor, they met a nerve and soon saw customers returning regularly. By 2008, Generika had opened 16 company-owned stores and was serving several thousand clients. However, initial funds were exhausted, and the company had to start making profit in order to survive. If Generika did not start generating profit, many lives would be adversely affected. External funding was scarce, so franchising as a way to achieve scale was their unique solution to expand profitably within in a business environment of low margins. The founders decided to open their business model to franchising to local entrepreneurs and gradually expanded their geographic scope across various Filipino islands. This choice helped them to reach the scale they needed to enter the profitability zone. By the end of 2018, the company had grown to almost 800 branches nationwide, establishing an inclusive franchising model as the way to business success. Students are supposed to put themselves into Mr. Ferrer’s shoes in 2008 and evaluate the franchising option by understanding the particular environment of inclusive business models, identifying the difference in cost structure between the company-owned store model and the franchising model, defining opportunities and risks of for-profit social franchising, and developing an approach as to how to realize the franchising idea.

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