X5 buys into pharmacy retail through А5

Х5 Retail Group has announced the purchase of an 8.45% in А5 Pharmacy Retail, the managing company of the A5retail pharmacy chain.

According to Roman Buzdalin, A5 pharmacy general director, X5 has paid for the minority stake with retail property space to A5, meaning that X5 will be paying rent for operating on the space owned by A5. The total amount of A5 pharmacy stores opened on the X5 retail premises has reached 190 with an average 25-30 sq. m per store. Along with the recent agreement the X5 has extended an option to consolidate the pharmacy retailer in 2012. According to Pharmexpert, X5 will acquire one of the largest pharmacy retailers in Russia’s fragmented retail pharmaceuticals sectors with a 0.94% share of the market, compared to market leader 36.6 and its 2.53% market share.Renaissance Capital analyst, Natalia Zagvozdina, says  the alignment of pharmacy services with food retail will provide synergies.  “Pharmacy together with food retail will attract more customers to the stores providing supplementary products demanded by the customers” InvestCafe analyst, Anton Safonov, said despite the attraction of increased footfall the pharmacy retail sector is losing attractiveness due to heavy regulation.“ I don’t think X5 is looking for quick profits, but rather long term expansion and integration providing a full range of customer services in its numerous stores to increase turnover.”