SMEDA Medical Store

Pre-Feasibility Study
MEDICAL STORE
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
th
6 Floor LDA Plaza Egerton Road, Lahore
Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
Helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
PUNJAB SINDH BALOCHISTAN
NWFP
5TH Floor, Bahria Ground Floor Bungalow No. 15-A

8th Floor LDA Plaza Egerton
Road, Lahore Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Karachi.
Tel 111 111 456, Fax: The Mall, Peshawar. Airport Road, Quetta.
Tel: (021) 111-111-456
6304926-7 Website Tel: (091) 9213046-47 Tel: (081) 831623, 831702
www.smeda.org.pk Fax: (021) 5610572
Fax: (091) 286908 Fax: (081) 831922
helpdesk@smeda.org.pk Helpdesk-khi@smeda.org.pk
helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
January, 2007
Pre-Feasibility Study Medical Store
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information he/she feels necessary for making an informed decision.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Document No. PREF-82
Revision 3
Prepared by SMEDA-Punjab
Issue Date August, 2004
Revision Date January , 2007
Issued by Library Officer
PREF-82/January 2007/Rev3 1
1 INTRODUCTION TO SMEDA.................................................................................................... 4
2 PURPOSE OF THE DOCUMENT ............................................................................................... 4
3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 5
4 PROJECT PROFILE.................................................................................................................... 5
4.1 OPPORTUNITY RATIONALE ...................................................................................................... 5
4.2 PROJECT BRIEF ....................................................................................................................... 5
4.3 MARKET ENTRY TIMING ......................................................................................................... 6
4.4 PROPOSED BUSINESS LEGAL STATUS ....................................................................................... 6
4.5 PROJECT CAPACITY AND RATIONALE ....................................................................................... 6
4.6 PROJECT INVESTMENT ............................................................................................................. 6
4.7 PROPOSED PRODUCT MIX ........................................................................................................ 7
4.8 PROPOSED LOCATION .............................................................................................................. 7
4.9 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS ............................................................ 8
4.10 STRATEGIC RECOMMENDATIONS ............................................................................................. 8
4.10.1 Product Range counts a lot............................................................................................ 8
4.10.2 Customer Service .......................................................................................................... 8
4.10.3 Location of the outlet..................................................................................................... 8
5 SECTOR & INDUSTRY ANALYSIS........................................................................................... 8
5.1 SECTOR CHARACTERISTICS ..................................................................................................... 8
5.2 SUB SECTOR INFORMATION ..................................................................................................... 9
The Pharma Industry has experienced major growth in recent years. As per an estimate the Pharma
industry is growing at 18 % annually. The Pakistan’s harsh climate provides more favorable business
opportunities in pharmaceutical business.......................................................................................... 9
5.3 LEGAL ISSUES REGARDING INDUSTRY ..................................................................................... 9
5.4 MAJOR PLAYERS ..................................................................................................................... 9
6 MARKET INFORMATION ......................................................................................................... 9
6.1 MARKET POTENTIAL ............................................................................................................... 9
6.2 TARGET CUSTOMERS ............................................................................................................ 10
7 PRODUCT................................................................................................................................... 10
7.1 MAJOR SUPPLIERS ................................................................................................................. 10
7.1.1 Products of Multinational Companies .............................................................................. 10
7.1.2 Products of National Companies...................................................................................... 11
7.1.3 Herbal Products .............................................................................................................. 11
7.1.4 Food Supplements............................................................................................................ 11
7.1.5 Eatables .......................................................................................................................... 11
7.1.6 Toiletries ......................................................................................................................... 11
7.1.7 Sanitation Products.......................................................................................................... 11
7.1.8 Prepaid Cards ................................................................................................................. 11
7.2 PROFIT MARGINS .................................................................................................................. 11
7.3 OTHER INCOME ..................................................................................................................... 12
8 LAND & BUILDING REQUIREMENT .................................................................................... 12
8.1 LAND REQUIREMENT ............................................................................................................ 12
8.2 UTILITIES REQUIREMENT ...................................................................................................... 12
9 OFFICE EQUIPMENT............................................................................................................... 12
10 HUMAN RESOURCE REQUIREMENT................................................................................... 13
11 PROJECT COSTS ...................................................................................................................... 14
12 FINANCIAL ANALYSIS............................................................................................................ 15
12.1 PROJECTED INCOME STATEMENT ........................................................................................... 15
12.2 PROJECTED BALANCE SHEET ................................................................................................. 16
12.3 PROJECTED CASH FLOW STATEMENT ..................................................................................... 17
12.4 REVENUE CALCULATION ....................................................................................................... 18
13 KEY ASSUMPTIONS................................................................................................................. 19
1 INTRODUCTION TO SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established
with the objective to provide fresh impetus to the economy through the launch of an
aggressive SME support program.
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved recommending changes in the regulatory environment by taking into
consideration other important aspects including finance, marketing, technology and
human resource development.
SMEDA has so far successfully formulated strategies for sectors including, fruits and
vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear,
textiles, surgical instruments, transport and dairy. Whereas the task of SME development
at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s
areas of operation.
Along with the sectoral focus a broad spectrum of business development services is also
offered to the SMEs by SMEDA. These services include identification of viable business
opportunities for potential SME investors. In order to facilitate these investors, SMEDA
provides business guidance through its help desk services as well as development of
project specific documents. These documents consist of information required to make
well-researched investment decisions. Pre-feasibility studies and business plan
development are some of the services provided to enhance the capacity of individual
SMEs to exploit viable business opportunities in a better way.
This document is in the continuation of this effort to enable potential investors to make
well-informed investment decisions.
2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs
in project identification for investment. The project pre-feasibility may form the basis of
an important investment decision and in order to serve this objective, the document/study
covers various aspects of project concept development, start-up, marketing, finance and
business management. The document also provides sectoral information, brief on
government policies and international scenario, which have some bearing on the project
itself.
This particular pre-feasibility is regarding Medical Store, which comes under

Pharmaceutical sector. Before studying the whole document one must consider following
critical aspects, which forms the basis of any investment decision.
3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

Before making any investment decision, it is advisable to evaluate the associated risk
factors by taking into consideration certain key elements. For starting a medical store
critical factors that should be taken into consideration before launching the project are
listed below:
 Number of customers to the Medical Store will determine the financial success of the
project. The entrepreneur should analyze the minimum percentage of population that
it will have to mobilize out of the total population to achieve a steady flow of
customers. In order to do this, the entrepreneur should analyze existing competing
Medical Store businesses in the target vicinity.
 Looking at the nature of the products offered on a medical store, it is advised that the
store should be established in a city that has a population to cover the sales concept of
the project.
 Another aspect linked with the revenue generating capacity of the project is the
spending pattern of the potential customers in a specific city. Average per capita
income in Pakistan is USD 830/yr and increasing concern of people about their health
and fitness show that now people are consuming more medicines. This factor is very
helpful and it is observed in recent days that international multinational
pharmaceutical companies are looking at our country as potential market.
 Selection of location for sales outlet is an important factor in the successful running
of any medical store. Areas in the vicinity of a hospital/clinic or the developing areas
are most suitable locations.
 Availability of complete product line is another important factor. In addition to this,

provision of other general items, for the customers, also plays a major role in
increasing sales of a medical store.
4 PROJECT PROFILE
4. 1 Opportunity Rationale
Pakistan is a very populous country. Pakistan’s population has soared up to 149.50

million, and at least one-third of it is living below the poverty level. Majority of
population has no access to clean water to drink or proper sanitation facilities. This poses
serious threats to health of masses. Moreover the variable and harsh climate of Pakistan
causes major viral diseases through out the year. This creates a great demand for
Pharmaceutical Products in Pakistan. As the major source of retail sales of Pharma
Products is through medical stores, a big investment opportunity exists in this sector.
4. 2 Project Brief
The proposed project is a well built medical store with all of the product range in stock
for sales. The proposed Size of the medical store should be around 500 sq. feet, with
electricity and 2 telephone lines. The proposed project is based on well-established

Pharmaceutical Retail Chains of Pakistan.
4. 3 Market Entry Timing
As such there is no specific time required for the entry time in pharmaceutical sector. As
the need is increasing day by day due to the increase in population and diseases,
investment in this sector can be made any time in the year.
4. 4 Proposed Business Legal Status
A medical store can be started as a sole proprietorship or a partnership and even it can be
registered under company law with Securities and Exchange Commission of Pakistan.
Although selection totally depends upon the choice of the entrepreneur but this financial
feasibility is based on a Sole Proprietorship. For getting information on the formation of
type of firm/company, please visit the Website:
www.saarcnet.org/newsaarcnet/govtpolicies/Pakistan/settingbusiness.html.
http://www.secp.gov.pk/Guides/PromotersGuide.pdf
4. 5 Project Capacity and Rationale
The product range offered on a Medical Store is blend of both multinational and national
companies’ products and General Products (Food Supplements, Toiletries, Shampoo,
Soaps, Diapers (sanitary napkins), Internet Cards, Payphone Cards and Cellular Prepaid
Cards). The proposed medical store will remain open for 24 hours (3 shifts). It is
recommended to start with one retail outlet and expand the operation by one outlet after
every 3 years.
4. 6 Project Investment
The total cost of the project is around Rs. 4.47 million.
Table 4-1 Project Costs

Capital Investment Rs. 2,939,900
Working Capital Requirement Rs. 1,536,124
Total Investment Rs. 4,476,024
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.
However this composition of debt and equity can be changed as per the requirement of
the investor.
Table 4-2 Project Financing

Debt 50% 2,238,012
Equity 50% 2,238,012

Total project Investment Rs. 3,918,224
Table 4-3 Viability
IRR % 73.22
NPV @25% Rs. 23,892,003
Pay Back Period (year) Yrs. 0.70
4. 7 Proposed Product Mix
The proposed medical store will be offering a blend of different products. Percentage
quantity of each item offered on the store is based on survey of distribution companies.
Following is the list of products, which are to be offered on medical store.
Table 4-4 Product Mix

Product Category Percentage In Total Sales
Products of Multinational Companies 39.1
Products of National Companies 44.1
Herbal Products 4.2
Food Supplements 4.2
Eatables 3.3
Toiletries 1.7
Sanitation Products 1.7
Pre Paid Cards 1.7
4. 8 Proposed Location
A medical store should be easily accessible and should have considerable population
concentration. Considering the spread of new well developed residential areas some of
the suitable locations in Lahore are:
 Main Boulevard Allama Iqbal Town
 Near Akbar Chowk Faisal Town
 Johar Town Near Doctors Hospital
 DHA
 EME Colony
 Tech Society
 Jail Road
 Mughal Pura
 Chowk Chauburji
 Or any locations near any new hospital or emerging clinics.
4. 9 Key Success Factors/Practical Tips for Success
Some of the Key Success factors that will determine the success of this project include:
 Availability of regular medicine supplies.
 A well trained Pharmacist
 Availability of complete product range
 Reasonable and competitive prices.
 Inventory control to avoid any pilferage.
4. 10 Strategic Recommendations
4.10.1 Product Range counts a lot

Variety and availability are the key factors in retail business. As far as the Pharma
business is concerned, this is the most crucial factor. Almost all major manufacturers of
pharmaceutical products offer same drugs with different names (Company Names). So
availability of all major brands is crucial.
4.10.2 Customer Service

Outlet must have a proper temperature and proper outlook to attract the customers. If we
take a look at major players in Pharma retail business, like Fazal Din’s, Zaka’s Pharmacy,
Clinix Plus, all of them have well-organized outlets all around the city. Not only the
outlets for the proposed medical store should be well organized, also the service provided
to the customers should be very quick and efficient.
4.10.3 Location of the outlet

The investment in better location pays in the long run. The Pharma retails business is
highly dependent upon the easy access for the buyers. This includes all areas near any
major hospital or popular clinics.
5 SECTOR & INDUSTRY ANALYSIS

5. 1 Sector Characteristics
The review of Pakistani pharmaceutical market shows that there are around 450
companies, which are registered with the Ministry of Health. Out of some 350
manufacturing units operating in the country include dozens of multinationals.
Multinational pharmaceutical companies have played a vital role to provide the base for
the growth of the pharmaceutical industry since the emergence of Pakistan. They have
been enjoying the bulk of the business and are still enjoying after so many years, though
their collective market share has dropped significantly during last 18 years. In 1985, the
MNCs enjoyed 65 per cent of the market share while the national companies had 35 per
cent of it. The national pharmaceutical companies have improved their market share by
an average of 1.2 per cent every year. This percentage share increased up to a level of
53% in the year 2000 and this 18 per cent gain has come at the cost of MNCs whose
collective share has dropped by an equal percentage to 47 per cent during the same
period. Thus in 2000, the share of national companies stood at 53 per cent, 6 per cent
more than that of the MNCs1.
5. 2 Sub sector Information
The Pharma Industry has experienced major growth in recent years. As per an estimate
the Pharma industry is growing at 18 % annually. The Pakistan’s harsh climate provides
more favorable business opportunities in pharmaceutical business.
5. 3 Legal Issues Regarding Industry
The medical store must be registered under Drugs Act 1976 with respective District
Health Officer (DHO). The registration fee for obtaining license is Rs. 1,200/- and license
will be renewed after every 2 years. The office of Executive Director Health is located at
24-Cooper Road, Lahore. A form is duly filled and submitted along with all the required
documents. The said form is available at the same office. After that a physical survey is
conducted by the health department and only after that license is issued.
Purchase and sale of drugs of narcotics and steroid nature will be maintained in the stock
register. All the purchase invoices and stock register will be kept for 5 years.
5. 4 Major Players
The pharmaceutical industry is growing in Pakistan day by day. Out of the national and
multinational companies operating in Pakistan the major players in this sector are:
Table 5-1 Major Players

Name of the Company No. of retail stores in Lahore
Fazal Din & Sons (Pvt.) Ltd. 4
Fazal Din Pharma Plus 9
Zaka Pharmacy 11
Clinix 6
6 MARKET INFORMATION
6. 1 Market Potential2
The review of Pakistani pharmaceutical market shows that there are around 450
companies which are registered with the Ministry of Health, some 350 manufacturing
2
http://www.piribo.com/publications/country/asia_pacific/pharmaceutical_market_pakistan.html
Pakistan Economist Apr 2004
units operating in the country including dozens of multinationals. Healthcare in Pakistan

is still in the early stages of development. Widespread poverty and a weak health system
underlie the poor health status of the population. Government funding continues to be
minimal, equal to around 3% of GDP and achieves little more than maintaining the status
quo, while the problems of poor nutrition and sanitation are compounded by Pakistan's
large and fast growing population. However as the economy improves, the level of
spending may well begin to rise. Other issues at the heart of the problem include the
continuing prevalence of communicable diseases, low health manpower levels and the
under- utilization of primary health facilities.
The Pakistani pharmaceutical market remains beset with difficulties. Strict government
control over pricing has made many drugs uneconomical, with the result that they either
become available only on the black market at inflated prices, or disappear completely. In
this environment, manufacturers, both local and foreign-owned, have proved unable to
generate the profits needed for capital investment. This is not helped by a regulatory
system best described as rudimentary. There is virtually no public drug reimbursement or
IP protection; patent law was officially tightened in December 2000, although the
effectiveness of this has been questioned. In 2002, further changes were made, making
Pakistan's IP laws even weaker. The appointment of drug inspection teams to investigate
the manufacture and sale of 'fake' drugs has met with disappointing results so far, largely
due to a lack of resources and bureaucratic complications.
Drug prices are officially controlled, although the government lacks the capacity to
enforce its policies in this area. Some price rises have been allowed since 2000, but the
current government shows little sign of enacting any serious reform of the pharmaceutical
sector, preferring to allege profiteering on the part of the pharmaceutical industry. New
legislation permitting imports of Indian-made drugs was introduced in June 2005,
although this has yet to be capitalized upon in any significant way and is unlikely to be in
the near future.
6. 2 Target Customers
The major target market for the facility consists of residential areas in the vicinity of the
medical store.
7 PRODUCT
The proposed medical store will be offering a blend of different pharmaceuticals.
Alongwith pharmaceutical products, it will also be providing approximately 33% general
items. These general items include herbal products, eatables, food supplements and
toiletries.
7. 1 Major suppliers
7.1.1 Products of Multinational Companies

Abbott, GSK, Aventis, Novartis, Pfizer, Wythe, ICI, Squib, SKB, Schering, Lilly, Rackitt
& Benckiser, BD
7.1.2 Products of National Companies

Sami, Hilton, Highmount, Schazoo, Eferoze, Reko, Atco, Nabi Qasim, Highnoon,
Woodwards
7.1.3 Herbal Products

Hamdard, Qurshi, Ajmal
7.1.4 Food Supplements

Nestle Cereals, Nido, Maggi, Slim up, Set point diet
7.1.5 Eatables
Cadburys, Union, Mitchell’s, Coca Cola, Pepsi, Nestle
7.1.6 Toiletries
Rose Petal, Flying, Lever Bros. Etc.
7.1.7 Sanitation Products

Pampers, Always
7.1.8 Prepaid Cards

Jazz, Instaone, UFone, Tango, PTCL, Flash, Rabta, WOL, CyberNet, Beconet, Hello
7. 2 Profit Margins
The sales prices charged for each item would be competitive and will only be earning a
certain percentage of revenue. Percentage margin charged on each type of product is as
under:
Table 7-1 Profit Margins

Item Profit Margin
Margin on Multinational Sales 10%
Margin on National Sales 15%
Margin on Herbal Products 30%
Margin on Food Supplements 50%
Margin on Eatables 10%
Margin on Toiletries 10%
Margin on Sanitation products 10%
Margin on Mobile Cards 3.5%
Margin on Calling Cards 5%
Margin on Net Cards 20%
Total amount of sales is based on survey and observation. Total sales assumed for the
first year are as under:
Table 7-2 Estimated Sales3

Product Category Expected Sales Amount (Rs.)
Products of Multinational Companies 10,998,000
Products of National Companies 12,402,000
Herbal Products 1,440,000
Food Supplements 1,260,000
Eatables 1,080,000
Toiletries 540,000
Sanitation Products 540,000
Pre Paid Cards 1,116,000
Total sales for the first year 29,376,000
Above mentioned sales are assumed for the first year on the basis of survey. Annual
growth rate in sales is taken as 10%.
7. 3 Other Income
Other income includes revenues from diabetes tests, blood pressure checking and any sort
of intra muscular injections. Such income is taken as 1% of the total annual revenues.
8 LAND & BUILDING REQUIREMENT

8. 1 Land Requirement
Approximately 500-sq. ft. will be required for a medical store. It is recommended that the
area should be acquired for rent. Rent cost for the proposed areas will be ranging between
Rs.80,000 to Rs.100,000. Rent cost incorporated for financial analysis is Rs.100,000.
Advance rent of six months is also to be paid.
8. 2 Utilities Requirement
Electricity
Telephone
9 OFFICE EQUIPMENT
The following equipment and furniture will be required for the offices
3
details given in financial analysis(Revenue Calculation)
Table 9-1 Details of Office Equipment

Office Equipment Quantity Price (Rs.) Total (Rs.)
Refrigerator 1 20,000 20,000
Split Units 2 25,000 50,000
Computers 1 25,000 25,000
UPS 1 8,500 8,500
Printers (Epson small) 1 12,000 12,000
Software 1 100,000 100,000
Chairs 6 600 3,600
Counter & Show cases 537,000 537,000
Gluco meter & BP 1
apparatus 8,800 8,800
Total 764,900
10 HUMAN RESOURCE REQUIREMENT

Medical Store will run for 24 hours in three shifts (i.e. 8 hours per shift). Shift timing will
be:
Table 10-1 Shift Schedules

Shift 1 8:00 am to 4:00 pm
Shift 2 4:00 pm to mid night
Shift 3 midnight to 8:00 am
The staff will include Pharmacist who will have B-Pharmacy degree. Accounts officer
must be B. Com and having one year experience in related field. Computer operator will
be one year diploma holder having knowledge of proper inventory control.
Human resource requirement for the proposed project is as under:
Table 10-2 Staff Requirement (3 shifts)

Positions Number Salary/month Annual salary
(Rs.) (Rs,)
ADMINISTRATIVE STAFF:
Owner 1 100,000 1,200,000
Accounts officers 2 10,000 240,000
Pharmacist 7 12,000 1,008,000
Computer operators 5 7,500 450,000
Security Guards 3 4,500 162,000
Grand Total: 18 3,060,000
11 PROJECT COSTS
The breakdown of total project cost is in the table below:
Table 11-1 Project Costs

Capital Costs Rs.
Office Equipment 764,900
Preliminary Expenses 75,000
Pre-operational Expenses4 2,100,000
Total Capital Costs 2,939,900
Working Capital
Inventory 1,569,000
Accounts Payable ( 32,876)
Total Working Capital 1,536,124
Project Cost 4,476,024
4
Pre-operational Expenses include advance rent of six months
12 FINANCIAL ANALYSIS
12. 1 Projected Income Statement
Projected Income Statement

Rs. in Thousands
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Sales/Revenue 29,376 32,314 35,545 39,099 43,009 47,310 52,041 57,246 62,970 69,267
Cost of Sales:
Add opening stock - 1,569 1,726 1,898 2,088 2,297 2,527 2,780 3,058 3,363
Operating expenses 20,519 20,820 22,876 25,137 27,622 30,355 33,359 36,662 40,294 44,287
Less closing stock 1,569 1,726 1,898 2,088 2,297 2,527 2,780 3,058 3,363 3,700
18,950 20,663 22,704 24,947 27,414 30,125 33,106 36,384 39,988 43,950
Gross Profit 10,426 11,650 12,841 14,152 15,596 17,185 18,935 20,862 22,982 25,317
Operating Expenses:
Administrative Expenses 3,356 3,675 4,027 4,415 5,521 6,046 6,642 7,298 8,020 8,815
Marketing Expenses 100 95 90 86 81 77 74 70 66 63
Operating Profit 6,970 7,881 8,724 9,651 9,994 11,062 12,220 13,494 14,896 16,438
Financial Charges 298 235 172 110 47 - - - - -
L C Charges - - - - - - - - - -
Other Income 294 323 355 391 430 473 520 572 630 693
Profit before Taxation 6,966 7,969 8,907 9,932 10,377 11,535 12,740 14,066 15,525 17,131
Taxation 1,393 1,594 1,781 1,986 2,075 2,307 2,548 2,813 3,105 3,426
Profit after Taxation 5,573 6,375 7,126 7,946 8,301 9,228 10,192 11,253 12,420 13,705
Acc. Profit b/f - 5,573 11,948 19,074 27,020 35,321 44,549 54,741 65,994 78,415
Un-appropriated Profit c/f 5,573 11,948 19,074 27,020 35,321 44,549 54,741 65,994 78,415 92,119
15
PREF-82/January, 2007/Rev3
12. 2 Projected Balance Sheet
Projected Balance Sheet

Rs. In Thousands
Year - 0 Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Tangible Fixed Assets 765 673 593 524 464 411 365 324 289 257 229
Preliminary Expenses 75 60 45 30 15 - - - - - -
Current Assets:
Stock in hand 1,569 1,569 1,726 1,898 2,088 2,297 2,527 2,780 3,058 3,363 3,700
Accounts Receivable - - - - - - - - - - -
Pre-paid rent 600 - - - - - - - - - -
Cash in Hand / Bank 1,500 8,703 14,759 21,529 29,112 36,911 46,185 56,406 67,683 80,124 93,844
3,669 10,272 16,485 23,427 31,201 39,208 48,712 59,186 70,741 83,487 97,544
4,509 11,005 17,123 23,981 31,680 39,619 49,077 59,510 71,030 83,744 97,773
Owners Equity:
Capital 2,238 2,238 2,238 2,238 2,238 2,238 2,238 2,238 2,238 2,238 2,238
Accumulated Profit - 5,555 11,916 19,031 26,968 35,262 44,484 54,671 65,921 78,338 92,040
Long Term Loan 2,238 1343 895 448 - - - - - - -
Current Liabilities:
Current Portion
of Long Term Loan - 448 448 448 448 - - - - - -
Tax provision - 1,389 1,590 1,779 1,984 2,074 2,305 2,547 2,812 3,104 3,426
Accounts Payable 33 32.876 36 39 42 46 50 54 59 64 70
33 1,869 2,074 2,265 2,474 2,119 2,355 2,601 2,871 3,168 3,495
4,509 11,005 17,123 23,981 31,680 39,619 49,077 59,510 71,030 83,744 97,773
16
12. 3 Projected Cash Flow Statement
Projected Cash Flow Statement

Rs. in Thousands
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Profit - 6,944 7,951 8,893 9,921 10,368 11,527 12,734 14,062 15,522 17,128
Amortization - 15 15 15 15 15 0 0 0 0 0
Depreciation - 92 80 69 60 53 46 41 36 31 28
- 7,051 8,046 8,977 9,996 10,435 11,574 12,775 14,097 15,553 17,156
Working Capital Change - 600 (154) (170) (186) (205) (226) (248) (273) (301) (331)
Cash form other Sources
Owners 2,238 - - - - - - - - - -
Bank Finance 2,238 - - - - - - - - - -
4,476 - - - - - - - - - -
Total Sources 4476 7651 7892 8808 9810 10230 11348 12527 13824 15252 16825
Applications:
Fixed Assets 765 - - - - - - - - - -
Preliminary Expanses 75 -
Preoperational Expenses 2,100 -
Working Capital 1,536 -
Re -Payment of Loan - 448 448 448 448 448 - - - - -
L C Charges - - - - - - - - - - -
Tax - - 1,389 1,590 1,779 1,984 2,074 2,305 2,547 2,812 3,104
4,476 448 1,836 2,038 2,226 2,432 2,074 2,305 2,547 2,812 3,104
Cash Increase/(Decrease) - 7,203 6,055 6,770 7,584 7,798 9,274 10,221 11,277 12,440 13,721
Opening Balance 1,500 1,500 8,703 14,759 21,529 29,112 36,911 46,185 56,406 67,683 80,124
Closing Balance 1,500 8,703 14,759 21,529 29,112 36,911 46,185 56,406 67,683 80,124 93,844
1,500 8,703 14,759 21,529 29,112 36,911 46,185 56,406 67,683 80,124 93,844
17
12. 4 Revenue Calculation

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X
Sales Growth Rate 10% 10% 10% 10% 10% 10% 10% 10% 10%
Purchase Price Growth Rate 10% 10% 10% 10% 10% 10% 10% 10% 10%
Revenue (Rupees): Proportion
Multinational 37.4 10,998,000 12,097,800 13,307,580 14,638,338 16,102,172 17,712,389 19,483,628 21,431,991 23,575,190 25,932,709
National 42.2 12,402,000 13,642,200 15,006,420 16,507,062 18,157,768 19,973,545 21,970,900 24,167,989 26,584,788 29,243,267
Herbal 4.9 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304 2,319,134 2,551,048 2,806,153 3,086,768 3,395,445
Food Supliments 4.3 1,260,000 1,386,000 1,524,600 1,677,060 1,844,766 2,029,243 2,232,167 2,455,384 2,700,922 2,971,014
Eatables 3.7 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228 1,739,351 1,913,286 2,104,614 2,315,076 2,546,584
Toiletries 1.8 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Sanitation Products 1.8 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Pre-paid Cards 3.8 1,116,000 1,227,600 1,350,360 1,485,396 1,633,936 1,797,329 1,977,062 2,174,768 2,392,245 2,631,470
29,376,000 32,313,600 35,544,960 39,099,456 43,009,402 47,310,342 52,041,376 57,245,514 62,970,065 69,267,071
Diseases
ALLOPATHIC
Infection 25% 5,850,000 6,435,000 7,078,500 7,786,350 8,564,985 9,421,484 10,363,632 11,399,995 12,539,995 13,793,994
Health care products 7% 1,638,000 1,801,800 1,981,980 2,180,178 2,398,196 2,638,015 2,901,817 3,191,999 3,511,198 3,862,318
Cardic 10% 2,340,000 2,574,000 2,831,400 3,114,540 3,425,994 3,768,593 4,145,453 4,559,998 5,015,998 5,517,598
Diabetics 13% 3,042,000 3,346,200 3,680,820 4,048,902 4,453,792 4,899,171 5,389,089 5,927,997 6,520,797 7,172,877
ENT 7% 1,638,000 1,801,800 1,981,980 2,180,178 2,398,196 2,638,015 2,901,817 3,191,999 3,511,198 3,862,318
B.P. / Relaxation 7% 1,638,000 1,801,800 1,981,980 2,180,178 2,398,196 2,638,015 2,901,817 3,191,999 3,511,198 3,862,318
Skin / Allergies 5% 1,170,000 1,287,000 1,415,700 1,557,270 1,712,997 1,884,297 2,072,726 2,279,999 2,507,999 2,758,799
Kidney 5% 1,170,000 1,287,000 1,415,700 1,557,270 1,712,997 1,884,297 2,072,726 2,279,999 2,507,999 2,758,799
Gyne 7% 1,638,000 1,801,800 1,981,980 2,180,178 2,398,196 2,638,015 2,901,817 3,191,999 3,511,198 3,862,318
Muscullar 5% 1,170,000 1,287,000 1,415,700 1,557,270 1,712,997 1,884,297 2,072,726 2,279,999 2,507,999 2,758,799
Ortopadeic 5% 1,170,000 1,287,000 1,415,700 1,557,270 1,712,997 1,884,297 2,072,726 2,279,999 2,507,999 2,758,799
Others 4% 936,000 1,029,600 1,132,560 1,245,816 1,370,398 1,507,437 1,658,181 1,823,999 2,006,399 2,207,039
100% 23,400,000 25,740,000 28,314,000 31,145,400 34,259,940 37,685,934 41,454,527 45,599,980 50,159,978 55,175,976
Multinational 47% 10,998,000 12,097,800 13,307,580 14,638,338 16,102,172 17,712,389 19,483,628 21,431,991 23,575,190 25,932,709
National 53% 12,402,000 13,642,200 15,006,420 16,507,062 18,157,768 19,973,545 21,970,900 24,167,989 26,584,788 29,243,267
100% 23,400,000 25,740,000 28,314,000 31,145,400 34,259,940 37,685,934 41,454,527 45,599,980 50,159,978 55,175,976
Herbal
Qurshi 60% 864,000 950,400 1,045,440 1,149,984 1,264,982 1,391,481 1,530,629 1,683,692 1,852,061 2,037,267
Hamdard 40% 576,000 633,600 696,960 766,656 843,322 927,654 1,020,419 1,122,461 1,234,707 1,358,178
100% 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304 2,319,134 2,551,048 2,806,153 3,086,768 3,395,445
Food Suppliments
Slim up 60% 756,000 831,600 914,760 1,006,236 1,106,860 1,217,546 1,339,300 1,473,230 1,620,553 1,782,608
Others 40% 504,000 554,400 609,840 670,824 737,906 811,697 892,867 982,153 1,080,369 1,188,406
100% 1,260,000 1,386,000 1,524,600 1,677,060 1,844,766 2,029,243 2,232,167 2,455,384 2,700,922 2,971,014
Eatables 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228 1,739,351 1,913,286 2,104,614 2,315,076 2,546,584
Toiletries 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Sanitation Products 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Pre-paid Cards
Mobile 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Calling Cards 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Internet 36,000 39,600 43,560 47,916 52,708 57,978 63,776 70,154 77,169 84,886
1,116,000 1,227,600 1,350,360 1,485,396 1,633,936 1,797,329 1,977,062 2,174,768 2,392,245 2,631,470
18
13 KEY ASSUMPTIONS
Table 13-1 Operating Assumptions
Hours operational per day 24 hours
Days operational per month 30 days
Day operational per year 360 days
Table 13-2 Revenue Assumptions
Revenue assumption Survey of Distribution companies &
Pharmacy
Revenue classification On the basis of diseases
Sales growth rate 10%
Other Income (%age of revenues) 1%
Table 13-3 Expense Assumptions
Printing & Stationary 1% of Revenue
Entertainment 0.1 % of Revenue
Communication Expense 0.1% of Revenue
Consultancy Charges and Audit (Annual) Rs.15,000
Electricity cost growth rate 10%
Electricity rate / unit Rs. 6.75
Kilo Watts Consumed per day 8.3
Depreciation Method Written Down Value
Depreciation Rate on Furniture 10%
Depreciation Rate on Electric Equipment 10%
Computers and printers 20%
Table 13-4 Cash Flow Assumptions
Accounts payable cycle 7 days
Inventory 30 days
19
PREF-82/January, 2007/Rev 3
Table 13-5 Financial Assumptions

Project Life 10 Years
Debt 50%
Equity 50%
Debt Tenure 5 Years
Interest rate 14 %
Income tax rate 20 %
Discount rate (weighted avg. cost of capital for NPV) 25%
Minimum Cash Balance Rs. 1.5 Million
20
PREF-82/January, 2007/Rev 3

SMEDA Medical Store

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SMEDA Medical Store

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Pre-Feasibility Study

Small and Medium Enterprise Development Authority

5TH Floor, Bahria Ground Floor Bungalow No. 15-A

Issue Date August, 2004

Revision Date January , 2007

Issued by Library Officer

2 PURPOSE OF THE DOCUMENT ............................................................................................... 4

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 5

10 HUMAN RESOURCE REQUIREMENT................................................................................... 13

11 PROJECT COSTS ...................................................................................................................... 14

2 PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Medical Store, which comes under

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

 Availability of complete product line is another important factor. In addition to this,

Pakistan is a very populous country. Pakistan’s population has soared up to 149.50

electricity and 2 telephone lines. The proposed project is based on well-established

4. 3 Market Entry Timing

4. 4 Proposed Business Legal Status

4. 5 Project Capacity and Rationale

The total cost of the project is around Rs. 4.47 million.

Table 4-1 Project Costs

Table 4-2 Project Financing

Equity 50% 2,238,012

Table 4-4 Product Mix

4. 9 Key Success Factors/Practical Tips for Success

4.10.1 Product Range counts a lot

4.10.2 Customer Service

4.10.3 Location of the outlet

5 SECTOR & INDUSTRY ANALYSIS

5. 2 Sub sector Information

5. 3 Legal Issues Regarding Industry

Table 5-1 Major Players

Pakistan Economist Apr 2004

units operating in the country including dozens of multinationals. Healthcare in Pakistan

7.1.1 Products of Multinational Companies

7.1.2 Products of National Companies

7.1.3 Herbal Products

7.1.4 Food Supplements

7.1.7 Sanitation Products

7.1.8 Prepaid Cards

Table 7-1 Profit Margins

Table 7-2 Estimated Sales3

8 LAND & BUILDING REQUIREMENT

Table 9-1 Details of Office Equipment

10 HUMAN RESOURCE REQUIREMENT

Table 10-1 Shift Schedules

Human resource requirement for the proposed project is as under:

Table 10-2 Staff Requirement (3 shifts)

Grand Total: 18 3,060,000

Table 11-1 Project Costs

Projected Income Statement

12. 2 Projected Balance Sheet

Projected Balance Sheet

12. 3 Projected Cash Flow Statement

Projected Cash Flow Statement

12. 4 Revenue Calculation

Table 13-5 Financial Assumptions

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