Clicks customers are increasingly opting for generic medicine driven by lower prices as the group plans an aggressive rollout of pharmacies next year, including specialised 24-hour pharmacies.
Generics include not only Clicks branded products but also those from other pharmaceutical companies. In the year to August, sales from generics grew 10% and made up 59% of pharmacy sales by value and 69% of volume. Pharmacy sales for the year to August rose 8.9% to R9.7bn.
CEO Bertina Engelbrecht said customers should be offered a cheaper generic alternative, as that was a way to extend the customers’ benefit through to the end of December. “We remain committed to extending the benefits of medical aid customers by consistently offering them the choice of more affordable generic medicines.”
She said sales in generics are likely to double over time, given increased demand from customers. Engelbrecht said generic medicines are showing growth globally as customers are looking for ways to cut healthcare costs.
The rise in chronic diseases has also spurred the demand for affordable medications.
According to Statista, the total market for generic drugs worldwide was estimated at around $424bn in 2023. The market is expected to increase to more than $600bn by the beginning of the next decade.
We remain committed to extending the benefits of medical aid customers by consistently offering them the choice of more affordable generic medicines
— CEO Bertina Engelbrecht
Clicks is set to spend R1bn a year for the next three years. For the 2025 financial year, R578m will be spent on new stores and pharmacies and the refurbishment of 70–80 stores.
A further R447m will be invested in supply chains, technology and infrastructure. Clicks plans to open 40–50 new stores and 40–50 pharmacies for the 2025 financial year as it aims to have 1,200 stores.
It ended the 2024 financial year with 936 stores after adding 51 outlets, growing its pharmacy network to 720 stores following the opening of nine new pharmacies.
It said that 51% of South Africa’s population live within 5km of a Clicks pharmacy, highlighting the pharmacy chain’s convenience. “We are anticipating a higher level of pharmacy openings now that the processing of pharmacy licence applications has resumed.”
Clicks was held back from opening new dispensaries at the same rate as stores because of factors such as the dispute regarding its medicine manufacturing plant Unicorn with independent pharmacies. The Constitutional Court ruled that Clicks’ ownership of a medicine manufacturing factory and pharmacies is in contravention of the Pharmacy Act.
The case, which was in court for seven years, was brought by the Independent Community Pharmacy Association over concerns Clicks pharmacists were compelled to dispense drugs made by Unicorn Pharmaceuticals rather than giving customers a choice.
Clicks has since sold Unicorn to remove conflict and pave the way for the department of health to issue outstanding and new pharmacy licences. It said post its year-end, pharmacy licences were again being issued.
Engelbrecht said the Unicorn resolution opens a way to accelerate UniHealth hubs with upto 10 specialised pharmacies over the medium term.
UniHealth is the new brand for the company’s 24-hour pharmacies. This will replicate the model by Cape Town based M-Kem, which Clicks bought over a years ago.
Engelbrech said the group opted for a different name for the new specialised pharmacies. “We decided on a different branding, because M-Kem is only really known largely within the northern suburbs of the Western Cape. And so we needed to find a corporate identity that would be able to live across South Africa.”
UniHealth stores will offer a number of services, some similar to those covered in hospitals, and will also have a travel clinic.
Engelbrecht said despite limited pharmacy openings, the business gained market share. Retail pharmacy market share increased from 23.7% to 24.2%. Pharmacies contribute 27.5% to total retail sales.
Its Club card customers contributed more than 87% of pharmacy sales. Clicks grew loyalty programme membership by 1.4 million to 11.8 million. Retail turnover —which includes Clicks, GNC, The Body Shop and Sorbet corporate stores — grew by 11.7% to R35bn with group turnover up 9.2% to R45.4bn.
Front shop health sales increased by 10.7% to R8.9bn, driven by promotions and private label baby products. Sales of private label products grew by 13.5% and now account for 30% of front shop sales in Clicks stores. Beauty and personal care products increased revenue by 15.9% to R11.3bn. Group trading profit increased by 15.1% to R4.2bn.
Clicks is also considering opening smaller format stores. Englebrecht said while the model is still being developed, the stores would probably be half the size of standard outlets, which is around 600m2. The stores will not be targeted at specific areas.
Clicks has a market capitalisation of R90bn and its share price is trading at R38, having gained 16% since January.
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