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Republic of the Philippines

Polytechnic University of the Philippines


College of Accountancy and Finance
Sta. Mesa, Manila
May 13, 2017

TOTAL QUALITY MANAGEMENT-MANA 2053:


MERCURY GROUP OF COMPANIES

Submitted by:

Group 1:

Abella, Gennalyn DS. Malaiba, Allina Angela B.


Ariola, Ian Reister S. Montemayor, Joan T.

Calaguas, Daisy S. Negrito, Doreen Frances M.

Cortes, Katrina C. Pealosa, Peter Miguel C. (Coordinator)

Cutaran, Jans Malinda V. Quilang, Miguel C.

De Leon, Kristine Ronne C. Sagun, Hannah Mae A.


Solis, Khristine Aina A.
Encinas, John Paul D.
Tedranes, Mikaela
Grafil, Georgie Arcita A.
Tordil, Rizane
Jose, John Lloyd G.
Villanueva, Wella Anne T.
Lorenzo, Sarah E.

BSA 2-FS1N

Submitted to:
Prof. Marifel Javier
A. The Executive Summary
Introduction
Mercury Drug, one of the country's biggest drugstore chain, first opened in 1945 in
Manila after the city was liberated from the Japanese occupation. The first Mercury
Drug store opened on March 1, 1945 in Bambang Street. It now has over 1,000
branches nationwide.

The Company and Management

Mercury Drug is headquartered at 7 Mercury Avenue Corner E. Rodriguez Jr. Avenue,


Bagumbayan, Quezon City, 1110 Metro Manila and Owned by the Vivian Que Azcona,
who is the daughter of Mariano Que, the founder of the company.

Products and Services


Mercury Drug provides the widest range of branded and generic medicines, as well as a
complete line of healthcare and personal care products, including medical devices, and
basic everyday needs. Pharmacy counselling in-store or call-in service was made
available to help customers with their medication eries on dosage, directions for use,
precautions, potential side effects and adverse reactions.

The company with the mission of "To serve our customers to have what they want,
when they want it, where they want it, how they want it." and vision "To continuously be
the leading trusted and caring drugstore." continue to dominate the pharmacy industry in
the Philippines. This company aims in satisfying the needs of the customers not just in
medicine but also in personal care items and basic everyday needs.

Under Que, Mercury Drug also catered to the healthcare needs of Filipinos through
several services programs under its foundation, including "Bantay Kalusugan," which
provides free health profiling and screening for chronic non-communicable diseases and
"Operation Bigay Lunas," which gives free medical services and medicines to undeserved
communities around the country.

With their promotion, advertising and marketing strategies like gamot padala, using
discount coupons, gift certificates, suki cards and introducing Mercury Drug Citi card,
Mercury Drug MyWallet and even having a drive-thru service, the company perdures to
gain the trust of their customers as they maintain their goal in meeting the satisfaction of
their buyers and they innovate in order to give convenience and make their customers
have what they want, when they want it and how they want to have it as what their mission
states.

In the retail sale of medicines, Mercury Drug has long been the uncontested leader, with
its P104.49- billion gross revenue or a 62% share of the market. This has catapulted
Mercury Drug to the 6th spot in this years Top 1000 Corporations. Its competitors,
Watsons Personal Care Stores (Philippines), Inc. and Rose Pharmacy, Inc., trail Mercury
Drug by a mile, with revenues of P19.34 billion and P8.44 billion, respectively.

A study of consumer attitudes and priorities identified the Mercury Drug store network as
the most accessible among leading retail chains, followed by Puregold Price Club, Inc.
and the various retail operations of the SM Group.

The Smart Shopper study found the Mercury Drug chain scored highest in accessibility
with 86% of respondents saying there is a branch near their home or office. The study,
Smart Shopper 2015 conducted by Kantar World panel using input from 2,000 urban
homes, also found that apart from accessibility, the second priority of retail customers
seeking to buy fast-moving consumer goods (FMCGs) is trust, and the third is physical
distance from home or office. The Mercury Drug chain scored highest in accessibility with
86% of respondents saying there is a branch of the drug store near them and 64% having
actually visited a branch in the last 12 months, as opposed to only 6% saying they intend
to visit Mercury on their next shopping trip.

Mission:
To serve our customers to have what they want, when they want it, where they want
it, how they want it.

Vision
To continuously be the leading trusted and caring drugstore.

Values and Focus


Mercury Drugstores objective is to provide over the top service that will make Filipinos
feel safe and being cared for. They are also making sure that they are accessible all the
time and their prices are affordable making their service a part of the societies success.
Mercury drug will keep on looking for opportunities to further enable customers to have
more access to quality, safe and life-saving medicines, thus enabling them to have
more meaningful, healthier and longer lives. It will always pursue its commitment to
better and further serve its customers whose trust and loyal patronage has allowed
Mercury Drug to be of continued service to the nation.

B. Company Summary

Mercury drug is said to be not just a company itself, rather it is the country's trusted
health and wellness partner that provides the widest range of branded medicines and
also generic (majority of it is of course, branded). Generic is used for a low cost
medicines that is needed by an individual. It is also the same with the branded ones but
has little difference on the effect. Mercury drug compromises also personal care
products such as complete line of healthcare and personal care products, including
medical devices, and basic everyday needs (such as water and food). Through the
years, it has been opened store after store all over the Philippines with the cost that is
reached by the customers. It has been said that it expanded on other countries. Today,
it has grown into a vast network of more than 1000 stores nationwide with over 12000
employees, who are still training currently and continuously on product knowledge and
customer service to ensure that the customers will be satisfied with their wants. In short,
customers "have what you want, when you want it, where you want it, and how you
want it". In order to improve its services, every employee must prolong its legacy in
which it all started why it became successful and, of course, more knowledge by doing
their jobs properly.

Properties
The Quezon City-based company operates a national chain of more than 450
drugstores, including company-owned and franchised stores.
Mercury Drug is a subsidiary of the Mercury Group of Companies, which governs other
Que family interests, including the 10*Q convenience store chain and the Tropical Hut
fast-food group.

Business Description
We are all familiar with the Mercury Drug store. Hearing that, a certain phrase pops up
on our minds and that is "Nakasisiguro, gamot ay laging bago" Mercury Drug
Corporation is the Philippines' dominant pharmacy group. The Quezon City-based
company operates a national chain of more than 450 drugstores, including company-
owned and franchised stores. Mercury Drug's pharmacies follow the American model,
combining drug and medical equipment sales with over-the-counter medicines, personal
care items, basic household needs, cosmetics and other beauty products, and the like.

Business Owner and Partners


Founded by Mariano Que, who first sold pills from a pushcart in the 1940s, Mercury
Drug Corporation remains a privately held company. Leadership of the company also
remains in the family: The company's president is Mariano Que's daughter, Vivian Que-
Ascona. Mercury Drug is a subsidiary of the Mercury Group of Companies.

Market Share
Que family-owned firm has long been rumored to be joining the Philippine Stock
Exchange through the backdoor route. And for good reason. Starting as a small
drugstore, the company has since grown into a network of more than 1,000 outlets
across the country, employing over 12,000 people.
In the retail sale of medicines, Mercury Drug has long been the uncontested leader, with
its P104.49- billion gross revenue, or a 62% share of the market. This has catapulted
Mercury Drug to the 6th spot in this years Top 1000 Corporations. Its competitors,
Watsons Personal Care Stores (Philippines), Inc. and Rose Pharmacy, Inc., trail
Mercury Drug by a mile, with revenues of P19.34 billion and P8.44 billion, respectively.

Brand
Mercury Drug, the country's caring health and wellness partner, is a brand by Mercury
Group of Companies, Inc. It operates a network of company-owned and franchised
drugstores. Being the leading pharmacy group, they make sure that the trust of their
customers will not be broken. The company strive to maintain their brand and the
characteristics of what makes them the Mercury Drug today, the most trusted and
dominant drugstore in the whole country. We can say that it is the continuously trusted
brand of drugstore in the whole country because of its quality assurance and care for
customer satisfaction.

PRINCIPAL COMPETITORS
Caltex
I-Mart International Corporation
Phils. Corporation
Easy Mart
Petron Corporation
Philippine Seven Corporation
Robinsons Convenience Store Inc.
Seaoil Philippines Inc.
Shell Philippines Inc.
Philippines Corporation.

GLOBAL COMPETITIVENESS

Mercury Group of Companies is global in nature since the services provided by the
company is a global need. Although it's not there yet, it is expected that it's part of the
organization's long-term strategy and goal.
As part of its long-term strategic plans, Mercury Drug should also focus on the
evolving needs of customers when it comes to medicine and health care. To be able to
survive the emergence of both foreign and local competitors, Mercury should strive to
improve the quality of its products and services. Ensuring customer satisfaction can have
a long-term effect on the company. Mercury, by improving the quality of its services, can
gain more loyal customers and retain those who already are.

Studies suggests that when it comes to health care, consumers tend to patronize
quality products with lower cost. Consumers always want to buy products and avail
services which are affordable but without compromising quality.

PROMOTION AND MARKETING PROGRAM

1. GAMOT PADALA

3 convenient options to buy and send any item


Full order served in any of more than 1,000 stores nationwide
No service fee. No code or PIN required
Hassle-free pick-up

2. Discount Coupons- Mercury offers discount coupons.


3. Gift Certificates
Available in Php100, Php200, Php500 denominations,
Mercury Drug Gift Certificates are ideal gifts to families and
friends to cover their medicines and other personal healthcare
needs. These certificates are also great corporate health benefits
or raffle prizes.

4.Suki Cards- A customer loyalty card that rewards members with points
from all their purchases in Mercury Drug stores.

5. Mercury drug Citi card- The first health credit card that allows rebates on card
purchases at Mercury Drug and other Citibank-accredited stores, as well as joint use with
Suki Card at Mercury Drug.

6. Mercury Drug MyWallet - A variant of Suki Card in partnership with RCBC MyWallet.
Offers the convenience of an ATM card with the rewards of Suki points.
7. Mercury Drug Opens Drive-Thru Service - Mercury Drug introduced a first in
pharmacy retail with its first drive-thru service in its San Juan City Greenhills Ortigas store.
Customers who are in a hurry or who have mobility concerns can now simply drive in,
place their order and drive through to pick up their order.

INVESTMENTS IN PHARMACY OR OTHER RELATED PRODUCT/OPERATIONS


Drug Stores
Mercury Drug Corporation is the Philippines' dominant pharmacy group. The Quezon
City-based company operates a national chain of more than 450 drugstores, including
company-owned and franchised stores. Mercury Drug is estimated to sell as much as
60 percent of all medicines sold each year in the Philippines (the country's hospitals
sell about 12 percent of medicines). Mercury Drug's pharmacies follow the American
model, combining drug and medical equipment sales with over-the-counter medicines,
personal care items, basic household needs, cosmetics and other beauty products,
and the like. Most of the company's stores also are equipped to store and sell serums,
blood plasma, albumin, and similar biologically active medical products.

Mercury Drug Superstores


The introduction of the convenience store concept in the Philippines in the early 1980s
represented both a new source of competition for Mercury Drug and a new
opportunity. Mercury developed its own convenience format in response to the growth
of competitors such as 7-11. Typically located next to its drugstores, the Mercury Drug
Superstores expanded the company's range of goods beyond drugs and into wider
consumer categories, such as beauty and personal care products, fast-foods, and the
like.
In addition to its drugstores, Mercury operates a chain of Mercury Drug Superstores.
Generally attached to the company's pharmacies, the Mercury Drug Superstores
extend the group's assortment to include convenience store and fast-food items. By
the mid-2000s, Mercury Drug Corporation operated more than 150 Mercury Drug
Superstores.
Purchase MCDC and later changed its name to MCTC (Medical Center Trading
Corporation)
The company also began branching out beyond pharmaceutical sales. A significant
early purchase was that of Medical Center Drug Corporation (MCDC). Founded in
1946, MCDC focused on sales of pharmaceutical supplies, equipment, and basic
surgical instruments. The purchase of MCDC, complementary to its existing drugstore
business, led Mercury Drug to change its structure. In 1972, Que created the Mercury
Group of Companies, Inc., which in turn oversaw Mercury Drug and MCDC. Both
companies remained independent of the other; in 1980, MCDC changed its name, to
Medical Center Trading Corporation (MCTC), in order to highlight its difference from
Mercury Drug. MCTC then grew into the Philippines' leading importer and distributor
of medical, hospital, laboratory, and related equipment, with branches throughout the
Metro Manila and surrounding region.
Separately, the Que family added other interests, including the Q*10 convenience
store format and the Tropical Hut fast-food restaurant chain. Nonetheless, Mercury
Drug Corporation remained the focus of the family's holdings.

RISK FACTORS

What are the factors that could put the company at risk?
Risk is the chance or probability, high at one extreme and low at the other, that a person
could be harmed or experience an adverse health outcome if something goes wrong,
together with an indication of how serious the harm could be.
Risk management in the context of registered pharmacies is about more than near
misses and dispensing errors. It involves:

Having the necessary systems, processes and skilled staff in place to minimize
the likelihood of providing poor quality care.
Having mechanisms to learn from situations where, despite having those
systems something has gone wrong.
Identifying and minimizing the potential for harm or adverse health outcomes if
something goes wrong as a result of a pharmacys activities and services

As a company who engages mainly in pharmaceuticals, Mercury group of companies


should be mindful of what the greatest risks are to their business.
By carefully considering what could cause harm to patients and users of pharmacy
services, the company can think about what they and other members of the pharmacy
team need to do in order to keep the risk as low as possible, and what they could do to
reduce it further. The team should take account of the individual circumstances in the
pharmacy and understand the factors central to managing risk and providing person-
centered services. These include:

The services the pharmacy provides


The staff working there and their knowledge and experience
The scale and nature of the activity
The number of people potentially affected by it
The likelihood of something going wrong
The likely impact on the service user, taking into consideration their health and
vulnerability

FINANCIAL STATEMENT
According to the Individual - Audited financial statement for the Year of 2009, total
net operating revenues increased with 4.80%, from PHP 70,904,308.79 thousands
to PHP 74,307,768.89 thousands.

Operating result increased from PHP 1,357,671.09 thousands to PHP


1,834,069.57 thousands which means 35.09% change. The results of the period
increased 40.68% reaching PHP 1,338,506.91 thousands at the end of the period
against PHP 951,423.05 thousands last year.

Return on equity (Net income/Total equity) went from 19.83% to 24.00%, the
Return On Asset (Net income / Total Asset) went from 4.70% to 6.77% and the
Net Profit Margin (Net Income/Net Sales) went from 1.34% to 1.80% when
compared to the same period of last year.

The Debt to Equity Ratio (Total Liabilities/Equity) was 254.51% compared to


322.00% of last year.
Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.23 to
1.30 when compared to the previous year.

Financial Summary

The total net operating revenues increased with 4.80%, from PHP 70,904,308.79
thousands to PHP 74,307,768.89 thousands. This is caused by the improvements
in cost controls, productivity or the adoption of new technology.
Return on equity (Net income/Total equity) went from 19.83% to 24.00% which
means that the management is giving shareholders more for their money, which is
represented by shareholders' equity. Simply put, ROE indicates whether the
company is growing profits without pouring new equity capital into the business.
Return On Asset (Net income / Total Asset) went from 4.70% to 6.77% which is
due to the increase in net income and profit margin.
Net Profit Margin (Net Income/Net Sales) went from 1.34% to 1.80% when
compared to the same period of last year. The net profit margin, also known as net
margin, indicates how much net income a company makes with total sales
achieved. An increase in the net profit margin means that a company becomes
more efficient at converting sales into actual profit.
The Debt to Equity Ratio (Total Liabilities/Equity) was 254.51% compared to
322.00% of last year which typically shows that a company has been moderate in
financing its growth with debt, and there may be a low potential for financial distress
if earnings do not exceed the cost of borrowed funds.
Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.23 to
1.30 when compared to the previous year. It means that the company is more
capable of paying its obligations since it has a larger proportion of asset value
relative to the value of its liabilities.

Core Capabilities

Mercury Drug Corporation creates competitive advantage in the marketplace. Theyve


known as the most trusted brand in drugstore/pharmacy and they consistently gained the
consumers' trust. They protect and fulfil the promises made to the consumer, ensuring
that quality does not decline, and delivering value and satisfaction each and every time.
They also emerged as the most recognizable Filipino brand in the retail category.

They provide the widest range of branded and generic medicines, as well as a complete
line of healthcare and personal care products, including medical devices, and basic
everyday needs. Pharmacy counselling in-store or call-in service was made available to
help customers with their medication queries on dosage, directions for use, precautions,
potential side effects and adverse reactions. They also used mobile app to enable fast,
easy and convenient access to its store locations, promotional offers and services.

Through the years, Mercury Drug has opened store after store all over the Philippines to
bring medicines within easy reach of its customers. Their employees continuously trained
on product knowledge and customer service to give satisfaction to customers.

As a way of giving back to the people for their loyal support through the years Mercury
Drug take part in corporate social responsibility programs. Through this foundation they
want to make a meaningful difference to help other people. The social responsibility
focused on health and education, the company hopes to help build a healthy, educated
and productive nation.

The following are the companys programs:

Operation Bigay Lunas provides free medical services and medicines to underserved
communities throughout the Philippines.

Operation Pa-tubig, In partnership with the Philippine Business for Social Progress, this
program makes safe, potable water accessible to marginalized waterless communities
nationwide, to help improve health and sanitation, as well as uplift living conditions and
the quality of life of the residents in these areas.

Bantay kalusugan aims to increase awareness about chronic non-communicable


diseases (NCDs). Free health profiling, screening, counselling and education activities
are conducted in selected sites to aid in early detection, reduce the number of cases,
guide on proper management and promote healthy lifestyles.

Pharmacy Scholarship. To foster pharmacy education and help alleviate the shortage of
pharmacists in the Philippines, full scholarships are awarded to deserving but financially-
challenged pharmacy students enrolled in member schools of the Philippine Association
of Colleges of Pharmacy (PACOP).

Gawad Talino program awards graduating senior high school students for excellence in
Mathematics and/or Science.

Sagip talent, Mercury Drug Foundation hopes to help build a new generation of future
leaders

Disaster Relief. In times of disaster, Mercury Drug mobilizes its foundation to provide
immediate relief assistance in the form of medicines or hygiene packs to help calamity
areas in their recovery and to reduce the risk of diseases.
Mercury Corporation Analysis
Assessments & Analysis Based on April 25, 2017 close price: $61.3 for the Growth
Investor based on the criteria of Martin Zweig.

Detalied Analysis
P/E RATIO: [FAIL]

The P/E of a company must be greater than 5 to eliminate weak companies, not more
than 3 times the current Market P/E because the situation is much too risky, and never
greater than 43. MCY's P/E is 46.30, , while the current market P/E is 17.00. Therefore,
it fails the first test.

REVENUE GROWTH IN RELATION TO EPS GROWTH: [PASS]

Revenue Growth must not be substantially less than earnings growth. For earnings to
continue to grow over time they must be supported by a comparable or better sales growth
rate and not just by cost cutting or other non-sales measures. MCY's revenue growth is
3.79%, while it's earnings growth rate is -9.68%, Based on the average of the 3, 4 and 5
year historical EPS growth rates. Therefore, MCY passes this criterion.

SALES GROWTH RATE: [FAIL]

Another important issue regarding sales growth is that the rate of quarterly sales growth
is rising. To evaluate this, the change from this quarter last year to the present quarter (-
6.18%) must be examined, and then compared to the previous quarter last year compared
to the previous quarter (9.50%) of the current year. Sales growth for the prior must be
greater than the latter. For MCY this criterion has not been met and fails this test.

The earnings numbers of a company should be examined from various different angles.
Three of these angles are stability in the trend of earnings, earnings persistence, and
earnings acceleration. To evaluate stability, the stock has to pass the following four
criteria.

CURRENT QUARTER EARNINGS: [FAIL]

The first of these criteria is that the current EPS be positive. MCY's EPS ($-0.47) fail this
test.

QUARTERLY EARNINGS ONE YEAR AGO: [PASS]

The EPS for the quarter one year ago must be positive. MCY's EPS for this quarter last
year ($0.42) pass this test.

POSITIVE EARNINGS GROWTH RATE FOR CURRENT QUARTER: [FAIL]

The growth rate of the current quarter's earnings compared to the same quarter a year
ago must also be positive. MCY's growth rate of -211.90% fails this test.

EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: [FAIL]

Compare the earnings growth rate of the past four quarters with long-term EPS growth
rate. Earnings growth in the past 4 quarters should be at least half of the long-term EPS
growth rate. A stock should not be considered if it posted several quarters of skimpy
earnings. MCY had 2 quarters of skimpy growth in the last 2 years.
This strategy looks at the rate which earnings grow and evaluates this rate of growth from
different angles. The 4 tests immediately following are detailed below.

EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3


QUARTERS: [FAIL]

If the growth rate of the prior three quarter's earnings, 92.47%, (versus the same three
quarters a year earlier) is greater than the growth rate of the current quarter earnings, -
211.90%, (versus the same quarter one year ago) then the stock fails, with one exception:
if the growth rate in earnings between the current quarter and the same quarter one year
ago is greater than 30%, then the stock would pass. The growth rate over this period for
MCY is -211.9%, and it would therefore fail this test.

EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN THE


HISTORICAL GROWTH RATE: [FAIL]

The EPS growth rate for the current quarter, -211.90% must be greater than or equal to
the historical growth which is -9.68%. Since this is not the case MCY would therefore fail
this test.

EARNINGS PERSISTENCE: [FAIL]

Companies must show persistent yearly earnings growth. To fulfill this requirement a
company's earnings must increase each year for a five year period. MCY, whose annual
EPS growth before extraordinary items for the previous 5 years (from the earliest to the
most recent fiscal year) were $2.13, $2.04, $3.23, $1.35, and $1.32, fails this test.

LONG-TERM EPS GROWTH: [FAIL]

The final important criterion in this approach is that Earnings Growth be at least 15% per
year. MCY's long-term growth rate of -9.68%, Based on the average of the 3, 4 and 5
year historical EPS growth rates, fails the minimum required.
TOTAL DEBT/EQUITY RATIO: [PASS]

A final criterion is that a company must not have a high level of debt. A high level of total
debt, due to high interest expenses, can have a very negative effect on earnings if
business moderately turns down. If a company does have a high level, an investor may
want to avoid this stock altogether. MCY's Debt/Equity (18.26%) is not considered high
relative to its industry (28.57%) and passes this test.

Competitive Strategies

The smaller pharmacies are staying competitive by keeping operating costs low and
providing personal, and in some cases, customized service to clients in the drug
dispensary. Furthermore, small pharmacy owners are also battling with large chains on
front-store pricing.

With new incentives and business strategies coming into play to repair and improve the
health-care system, local pharmacies are positioned to help meet the top two goals of
reform: providing convenient, expanded access to medical care and controlling costs.

As pharmacy companies plan for the future, they will need to first choose between two
approaches for serving different patient segments consistently. The first is to build retail
health centers that focus on healthy and at-risk individuals and that deliver a range of
health and wellness services, such as health risk assessments, counseling, smoking
cessation programs, and ongoing tracking of risk factors. This health maintenance
function could be executed in partnership with employers and government payers that
seek to manage the health of large populations. This approach could also expand into the
adjacent domains of nutrition and weight management, well-being, and beauty products
and services. Consumer products companies could partner with pharmacies to deliver
compelling value propositions in this sphere.

A large retail footprint, trusted patientpharmacist relationships, and in-house trained


clinicians are the key assets in this approach. Our analysis shows that pharmacies
equipped with retail clinics could handle health issues that would otherwise be
responsible for up to 10 percent of physician and emergency room visits.

The second approach is to concentrate on compliance and comprehensive disease


management for the chronically ill. This population continues to grow, and more people
are being forced to deal with multiple chronic conditions. Disease management (DM)
companies are tackling the issue head on, but their efforts have not been fully satisfactory
for the public or commercial payers. (Medicare, for example, has canceled its DM
demonstration programs, and more commercial payers are bringing the DM function in-
house.) Once again, the pharmacy is well positioned to tackle this issue, offering face-to-
face interaction with a trusted clinician instead of the phone-based intervention used by
disease management companies. Starting with compliance programs and expanding into
medication therapy management and disease management, pharmacies could help
payers keep their chronically ill populations from becoming sicker.

Patients would receive better and more consistent care and greater support for staying
on prescribed treatments. Offering more services would allow the pharmacy to address
the seasonality issue that makes retail clinics unprofitable today. Finally, targeting
patients with counseling, disease management, and compliance programs could drive
greater market share and customer retention.

Once each pharmacy company has determined the patient segment on which it wants to
focus, it will need to determine the extent to which it will integrate into the health-care
system. We see the emergence of two potential models.

The first model is to create a shadow, or parallel, network, in which some pharmacy
companies would string together a cohesive set of retail- and employer-based sites in
which they offer a range of products and services, providing shorter wait times for
individuals and lower costs of care for employers. This network would be independent of
the traditional care-delivery system, relying on the conventional system for prescriptions
but seeking to replace it for a subset of patients with limited health needs.

The second model is for pharmacy companies to move toward more integration with the
existing system, rather than operating in parallel with it. Given adequate physician
support, a hybrid network could emerge, with pharmacies serving as accessible retail
outposts for large health-care systems. In this role, pharmacies would perform a triage
function, offering basic care to some and referring the rest to their primary care physician
or specialists.

C. What is Mercury Corp. doing right and how can it do better

Customer Service

Mercury is accessible, and provides what you need 24 hours because Mercury know that
the right medicine should be accessible whenever it is needed. They also provide priority
lanes for senior citizens because they have the highest need.

Also, trained pharmacists are always ready to assist you when it comes to the right
medicine taken for certain illnesses which only require over the counter medicine. You
only need to ask and they will provide you with the correct and effective medicine.
They were even awarded the Customer Service Excellence Award by the Federation of
Asia-Pacific Retailers Association (FAPRA). The FAPRA Award is a bi-annual award
which honors companies, associations and individuals who have reached outstanding
achievements in retail industry in the Asia-Pacific region.

They also have a systematic numbering system in which you get a ticket and wait for your
number to be called because having a systematic numbering system lessens the time
needed for entertaining each customer.

Mercury drug superstores also provide customers with price checker available at every
corner of their stores to provide customers the convenience of knowing the prices of
various goods. However, according to customer feedback, most of the price checker of
each stores, does not respond or function properly. Mercury drug can do better by
checking the functionality of their price checker through routine maintenance for it to
provide the convenience that the customer deserves.

Suki Card:

One of the promotional services that mercury also offers is the chance of customers to
avail a Suki Card to accumulate points and get certain items in exchange of those points.
Mercury can improve this service by allowing customers to share points with friends,
family, and even strangers. They will not only be helping customers utilize their points but
also promote the spirit of sharing.

Setup

To have optimal work flow, it is important to have the right setup. This includes having an
entry station for prescription drop-offs where the prescriptions can be placed in color-
coded baskets based on priority. There should also be separate files/baskets for special
cases, such as those requiring insurance resolution or physician callbacks.

Team Members

Part and parcel of this setup is having the right staff with the appropriate skill sets. To help
with efficiency, it is best to have 1 technician as the point of entry for the vast majority of
prescriptions. This person should focus on prescription prioritization and entry, be able to
multitask, and not be easily overwhelmed. A second technician should be positioned as
the dedicated counter. This person should be able to focus on a task, assess urgency,
and not be easily distracted. Ideally, they would not have to handle phone calls.

Improving the Work Environment

Pharmacists need both production and clinical experience to excel. When work flow is
properly orchestrated, there is time for MTM, adherence, and niche opportunities
pharmacists were trained for but may not have been able to take advantage of because
of time restraints and, in some cases, because they generate little or no reimbursement
by third parties or patients. If these services can be carried out in a pharmacists spare
time, additional revenue can be used to pay those high pharmacy salaries.

D. What is Mercury doing wrong and how can it be fixed

Insufficient Stock

Sometimes, when you ask about products like medicine, some branches say that they're
out of stock and that the supply might arrive on the next week, but you need the medicine
immediately. And commonly, these are the basic medicines or products that has high
demand. They have to make sure that their store will have an adequate supply of the
needs of customers, particularly in medicine that has high demand, so that they will be
able to attain their mission stated above.

Branded Medicines

Mercury Drug offers branded products of medicines, but in generation right now lots of
consumer buys generic brand of medium which lead in one of the biggest problem of
Mercury Drug. Although Mercury Drug is a big name in the pharmaceutical industry and
competing with them is impossible they must not be complacent with where they are now.
Mercury Drug must think of selling more Generic drugs not only for their customers but
also for them to be competitive the leading generic drug stores in the country.

Weak Brand

A weak brand means Mercury Drug Corporation cant charge the same prices for goods
and services as their competitors, because consumers dont value the brand. This
statement will lead to a decrease in profits. "Weak Brand (Mercury Drug Corporation)" is
an easy qualitative factor to overcome, so the investment will not have to spend much
time trying to overcome this issue. Issues like this will be overcome by the trusted service
of Mercury Drug for the past decades. If they cannot lower their products prices to meet
the consumers budget theyll just increase the satisfactory level of the consumers with
their high quality products and trusted medicines.

Uncompetitive Salary

Uncompetitive salary compared to other community pharmacies. Since Mercury


Drugstores are composed mostly of Pharmacists Assistants they should be compensated
better. It is said that the salary of a Pharmacists Assistant is twelve thousand pesos per
month. Mercury Drug must increase the pay of their employees or if not must give
healthcare benefits to ensure the manpower of the company.

Incompetent Employees

A lot of people patronize mercury drug store so expect a daily hectic shift, stay alert. Being
a widely known Drugstore in the country, anticipate load of consumers. Because of this
many of the employees get exhausted which will lead them on poor working performance.
There is an incident which a mercury employee sells a wrong drug to a consumer which
he took for three days and led him to a vehicular accident. In this case, Mercury drug
must be careful in choosing their employees because the health and safety of the people
will be put into jeopardy if drugstore employees will not exercise the highest degree of
care and diligence in selling medicines.

It would be great if the staffs and employees would show more courtesy in dealing with
their customers. A simple smile and a short greeting would be enough to create a pleasing
ambiance and to make the buyers feel more comfortable. After all, the way how we deal
with people is an important thing that we should take into consideration.

Heavy Workloads

Most of pharmacist serves as cashier at the same time. Some of the pharmacist in
Mercury Drug also serves as the cashier if the position needs a prompt service. Being a
pharmacist is a heavy task to be done what more if you are doing another thing at the
same time. Mercury Drug must be remembered that pharmacists are the heart of the
drugstore so they must be given appreciation. Also, employees must do things that they
are only assigned to for them to become more productive and complete their tasks
efficiently. Also, according to an employee, it was very hard to file a request for leave
because the nature of the job was shifting. Also they are required to attend their duty even
if there is a holiday or even a super typhoon.

Suki Card

Mercury drug does not give points to all purchases. Medicines that are not enjoying senior
citizen discounts are not given any reward points since customer should not expect
double rewards. Also, the reward points expire after 180 days, as opposed to other stores
giving rewards which expire after one to two years.
E. What Mercury can do (the opportunities that the company is positioned to
compete and how come the company is not going it)

Given that Mercury Drug is the leading drugstore in the whole country, they should
maintain their good image by the customers, continue to explore and innovate and take
advantage of the opportunities coming on their way. We suggest the following to be done
in order to keep their advantages in their competitors:

The researchers suggest that Mercury Drugs Corporation should make their place bigger
and put may branches in different area so that it is accessible everywhere. They should
add more goods and products in their store so the customers have many choices. The
company also has the opportunity to expand it globally as they remain competitive in the
pharmacy industry. But we think that Mercury is not willing to take risks on it, they may
have a reason, but with their standing in our country, it is foreseeable that they can expand
overseas.

The company should provide training to the employees because when employees are
knowledgeable, capable and efficient they can help keep your customers happy and loyal.
Never miss the opportunity to greet your customers and engage them with an open-ended
question about how you can help them. Public relations make customers aware of your
company, products, and services. They need to arrange the schedule of the employees
and also increase their salary to motivate them to work harder

By the use of technology, we can lessen the cost and the effort of customers in buying
goods in store/market because we can go online to buy these things. The widespread
adoption of home computers and high speed broadband connections, as well as the
number of retailers offering goods online has created a kind of shopping revolution.
Mercury drug can implement this kind of buying goods or drugs so that their customers
can buy anywhere, and it is very helpful if its emergency.

Mercury Drug Corporation can also use this automated basket. It will help the customers
in the grocery section of the Mercury Drug Superstores. These baskets have sensors
installed in it, and it senses the RFID tags. RFID tags are in the items in the grocery. Once
the customer put an item into the basket, it will show the total amount of the goods in the
basket. When the customer is done, and paid the goods in the counter the basket will
automatically put the goods into a plastic bag. It can help the customers to budget their
money, make the entire process of shopping and paying for goods a lot easier, not only
for the customers but also for Mercury as well. This will introduce a whole new level of
convenience that would become Mercurys notable edge against its competitors.
However, despite the potential gains that mercury may get from this undertaking, the
company still hasnt resorted to this method yet. One glaring proof is that they do not see
the urgent need for providing this kind of advanced and expensive technologies in their
stores because the current method that the store is practicing as of today is enough to
accommodate customers. In addition, their competitors havent engaged to this
undertaking as well, so why should they? If it will only cause the company to spend a
huge amount of money, then there really is no need for such changes.

the company has the opportunity to expand it globally as they remain competitive in the
pharmacy industry. But we think that Mercury is not willing to take risks on it, they may
have a reason, but with their standing in our country, it is foreseeable that they can expand
overseas.

F. Given a chance to be the CEO of Mercury Drug Corp. which country you would
like to expand and why. (support and defend you answers)

Given a chance to be the CEO of Mercury Drug Corporation and assuming that Mercury
Drug Corporation has the capabilities to expand globally, we suggset starting in
Singapore.

With Singapore ranked as the number one for Ease Of Doing Business in the World Bank
report, its a well regarded business destination and is seen as a prime location for
accessing the South East Asian markets. With the government keen to encourage
innovation and investment from foreign countries, overseas businesses registering a
business in Singapore enjoy low taxation and favourable trading conditions.

The government funded Economic Development Fund also offers financial assistance
and incentives for entrepreneurs starting up a business in Singapore such as research
and development support and help with intellectual property. It takes less than two weeks
..for a foreign worker to get an employment card and Singapore has a skilled workforce,
with its workers ranked among the most productive in the world. Incorporating or licensing
a business in Singapore are valuable options as well.

G. Recommendations

This is the leading drugstore in the Philippines today and we dont think that would still
change. They have so many branches and are also present on almost all malls, big or
small. They have almost everything you need when it comes to medicines and drugs.
From the smallest tablets to the biggest capsules, from syrups to powders.

You can also buy here medical stuff like gloves, bandages, face masks, etc. In some
bigger branches, they also have some grocery items and magazines. Almost complete.
The store is open 7 days a week, 24 hours a day. Another thing that made this drugstore
different from the others is that you could just grab your phone and order for the medicine
you need and just pick it up after. Your medicine will be waiting for you, ready and without
hassle.

It'll be more convenient if they would expand the area of each store and be more
considerate with regards to the number of customers that are walking in. There were
many times when the buyers can't even pass by a single aisle at the same. The space is
obviously not enough knowing that their pharmacy is one of the most popular here in the
Philippines. Many people have already given their trust and loyalty to this store. As a
result, they must continually enhance their performance and constantly meet the
customers' expectations in terms of their products and services.

They also have this Sukicard which you will present upon paying and earn points which
you could also use eventually. You could use it to pay for anything that you bought in their
store. Somehow practical right? But we noticed that their prices are somewhat higher
compared to the other drugstore we know.

The researchers think they should be the one selling cheaper medicines since they are
from a bigger company and they have lots of branches all over the country.

Also, demands are coming regarding their product. They must start selling more generic
drugs since it is what the consumers are asking for.

They should compensate well their employees since they are the building blocks of the
company. They must also continue to train their employees about their respective work
areas since technology is up surging and changes occurs abruptly.

Improving their customer services and giving more promos and discount will surely make
their customer stay in patronizing their products and services.

Lastly, social programs will be an edge for their companys growth. They will be noticed
not only as a widely known drugstore but also a company who has care for social welfare.