Good Pharm Bad News for Super Pharm

The newly launched Good Pharm drugstore chain threatens to disrupt the market dominance of Super Pharm and New Pharm with dramatically lower prices, Globes said on Sunday.

Good Pharm opened it first branch last week in Tel Aviv, and the grand strategy calls for 25 branches around the country.

The newcomer will be charging a maximum of 10 shekels for products, sharply undercutting the entrenched chains. For example, Oral B dental floss in Good Pharm will be only 10 shekels, whereas in Super-Pharm the price is 21 shekels. L’Oreal Elvive shampoo, sold in other chains for NIS 11.60-21.60, will be only 10 in Good Pharm. Similar price gaps, and even wider ones, apply to eyeglasses, razors, and other products.

The Grass family, founder of U.S. drugstore chain Rite Aid, the largest on the East Coast, was reportedly the key backer of the new Israeli store, investing $10 million in the project. The investors received 49 percent of the shares in the new chain, with control remaining with founders Adam Friedler and Ohad Sandler.

Friedler explained that Good Pharm’s prices are made possible by low overhead.

“If you analyze the price of a product, it has four components: gross profit, marketing cost, head office cost, and rent, and so a business can’t change its DNA. We don’t have a company headquarters in Herzliya Pituah, we don’t have branches in Ramat Aviv Mall, and we don’t have secretaries and secretaries’ secretaries. We also don’t have marketing costs, unlike Super-Pharm, which is the biggest advertiser in the economy.”

When asked if there is any justification for the current high prices in the drugstore chains, he replied bluntly: “No. If I thought there was justification for them, we wouldn’t be talking and I wouldn’t have felt the pain that led to the idea to set up the chain. The trigger for founding Good Pharm was when I wanted to buy myself a pill splitter. They wanted NIS 50 from me at Super-Pharm. I found it on eBay for $1.50, and I realized that anyone who paid was [being taken]. It’s not that I couldn’t afford it, but it annoyed me.”