Name: Mejarito, Angelica L.

Subject: Business Research

Year & Section: BSBA MM – 2C Subject Instructor: Prince Japee Seno

MERCURY DRUG CORPORATION

Background of the Company

Mariano Que, having worked in a Manila drugstore before World War II,
encountered the newly discovered sulfa drugs, which were considered "miracle"
drugs for treating various illnesses. Despite later revealing undesirable side effects,
these drugs were credited with saving lives during the war. After the war, Que seized
business opportunities in the Philippines by capitalizing on the demand for sulfa
drugs. Inspired by the entrepreneurial spirit, he started selling medications, adopting
the "Tingi-tinge" method (selling in single doses) to make them affordable to a
broader population. Que's reputation for quality and fair prices led to the success of
his business. In March 1945, he opened his first store, named Mercury Drug,
becoming a trusted pharmaceutical retailer in the Philippines.
Mercury Drug, initially a single-store operation, pioneered innovations in the
Filipino pharmacy sector under Mariano Que's leadership. In 1948, the company
introduced a groundbreaking drug delivery service, utilizing motorized vehicles for
swifter delivery times. Expanding its accessibility, Mercury Drug extended its store
hours in the 1950s, ultimately adopting a 24-hour schedule in 1965 to meet the
demands of Filipinos who tended to self-medicate. Transforming into the Philippines'
dominant drugstore group in the 1960s, Mercury Drug opened the country's first self-
service pharmacy in 1963 and later established a flagship store in Quiapo in 1965.
The company further demonstrated its commitment to quality by introducing
biological refrigerators in 1969 to safeguard life-saving medicines. Diversifying its
portfolio, Mercury Drug acquired Medical Center Drug Corporation (MCDC) in 1972,
leading to the formation of the Mercury Group of Companies, overseeing both
Mercury Drug and MCDC. While facing new competition in the 1980s with the rise of
convenience stores, Mercury Drug responded with innovation by developing its
convenience format, the Mercury Drug Superstores, expanding its offerings beyond
pharmaceuticals. Despite the Que family's ventures into other interests, including the
Q*10 convenience store format and the Tropical Hut fast-food restaurant chain,
Mercury Drug Corporation remained the primary focus of the family's holdings.
Mercury Drug experienced significant growth, expanding beyond Metro Manila
in 1976 and establishing a strong presence in Luzon, Visayas, and Mindanao. By
1995, the company operated over 270 stores, and within a decade, it expanded to
more than 450 branches, achieving near-monopoly status in the Philippines' drug
sales, controlling up to 60 percent by 2004. Despite its early success based on low
prices, Mercury Drug faced criticism for perceived high prices, with some pointing out
that similar drugs were available in India and other markets at a fraction of the cost.
In response to public concerns, the Philippine government, in the early 2000s,
initiated measures to compel the country's drug industry, including Mercury Drug, to
reduce prices on essential medicines. As part of this effort, the government
encouraged the parallel importation of pharmaceutical generics from India, known for
the quality of its generic equivalents.
In 2004, the Filipino government intensified efforts to address drug pricing
issues, particularly targeting Mercury Drug's dominant position. Legislation
expanding drug discounts for senior citizens was passed, sparking protests from
smaller independent drugstore owners who anticipated that this move would further
enhance Mercury's market dominance. President Arroyo prioritized the lowering of
drug prices, and in December of the same year, the government unveiled a plan to
challenge what some termed as Mercury's "oligopoly" on the retail market. The
Philippine International Trading Corp. (PICT), a government-owned entity, proposed
organizing 300 independent pharmacies into a new network named "Botika ng
Bayan." This network aimed to sell drugs directly sourced from manufacturers by
PICT at significantly lower prices, up to six times less expensive than Mercury's
rates. Despite these challenges, Mercury Drug Corporation persisted as a prominent
player in the Philippines' pharmacy market, retaining its position as one of the
country's largest corporations and demonstrating resilience amid government
initiatives to address drug pricing concerns.

Marketing Strategy Used

Mercury Drug believes that it owes its success to the millions of customers
who have trusted and patronized the drugstore chain throughout these years. As a
way of giving back to the people, Mercury Drug vows to bring quality, safe, and
affordable health–enhancing and life–saving medicines closer to the public. In the
first place, it is what the name Mercury Drug stands for. In Roman mythology,
Mercury is known as the god of commerce and manual skill. Being the messenger of
gods, Mercury needed a winged foot for his swift flights. Mercury Drug remains
committed to its name as seen in its corporate philosophy of total and speedy
customer service: “To serve you, to have what you want, when want it.”
Now more than ever, it is committed to introducing enhanced services to
better serve the customers farther and wider, whoever and wherever they may be.
For instance, Mercury Drug makes certain the availability of less common but life–
saving medical products such as serum, blood plasma, albumin, and the like that are
stored in a Bio – -refrigerator. This would require Mercury Drug to invest in modern
technology and to continuously upgrade its facilities in its head office, stores, and
distribution centers. Aside from pharmaceutical products, it now carries basic
household necessities such as food, health and personal care products, and others
for the buying convenience of its customers. It has also incorporated value-added
facilities and services in many of its drugstores. More and more branches are open
on a 24–hour service every day of the week.
 Objectives Strategies
To sustain its leadership in the retail Open more than 1,000 stores
drug industry nationwide
Ensuring high-quality branded and
generic medicines
“Nakakasiguro Gamot ay Laging
Bago”
Corporate Social Responsibility
Initiatives
1. Free consultation
2. Medical outreach program

Marketing and Promotion Strategies:

1. Reward Points thru Suki Card
Programs
2. Drive-thru services (first in the
country)
Financial Position
1. Maintain a privately – held
company.
2. Owns 99.9% of shares

Challenges while doing the Business.

Challenges for the Mercury Drug Corporation include rising theft incidences,
new competitors offering lower costs, and changing government regulations.
Complicating matters are the possibility of sales losses to competitors and the
growing influence of suppliers.

1. Rise of new competitors with lower prices of medicine and the intensity
of competition between competitors.

- The entry of new competitors with lower-priced medicines can lead to price
wars and decreased profit margins for existing players. The intensity of
competition may increase, requiring companies to focus on cost efficiency,
differentiation, or other strategies to maintain market share.

2. Shoplifting cases.
- Shoplifting can impact a pharmacy's bottom line by causing losses due to
stolen merchandise. Additionally, it may lead to increased security costs and
potential damage to the store's reputation.

3. Growing bargaining power of suppliers.

- If suppliers gain more bargaining power, it can lead to increased costs for
pharmacies. This might impact profit margins and overall competitiveness.
 4. Loss of sales to substitute products.
- If customers shift to substitute products, such as generic medicines or
alternative health solutions, it can lead to a decline in sales for traditional
pharmaceutical products.

5. Increasing intensity of competition among industry.

- Higher competition can lead to market saturation and reduced profitability for
all players. Companies may need to differentiate themselves and enhance
their value propositions.

6. Government regulations/policies (relieving of Botika ng Bayan in every

Municipality)
- Government interventions, such as the establishment of Botika ng Bayan, can
impact the competitive landscape and accessibility of medicines. Pharmacies
may face increased competition or changes in the regulatory environment.

My Recommendation for the Company

Mercury Drug Corporation has an opportunity to boost its business by
investing in digital transformation. The first step is to focus on improving its presence
with a website that's user-friendly and packed with helpful information. This website
should not just replicate their stores. Also provide valuable details about products,
health tips, and promotions to engage customers effectively.
Next, it would be beneficial for the company to develop an app that offers
customers a personalized and convenient shopping experience. This app can
include features, like online ordering, prescription refills, and even a loyalty program
to encourage repeat business.
Lastly, Mercury Drug needs to optimize its e-commerce capabilities. This
means streamlining the ordering and delivery processes to ensure the delivery of
customer orders. Moreover, integrating payment options and implementing
cybersecurity measures will enhance the overall security and convenience of online
transactions.
By embracing these advancements Mercury Drug Corporation can stay ahead
of industry trends, meet evolving consumer preferences, and ultimately strengthen
its market position.