Alza bought a part of the pharmacy and is preparing to sell medicines

Alza is no longer just a computer and electronics store. Today, there are not too many products that you would not buy in the largest Czech e-shop. Now, in addition, it is quietly preparing to enter another, potentially very lucrative segment, which is medicines. However, these are not so easy to sell, so preparations are currently underway in the background. And together with the new products, one of its former directors, who in the meantime jumped to Aukr, could return to Alza.

The company Other Corp from Zdice in Central Bohemia is not particularly exceptional at first glance. Since 2013, its managing director and owner has been Iveta Hermanová, who in recent years has managed an establishment in Zdice under the banner of the Alphega network of independent pharmacies. Nothing has changed about that yet, but at the beginning of this year, there were significant property and personnel changes in her company, which indirectly lead to the largest e-shop in our country. In addition, Alza officially confirmed its interest in the activities of this company a few days ago.

On May 1, Alza filed a notarial entry in the public register, in which it informs about the purchase of a part of the business plant of Other Corp, whose business is the operation of a pharmacy. Attorney Pavel Steinwicht, who has been representing the Holešovice e-shop for a long time, is signed on behalf of Alza in the document and is even listed as the indirect real owner of Alza.cz in the register of real owners.

This is because it has been hiding its official owner, or rather the owner of the Cypriot company LS Investments Limited, which is the sole shareholder of Alza, for a long time. However, this is nothing new. What is more interesting is that the entire transaction with Alza was probably negotiated on behalf of Other Corp by Jan Sadílek, who is signed on behalf of the selling party in the aforementioned document. It was he who replaced the pharmacist Iveta Hermanová in the position of managing director at the beginning of this year.

The thirty-nine-year-old Sadílek has extensive experience with Alza. He worked in the largest Czech e-shop from 2014 to 2021, including four years as marketing director, before he left for Aukra in mid-2021. He served there for a year and a half as managing director, then moved into the role of chief marketing officer before quietly leaving the company last summer. “I’m referring to Alza’s PR. I am not authorized to comment on that,” Jan Sadílek answered CzechCrunch’s questions about whether his new engagement means the renewal of his cooperation with Alza.

The same reaction as Sadílek was sent by Iveta Hermanová, who we asked about why she is no longer the owner of Other Corp as of January 1 of this year, or for what reasons she sold it. Attorney Štěpán Kmoch is the new owner of the Zdic company operating the local pharmacy, and similar to the case of Jan Sadílek, traces lead to Alza here as well.

Thirty-three-year-old Štěpán Kmoch is a cooperating attorney in the law office of the aforementioned Pavel Steinwicht, who has long-term ties to Alza. Kmoch specializes in e-commerce, marketing or consumer law or the protection of personal data, and in addition to his law practice, he holds shares in several companies that run music rehearsals and podcast studios in Prague, and together with his mother, Maria Kmoch, he owns Prague’s Galeria Kmoch.

He did not want to comment too much on the property entry into the company that runs the pharmacy in Zdice. “Unfortunately, due to the signed confidentiality agreement, I cannot comment on the transaction in any way,” reported Štěpán Kmoch for CzechCrunch. In a similar vein, Pavel Steinwicht also responded to our questions about Alza’s plans with the Other Corp plant or the connection with a colleague from his own law firm.

“I am bound by the lawyer’s legal obligation of confidentiality, and therefore I cannot comment in any way, as the client has not released me from the obligation of confidentiality,” he said On May 1, Alza sent one more notarial entry to the public register, in which it updates or expands its statutes, including the following points: production of medical devices and provision of health services – pharmacy. And from her statement to CzechCrunch, it is clear that she is interested in the new segment in the form of medicines, which is still missing from her assortment.

“In order to expand the product range, a part of the business plant was purchased. However, we will not comment on the specific strategy, as well as any cooperation with other persons. We perceive the topic of health as an interesting business opportunity for a long time, which is why we have it on the website and in the Alza.cz application as one of the main categories.” said press spokesperson Alza Eliška Čeřovská.

At the moment, these are, for example, food supplements, sports nutrition, dermocosmetics or electronics such as fitness bracelets or electric toothbrushes. “Our offer also includes selected brands of contact lenses. In order to further expand the range of not only contact lenses, but also dermocosmetics or over-the-counter medicines, we need a pharmacy license. We want to provide our customers with the entire range of products in the field of health,” spokeswoman Alzy added.

It is not yet clear when, in what form and if Alza will eventually start selling drugs. What is certain, however, is that it is a lucrative part of the market, which could ensure further growth for the Czech e-commerce leader. “From our point of view, it certainly makes sense. It is logical that – if this is the case – Alza wants to expand its offer to a segment that is in high demand among customers.” says Jan Vetyška, executive director of the Association for Electronic Commerce (APEK), who has been following events in Czech e-commerce for a long time.

While there are dozens or even hundreds of competing e-shops in many categories, the situation in the pharmacy segment is clearer due to regulations and higher entry barriers. Prim is played by large pharmacy chains Dr. Max and Benu, who after the success of brick-and-mortar branches, quickly went into the online world as well. Both chains have their own e-shops, and they also cooperate with online supermarkets – Benu s Rohlík, Dr. Max with Basket.

In the online world, the most prominent players are Pilulka.cz or Lékárna.cz, although they also have brick-and-mortar branches, as is the custom today for most large retailers who combine online and offline sales channels. “There are more online retailers and the room for further growth in this category is obvious,” says Jan Vetyška. The head of APEK sees great potential in the online sale of medicines, especially when prescription medicines can also be distributed online, which is currently prevented by legislation.

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If you want to sell, for example, over-the-counter medicines in the e-shop, the legislation itself is a challenging thing that needs to be overcome. It costs time and money. It is necessary to comply with a number of regulatory regulations and also to make fundamental changes within warehouses and logistics. “In order for a mail-order store to deliver a full over-the-counter assortment, it must de facto open a physical pharmacy in its logistics base. In doing so, they must ensure not only disposition matters, but also qualified personnel, of which there is a great shortage,” reminds press spokesman Dr. Max Michal Petrov.

All this together with, for example, demanding debates with the regulator in the form of the State Institute for Drug Control (SÚKL) can take half a year, according to Petrov. Martin Kasa, co-founder and co-owner of Pilulka, talks about the fact that the whole process will easily take a year. Also because intralogistics around medicines is incompatible with other segments due to many regulations.

That is why some merchants such as Rohlík or Košík have teamed up with big pharmacy players. So far, it seems that Alza will follow her own path, which she does not want to specify in any other way. A high-ranking man in the Czech e-commerce scene, who has experience with the online sale of medicines and with whom CzechCrunch spoke about Alza’s plans, admits that it is not an easy process, but at the same time it is not impossible to complete.

Photo: CzechCrunch

The online supermarket Košík.cz cooperates with the pharmacy Dr. Max

Especially if we are talking about the strength, experience and budgets of Alza, which in 2022 alone earned over 42 billion crowns and earned over 650 million net. In addition, two years before, it was always well over two billion. “It’s another signal that they want to increase the frequency of purchases, they want people to buy from them as often as possible. They’re getting aggressive on the high-turnover range, they already have a lot of drugstore, pet food or non-perishable food,” says a man from the top floors of the Czech e-commerce market, who did not wish to be named.

And what do those to whom she could so-called get into trouble by selling medicine say Alza’s plans? In Pilulka, for example, they are still reluctant to believe it. “We do not want to speculate about the possible plans of other companies, which also seem improbable to us. First and foremost, we focus on customers in order to continue to be their preferred choice and hold the position of the largest mail-order pharmacy in the Czech Republic and Slovakia. We are also devoting our energy to completing the transformation and commercial and strategic cooperation with a number of entities, including from abroad.” stated by Martin Kasa.

Michal Petrov from Dr. Max. At the same time, he acknowledges that even in the highly consolidated Czech market, significant changes can occur, especially when it comes to e-commerce. “The position of Dr. Maxe is relatively stable here, we grew by about thirty percent last year. In February, we were the third most visited e-shop ever, behind Alza and Lidl, among the number one pharmacies, as well as brick-and-mortar pharmacies,” calculates.

For the entry of new potential competitors into the market, Dr. Max’s used to it. “Already today we have to cope with the entry of new players into the e-commerce market, for example Notina. From the beauty category, it is very close to the health category, sometimes the two come together after all. But the question is, to what extent will it be possible to profile a player in this category, who until now is perceived by consumers dominantly as an e-shop with electronics,” adds Michal Petrov, referring to Alza’s potential efforts in this area.