AHEL to seek shareholders’ nod to hive off pharmacy business

Pursuant to the recent orders of the National Company Law Tribunal, Chennai, Apollo Hospitals Enterprise (AHEL) has called for an equity shareholders meeting here on October 21 for approving the scheme of arrangement between AHEL and Apollo Pharmacies (APL), the company has informed the stock exchanges on Monday. In November 2018, Apollo Hospitals had said, to capitalise on the huge growth opportunity and to give greater focus, it had decided to restructure its pharmacy business. Accordingly, the board had approved the segregation of the front-end retail pharmacy business carried out in the standalone pharmacy segment into a separate company called APL.

Front-end pharmacy business means standalone stores, people and dispensing of products.

As a back-end player, Apollo Hospitals will be the exclusive supplier for APL under a long-term supplier agreement and it will enter into a brand licensing agreement with APL to license the ‘Apollo Pharmacy’ brand to the front-end stores and online pharmacy operations to further augment and strengthen the brand with these arrangements being entered into in compliance with applicable law.

The proposed reorganisation would not have a material impact on the financials of Apollo Hospitals as the backend business related to the standalone pharmacies, which represents 85% of the business economics, will continue to be held by AHEL.