ICN Explores Opening More Russian Drugstores
Q: If you cross a certain Orange County retailing entrepreneur with a Costa Mesa drug company on an expansion binge in Eastern Europe, what do you get?
A: Drugstores in Russia.
ICN Pharmaceuticals Inc. hired John Ortega this year to explore the possible expansion of its network of 47 drugstores and kiosks in Russia and Eastern Europe. Ortega, a co-founder of Clothestime Inc., the Anaheim retailer of off-price women’s apparel that fell on hard times in 1995, lives in Newport Beach. At one time, Ortega lived next door to ICN’s founder and chairman, Milan Panic.
In a recent overseas telephone interview, the two executives said ICN is thinking about adding 50 locations in Russia within the next year to its network of 25 stores and kiosks.
ICN hopes selling drugs directly to Russian consumers for cash could help sustain its business there, despite economic turmoil across the nation. Recent devaluation of the Russian ruble has made it difficult for the manufacturer to collect on sales through its distributors. “When you sell through your own pharmacies, you collect much faster,” he said.
ICN officials said Russia allows drug manufacturers to own their own stores, a practice prevented by U.S. antitrust law.
Panic said the company is testing retailing strategies through its existing stores and kiosks in Russia. It’s experimenting with store size, product displays and location in hopes of developing an “economical” store concept for possible expansion.
Ortega, now a senior vice president with the company, said he will test American merchandising concepts in a flagship store that is set to open this month on the ground floor of ICN’s corporate office building in Moscow. Among other things, Ortega expects to advertise the grand opening through Russian media and to package products in attractive bags marked with ICN’s corporate logo.
If test-marketing works, Panic predicted the company would move ahead with plans for its 50-store expansion in Russia. To compete fully in the Russian drugstore business, the company eventually would have to operate at least 500 pharmacies across the country, he said. However, he emphasized that a retailing venture of that scope may not materialize.
