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How Dahlia Dy brought South Star Drug from Naga City to nationwide

She started in the family business when she was 10, and moved her way up to become the drugstore chain's president and managing director.
By Maricris Carlos |

 


TIGER LADY. “I’m a tiger already; I know my way around,” says Dahlia Dy, managing director of South Star Drug. Photo by Jason Quibilan / Entrepreneur Philippines 

 

Nothing much fazes Dahlia Dy anymore when it comes to running the drugstore business her parents started 78 years ago in Naga City.

 

After all, the BS Pharmacy graduate had seen South Star Drug grow from a store selling traditional Chinese herbal medicines into a company now among the top five pharmacy players in the country. “I’m a tiger already; I know my way around,” she said.

 

Dy started in the family business when she was only 10-years-old, helping out behind the counter or at the warehouse. She was named president in 2007, but had been busy behind the scenes long before that, dreaming and plotting to grow the company nationwide. “I didn’t believe a local company—a regional player like us—couldn’t do it. I believe there should be a way I could expand nationwide.”

 

And expand they did. The family decided to be strategic with the expansion, concentrating on opening stores in territories where they already have a presence: initially the Bicol region, Southern Luzon, and Metro Manila. Growth was measured though compared to market leader Mercury Drug. “Whatever our financials was able to support, that’s as far as we expand,” said Dy.

 

And yet, by 2012, the company had opened more than 200 stores.

 

Dy later realized that while the company was growing, their competitors were also growing. “Yes, we were running fast, but they were running faster.”

 

 

NEW LOOK. The updated logo of South Star Drug, as seen in this branch in Barangay Pinagbuhatan, Pasig City. Photo by Elmer Domingo 

 

Selling the business for further growth 

Still, the company’s growth had not gone unnoticed. Offers came from both local and foreign companies wanting to buy a drugstore chain with a wide network already in place.

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Dy saw the offers as an affirmation of how the company has grown. Selling the business had not been on the table until the offers came, but then she thought that being bought out would give them the resources to grow the business further. Another consideration was that the third-generation family members had other interests and pursuits and were lukewarm about joining the company.

 

In the end, the Dys took the offer from the Robinsons group, confident the family’s business legacy would be in the safe hands given the Gokongweis’ track record. “It was not all about the money,” she said. “I want to see the company 50 years from now, for the brand to be there. And we believe the Gokongwei family will be able to bring the company where we want,” she explained.

 

Lexter Azurin, equity research head at Unicapital Securities Inc., said the deal is beneficial to both companies. South Star Drug is “a perfect fit” among the portfolio of shops in Robinsons malls, and Robinsons can take advantage of one of the most extensive branch networks among drugstores in the country. “Given the massive expansion plans of Robinsons Retail to expand its store network, we believe that the growth of South Star Drug store will follow,” he said.

 

 

OPENING DAY. The grand opening of a South Star Drug branch in Robinsons Galleria Cebu, Cebu City in 2015. Photo from South Star Drug's Facebook page

 

Still in charge

The fact the Gokongweis named Dy as managing director of South Star Drug is a nod to what she has done for the company.

 

Besides the impressive expansion, even before she officially took over as president, she had already initiated reforms like controlling pilferage (a perennial problem for all retail businesses); improved processes and systems; enhanced employee productivity; and ensured the company had good relationships on the ground so it would have first crack at good locations for its stores.

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No wonder, then, that the Gokongwei group had entrusted Dy with the task of ramping up South Star Drug’s nationwide expansion under their banner. South Star Drug now has 270 stores, and is still expanding at an unprecedented pace.

 

As of March 2014, the company has already opened 26 stores and, for the first time, forayed into Visayas and Mindanao, and ended 2015 with 300 stores nationwide. Robinsons Retail executives have announced the company would aggressively add more stores after the company raised P26.8 billion ($575.20 billion) from an initial public offering in November 2013. Dy is not worried about the change of pace though. “In fact, I take it as a challenge.”

 

*****

Maricris is the former managing editor of Entrepreneur Philippines magazine.


This article was originally published in the June 2014 issue of Entrepreneur Philippines magazine. 

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