HOME-GROWN medical device wholesaler and distributor Yeap Medical Supplies was hit with an overwhelming demand for personal protective equipment (PPE) when Covid-19 struck.
Items such as gloves, medical gowns and surgical masks were flying off the shelves.
That was almost three years ago, when the company saw its total sales triple year on year, managing director Victor Yeap, whose company was founded in 2000, told The Business Times.
But as global demand for Covid-19-related supplies tapers off, Yeap is looking ahead to secure business for the long term.
“2020 was definitely not a normal year. The amount of sales we saw also represented a situation where many people bought to stock up,” he said.
Part of his company’s growth can also be attributed to its expansion of Pharmex Healthcare, a retail chain founded by Yeap’s father in 1983, which carries products including those under its in-house brand, Assure Medical.
The company opened three more stores in the second half of 2020 – at Jurong Green Community Club (CC), Novena Regency and Toa Payoh West CC – to make its medical and home care supplies more accessible to the public. This brings the total number of Pharmex Healthcare outlets across the island to six.
During this period, Yeap Medical Supplies also grew its online presence beyond its e-store, by listing products on e-commerce marketplaces Shopee and Lazada. It has since launched on GrabMart, PandaMart, NTUC Fairprice and most recently in October, Amazon.
“Everybody was stocking up on PPE in 2020, but that period of buying has somewhat moderated in 2021 and 2022. Now, buffer levels are healthy. They are buying either to replenish, or buying as and when they need,” said Yeap.
Yeap Medical Supplies posted a net profit of S$8.2 million for its full year ended Oct 31, 2021, down from a net profit of S$15.8 million in the year-ago period. Revenue fell to S$37.5 million for the same period, down from S$68.9 million the year before.
Challenges during Covid-19
The booming demand for medical supplies globally, however, also drew more players into the market to grab a slice of the pie.
Yeap noted how the company had to contend with competition from new entrants, many of which were direct-to-consumer businesses, retailing products at cheaper prices.
Yeap Medical Supplies, on the other hand, relies largely on selling products to resellers including pharmacies and supermarkets. As a result, its supplies are usually sold at a comparatively higher markup to account for middlemen margins, Yeap said.
Its masks, in particular, are medical-grade, and tend to be “a little bit more on the expensive side”, he added.
“During that time, a lot of cheaper non-medical masks appeared in the market. But they were a fairly new product category, and it was difficult for people who had never bought masks before to distinguish between a medical and a non-medical mask.”
This pushed the company to step up the marketing of its products, as well as educate the public through its social media channels on the differences in the types of masks being sold.
Yeap Medical Supplies also found itself stuck with unprofitable long-term contracts it had signed with healthcare institutions prior to the pandemic, which did not take into account the unexpected spike in costs of medical supplies, freight and fuel charges later on.
“The prices we originally quoted (under these tenders) definitely could not stand up to the surge in costs during the Covid-19 period. As a result, we had to sell (our products) at a loss,” said Yeap.
The company was eventually able to suspend some contracts and propose an adjustment of prices, subject to the approval of its clients. Growth in sales of medical supplies to the public and other businesses also helped it to recoup some of the losses sustained from these contracts.
Back to business
Following Singapore’s transition to an endemic Covid state, Yeap’s focus is to have the company return to “sustainable revenue growth under normal circumstances”.
The company, which has around 80 employees, will therefore be refocusing its efforts on increasing sales in other core product segments, such as clinical and infection control supplies.
“We see more companies looking to replenish, repurchase, and renew capital equipment, whereas in the past during Covid-19, they put off a lot of that investment. So those are coming back now,” Yeap noted.
Given Singapore’s ageing population and the growing number of aged care facilities, home care medical equipment is one area he sees an opportunity in. The company hopes to develop more innovative and niche products, such as mobility devices and home care furniture under its Assure Medical brand, for the local market.
The company will also be opening two more Pharmex Healthcare stores at the Bukit Timah CC and Tanjong Pagar CC in December and January, respectively, with another bid to open a store at Punggol CC pending.
“Having accessibility to our products is key. Of late, we have deliberately put our shops in community centres as these places organise a lot of health-related activities that encourage the elderly to participate in,” Yeap noted.
While Yeap Medical Supplies has trademarked its Assure Medical brand in South-east Asia, expanding overseas is not something on his cards for now. “If the right opportunity comes along, I wouldn’t rule out the possibility. But at this stage, it’s not something we’re actively doing,” Yeap said.
“A lot of our energy is spent on ensuring we maintain our presence and position in the Singapore market. We still have room to grow here.”