Mariano Que - Mercury Drugstore

Mariano Que initially worked as an employee of a drugstore during the prewar era but like most
typical successful entrepreneurs, Que found his opportunities after the war and during the
advent of the American occupation. The destruction of the prewar establishments left everyone
starting and rebuilding from scratch, and those who had a wider perception of the peoples needs
seemed to had the greater advantage.
Mariano Que saw the demand for sulfa drugs, since most of the Philippine pharmacies hardly had
enough resources to go by. Using his prewar experience as a drugstore employee, Mariano
invested in 100 pesos worth of sulfathiazole tablets and peddled them in single doses so they
could be affordable to the poverty-stricken sector. He rolled over his profits until he had enough
money to build a wooden pushcart. That way, he could peddle a wider assortment of
pharmaceutical products.
Other peddlers imitated his marketing and selling strategy, but Que made a difference. He had a
reputation for selling only quality and unexpired medical products, and soon enough he had a
steady clientele. By 1945, Mariano had saved enough resources, which enabled him to set up his
first store, aptly called Mercury Drug. The Roman god Mercury carried the caduceus symbol,
which was largely associated with the medical profession.
Despite the stores establishment, Mariano invested in motorized vehicles in order to provide
drug delivery services to his valued customers. He also expanded his store hours to 17 hours a
day, 7 days a week, since he recognized that the need for medication may come unexpectedly. In
1952, the stores were open 24/7, which made the drugstore become a valuable part of the
community.
In 1960, the Ayala Group of Companies offered Mariano Que a space to lease in the shopping
center that was about to be developed in the heart of Makati. Thus, the second Mercury Drug
opened, this time as a self-service pharmacy. The rest is a history of more innovations and
technological adoption of computer-guided controls and biological refrigerators. These
improvements allowed the drugstores expansion into other life-saving medications. The newer
branches of today are superstores as they carry more than just medicines but other consumer
products from food to household to health and beauty items.
Mercury Drug created a reputation that every Filipino household could rely on; and there was a
store in nearly every town and city accross the country. Today, there are about 700 Mercury
stores, some of which are under franchise. All these fulfilled Mariano Que's goal of making safe
medication available and accessible to every Filipino community. Today, Mariano's daughter,
Vivian Que Azcona, continues to uphold his company's visions and missions.
In return for their customers unwavering loyalty, Mercury Drug celebrates their annual
anniversaries by holding a free clinic to the indigent, for which the appropriate medications for
their illnesses are likewise given for free.

7 Mercury Avenue, corner E. Rodrigu

Quezon City
PH-1110
Philippines
Telephone: + 63 2 911 5071
Fax: + 63 2 911 6673
Web site: http://www.mercurydrug.com
Wholly Owned Subsidiary of Mercury Group of Companies, Inc.
Incorporated: 1945
Employees: 7,000
Sales: PHP 42.98 billion ($8.8 billion) (2003 est.)
NAIC: 446110 Pharmacies and Drug Stores

Mercury Drug Corporation is the Philippines' dominant pharmacy group. The Quezon Citybased company operates a national chain of more than 450 drugstores, including companyowned and franchised stores. Mercury Drug is estimated to sell as much as 60 percent of all
medicines sold each year in the Philippines (the country's hospitals sell about 12 percent of
medicines). Mercury Drug's pharmacies follow the American model, combining drug and medical
equipment sales with over-the-counter medicines, personal care items, basic household
needs, cosmetics and other beauty products, and the like. Most of the company's stores also are
equipped to store and sell serums, blood plasma, albumin, and similar biologically active medical
products. In addition to its drugstores, Mercury operates a chain of Mercury Drug Superstores.
Generally attached to the company's pharmacies, the Mercury Drug Superstores extend the
group's assortment to include convenience store and fast-food items. By the mid-2000s, Mercury
Drug Corporation operated more than 150 Mercury Drug Superstores. Founded by Mariano Que,
who first sold pills from a pushcart in the 1940s, Mercury Drug Corporation remains a privately
held company. Leadership of the company also remains in the family: The company's president is
Mariano Que's daughter, Vivian Que-Ascona. Mercury Drug is asubsidiary of the Mercury Group of
Companies, which governs other Que family interests, including the 10*Q convenience store
chain and the Tropical Hut fast-food group. In 2003, Mercury Drug's revenues amounted to nearly
PHP 43 billion ($8.8 billion).
Founding a Filipino Pharmacy Giant in the 1940s

Mariano Que started his career working in a Manila drugstore in prewar Philippines. There he
came into contact with many medications, including the newly discovered class of sulfa drugs,
including sulfathiazole. These new drugs, developed by German scientists in the early 1930s,
were quickly hailed as new "miracle" drugs. Indeed, the sulfa drugs enabled the treatment of
many illnesses, such as pneumonia, gonorrhea, and other bacterial infections, that previously
had been difficult, if impossible, to treat. Despite the fact that the sulfa drugs later were shown
to have a number of undesirable side effects (they formed deposits in the kidneys, and bacteria
quickly became resistant), they were credited with saving millions of lives around the world
through World War II.

The end of the war and the liberation of the Philippines by U.S. forces brought new business
opportunities in the country. During the occupation, supplies of medicines had become scarce,
and the immediate postwar period saw a surge in demand for sulfa drugs, and sulfathiazole,
considered by many to be a virtual cure-all. With most of the country's businesses, including its
pharmacies, destroyed during the war, much of the country's trade shifted to its busy
marketplaces. Mariano Que, inspired by the new entrepreneurial spirit, used his drugstore
experience to launch his own business.
At first, Que bought and sold medical vials and capsules. After he had generated sufficient
savings, however, he took PHP 100 (worth about $1.50 at the time) and bought a bottle of
sulfathiazole tablets. Que brought the sulfathiazole bottle to Manila's busy Banbang market and
sold the pillsin single doses. The method of selling, known as "Tingi-tingi," became extremely
popular in the poverty-stricken Philippines, bringing life-saving medications within financial reach
of many more people than before.
Que invested his profits in purchasing more pills, and before long he had generated enough
revenue to buy a pushcart, which he filled with an expanding assortment of pharmaceuticals. The
unregulated nature of the country's drug market, especially its pharmaceutical black market, led
to abuses by sellers, who sometimes peddled fake or dangerous formulations, or sold
medications long out of date, often at extortionist prices.

Que, however, built a reputation for the quality and freshness of his products, and also for the
fairness of his prices. Before too long, he had built up a steady clientele, and in March 1945, Que
opened his first store. Que named the Bambang-located store Mercury Drug, after the Roman
god and bearer of the caduceus, the symbol of the medical profession.

Branching Out in the 1970s

Mercury Drug remained a one-store operation into the 1960s. In the meantime, Que continued to
drive innovations in the Filipino pharmacy sector. In 1948, for example, Que began a drug
delivery service, becoming the first to use motorized vehicles for swifter delivery times. In the

1950s, Que expanded his store hours, introducing a 17-hour-per-day, seven-days-per-week

opening schedule. Part of the motivation behind the move came in recognition of a Filipino
tendency to auto-medicate their illnesses. By remaining open longer, Mercury Drug responded to
its clients' demands for increased access to pharmaceutical products. Launched in 1952, the new
opening schedule was expanded to 24 hours per day in 1965.

Mercury Drug began its drive to become the Philippines' dominant drugstore group in the next
decade. At the beginning of the 1960s, the company was contacted by the Ayala Corporation,
which was building a shopping center in Makati.

Ayala offered to lease space to Mercury, in order to include drugstore services at the center.
Mercury agreed, and once again revealed its penchant for innovation, opening the country's first
self-service pharmacy in 1963.
Two years later, Mercury opened its third drugstore, in Quiapo, which became the company's
flagship and set the model for its further development. In 1967, the company opened a
centralized warehouse to serve its growing store chain, introducing computer-guided
temperature controls to safeguard its products. Then, in 1969, the company became the first to
introduce biological refrigerators in its stores. This permitted the company to assure the quality
of its life-saving medicines.
Mercury Drug began building out its network of drugstores, staying close to the Manila market for
much of the early 1970s. The company also began branching out beyond pharmaceutical sales. A
significant early purchase was that of Medical Center Drug Corporation (MCDC). Founded in
1946, MCDC focused on sales of pharmaceutical supplies, equipment, and basic surgical
instruments.
The purchase of MCDC, complementary to its existing drugstore business, led Mercury Drug to
change its structure. In 1972, Que created the Mercury Group of Companies, Inc., which in turn
oversaw Mercury Drug and MCDC. Both companies remained independent of the other; in 1980,
MCDC changed its name, to Medical Center Trading Corporation (MCTC), in order to highlight its
difference from Mercury Drug. MCTC then grew into the Philippines' leading importer and
distributor of medical, hospital, laboratory, and related equipment, with branches throughout the
Metro Manila and surrounding region.
MCTC was not the only venture by Que (who was joined by daughter Vivian Que-Ascona, later
president of Mercury Drug) to expand beyond his drugstore empire. The introduction of the
convenience store concept in the Philippines in the early 1980s represented both a new source of
competition for Mercury Drug and a new opportunity. Mercury developed its own convenience
format in response to the growth of competitors such as 7-11. Typically located next to its
drugstores, the Mercury Drug Superstores expanded the company's range of goods beyond drugs

and into wider consumer categories, such as beauty and personal care products, fast-foods, and
the like.
Separately, the Que family added other interests, including the Q*10 convenience store format
and the Tropical Hut fast-food restaurant chain. Nonetheless, Mercury Drug Corporation remained
the focus of the family's holdings.

"Oligopoly" in the New Century

Mercury Drug, meanwhile, continued to grow strongly. In 1976, the company expanded beyond
the Metro Manila market for the first time, and over the next decades added locations in the
Luzon, Visayas, and Mindanao regions of the Philippines as well. Supporting this network was the
implementation of a fully computerized warehousing, inventory, and order processing system,
installed in 1985.
Mercury Drug's growth was impressive: By 1995, the company operated more than 270 stores.
Less than ten years later, Mercury had expanded its number of branches to more than 450,
giving it a near monopoly grip on the country's drug sales. By 2004, Mercury controlled as much
as 60 percent of all drug sales in the Philippines.

Ironically, Mercury's dominant position led the group, which had achieved its early growth based
on its low prices, to be criticized for what many considered as its restrictively high prices. Indeed,
as some critics pointed out, similar drugs could be purchased in India and other markets for as
much as one-third the price Mercury Drug charged.
In the early 2000s, the government began taking action to force the Philippines' drug industry,
including Mercury Drug, to lower prices on many life-saving medicines. As part of that effort, the
country's Trade and Industry and Health departments began encouraging the parallel importation
of pharmaceutical generics from India, which had earned worldwide recognition for the quality of
its generic equivalents.
Company Perspectives:
The company's mission is continuously be the leading, trusted and caring drugstore.
In 2004, the government stepped up its pressure. In September of the year, the government
passed legislation expanding drug discounts for the country's senior citizens. The country's
smaller independent drugstore owners protested the decision, in part because it was expected to
serve only to increase Mercury's dominance over the marketas the country's largest retailer of
pharmaceutical products, Mercury was easily able to negotiate discounted prices from its
supplies. Also in that year, President Arroyo established the lowering of drug prices as one of the
government's priorities.

In December 2004, the Filipino government announced a new plan to break what some were
calling Mercury's "oligopoly" on the country's retail market. The Philippine International Trading
Corp. (PICT), owned and run by the Filipino government, announced its intention to organize up
to 300 of the country's independent pharmacies into a new network of privately owned and
operated drugstores, dubbed "Botika ng Bayan." The new network would then sell drugs, sourced
by PICT directly from drug companies, at prices as much as six times less expensive than
"market"i.e., Mercury'srates.
Despite these pressures, Mercury Drug Corporation remained a fixture on the Philippines
pharmacy market. The company also remained one of the Philippines' largest corporations,
ranking in eighth place among the country's largest corporations and third place among the
corporations in the high-quality services/products bracket. Mercury Drug appeared to have
discovered its own "miracle drug" for success.

Principal Subsidiaries
Mercury Drug Superstore.

1945: Mariano Que begins selling sulfathiozone out of a cart, then opens a store in Manila
and founds Mercury Drug Corporation.
1963:Mercury Drug opens its second store, in a shopping center built by the Ayala Group.
1965:Mercury Drug opens a third, flagship branch in Quiapo.
1970:The company acquires Medical Center Drug Corporation (MCDC).
1972:Mercury Group of Companies, Inc. is set up as a holding company for MCDC and
Mercury Drug.
1976:Mercury begins expanding beyond the Manila market.
1985:The company sets up fully computerized warehousing, inventory, and ordering
systems.
1995:Mercury celebrates its 50th anniversary with more than 270 stores.

2004:Mercury operates more than 450 stores, with annual sales of nearly PHP 43 billion
($8.8 billion).