Farmacias El Amal

Farmacias El Amal

Company type	Private
Industry	Pharmacy retail
Founded	1973
Founder	Saleh Yassin
Headquarters	Puerto Rico
Area served	Puerto Rico
Key people	Saleh Yassin (President and CEO)
Products	Pharmacy products, general merchandise, grocery items, health and beauty care, home health care
Number of employees	1500 (2003)

Farmacias El Amal was a pharmacy chain that operated regionally across Puerto Rico. At its height, the company managed over 60 pharmacy locations throughout the island. Established as a privately owned business in 1973, it competed primarily with major retailers such as Walgreens, Kmart, and Walmart.

Founding and Early Development

Saleh Yassin emigrated from Jerusalem to Puerto Rico at the age of 17 to pursue studies at the Inter American University. Supporting himself through college by selling products door-to-door, he graduated with honors, earning a bachelor's degree in economics and business administration. He further advanced his education by obtaining a master's degree in economics and finance from the University of Rhode Island in 1970, and later pursued doctoral studies in economics and industrial organization at Vanderbilt University.

In 1973, Yassin acquired Super Farmacia El Amal Inc., a small drugstore located in Río Piedras with annual sales under $200,000 and facing financial difficulties. Over subsequent decades, Farmacias El Amal grew substantially, eventually generating annual revenues exceeding $200 million. Yassin, recognized three times as one of the Caribbean Business Top 10 Business Leaders, considered Puerto Rico his adopted home and emphasized that El Amal was wholly Puerto Rican-owned.

In 1978, he launched COD Drugs, a wholesale distribution company that became Farmacias El Amal’s purchasing division by 1995. Additionally, Yassin expanded into pharmaceutical manufacturing by acquiring Sein Mendez Laboratories and engaged in various profitable real estate projects. Throughout the 1970s and 1980s, Farmacias El Amal steadily increased its footprint by opening new stores in locations including Carolina and San Juan.

On December 8, 1978, the company inaugurated a new outlet at the Plaza del Carmen Mall in Caguas.

Expansion: 1990s–2000s

In 1995, Farmacias El Amal acquired a local pharmacy chain on the island, Farmacias Moscoso.

By April 26, 1999, it was reported that despite numerous difficulties and transformations in 1998 for the then 50-store Farmacias El Amal, Puerto Rico's largest pharmacy chain achieved double-digit growth by year-end. The sales results aligned with expectations, bolstered by promotional and public relations campaigns celebrating the chain’s 25th anniversary in 1998. These efforts featured outdoor concerts and advertising spots. Saleh Yassin, president and CEO of Farmacias El Amal, remarked, "In many regions, we remain relatively new in terms of brand recognition. Until three years ago we were a modest chain; then we acquired the largest chain but kept the smaller chain's name." Although integrating the Moscoso stores presented challenges, competition on the island remained intense. Walgreens operated 46 outlets, Kmart had 26, Wal-Mart maintained nine, alongside approximately 850 independent pharmacies. Yassin likened the competitive environment to a battlefield. Additionally, Farmacias El Amal faced Hurricane Mitch’s impact—losing one store which was subsequently rebuilt—and operated several locations on emergency power for 40 days. Nevertheless, hurricane effects did not hinder overall annual sales, which rose by 29 percent to $160 million compared to 1997. The addition of three new stores in late 1998 increased total locations to 50. Average store size grew from 6,800 square feet in 1997 to 7,500 square feet in 1998 as four outlets were remodeled following a new prototype of 12,000 square feet. Yassin’s primary goal for 1999 was to open seven new stores before year-end: five measuring 12,000 square feet, one at 14,000 square feet, and another nearing 16,000 square feet. Pharmacy sales accounted for about $64 million or 40 percent of total revenue, with third-party sales representing 65 percent of pharmacy business; Yassin anticipated this figure reaching 80 percent by the end of 1999.

On April 24, 2000, reports indicated that despite Puerto Rico's challenging competitive environment, Farmacias El Amal concluded 1999 with a sales increase of 12.5 percent and a same-store sales rise of 10 percent. The company opened five new stores and remodeled an additional five locations. Achieving $180 million in sales was more demanding than previous years due to rivals like Kmart, which expanded drugstore-style departments in sixteen existing outlets. In 1999, Farmacias invested $2 million in implementing advanced data mining and warehousing systems aimed at enhancing category management. General merchandise and grocery items contributed to 25 percent of sales that year—up from prior periods—while over-the-counter products represented 15 percent; health and beauty care accounted for 10 percent; home health care also made up about 10 percent. During 2000, several product categories were reorganized with new planograms based on prior year scan data. Furthermore, four drive-through windows were introduced as a response to Walgreens’ aggressive addition of similar features. The company planned to open five new stores in that year; all but one were expected to include drive-through services.

By August 31, 2000, Farmacias El Amal continued its aggressive growth strategy with plans to invest approximately $13 million over the following two years to establish new locations. President and CEO Saleh Yassin announced contracts had been signed for thirteen new drugstores; however, opening dates depended on shopping center completions. Stores scheduled to open before year-end included those in Rio Grande, Las Piedras, Fajardo, and Carolina. Yassin projected opening four to five additional stores the subsequent year with each requiring an investment near $1 million. He noted that sales were slower compared to the previous year due to factors such as elevated electricity and fuel costs and absence of economic stimulus from Hurricane Georges. Regarding rumors about El Amal’s potential sale to Eckerd, which had plans to enter Puerto Rico’s market but later halted them amid corporate restructuring by its parent company JCPenney, Yassin firmly denied such claims stating his commitment was toward continued expansion.

On April 23, 2001, it was reported that according to Saleh Yassin, Puerto Rico had become a "battleground" as competitors including Walgreens, Kmart, and Wal-Mart continued pharmacy expansions on the island. Despite intense competition during this period, Farmacias El Amal finished the year with an eight percent increase in sales and added one store. For 2001, the chain aimed for even more ambitious growth plans designed to distinguish itself from rivals by opening four additional pharmacies—raising total stores to fifty-nine by year-end—with three being freestanding units featuring drive-through pharmacy services due to consumer demand for convenience. Yassin stated that approximately ninety percent of these new sites would be freestanding with drive-throughs to stay competitive. Additionally, photo labs offering one-hour processing would be installed at all locations to boost foot traffic along with automatic teller machines enabling customers to pay utility bills electronically or access internet services. After pausing e-commerce initiatives previously, the company planned that month to launch an online platform offering roughly ten thousand SKUs and prescription refill capabilities initially available in Spanish with an English version expected by June. Customers could choose second-day delivery or store pickup options for online orders. To further differentiate itself in marketing efforts, Farmacias launched a $300,000 campaign under the slogan "Lo nuestro es farmacias" ("Pharmacy is our specialty"), emphasizing that pharmacy accounted for forty-four percent of total sales.

On March 6, 2003, Farmacias El Amal’s President & CEO Saleh Yassin announced an investment exceeding $8 million aimed at opening six new stores prior to Mother’s Day while celebrating its thirtieth anniversary. The company had obtained Certificates of Need & Convenience (CNC) required by the Health Department and secured locations pending use permits from the Regulations & Permits Administration (ARPE). Planned openings included sites in Bayamón, Caguas, Encantada (Trujillo Alto), Guayama, Plaza Las Américas mall, and Prime Retail in Barceloneta. Four out of six stores would be freestanding—a format typically costing over $2 million each—with only Encantada and Plaza Las Américas locations not freestanding. Despite ongoing expansion efforts, Yassin expressed skepticism about significant comparable store sales growth due to economic conditions where inflation offset nominal sales increases.

By June 5, 2003 reports highlighted Farmacias El Amal as a formidable competitor against national leader Walgreens—the largest pharmacy chain nationwide according to Hoover's Online—with El Amal ranking as a close second on the island while preparing to open its sixty-first store that week. With estimated revenues reaching $190 million in 2001 and surpassing $200 million in sales revenue by 2002 according to Yassin—who emphasized resilience against competition—the company ranked twenty-sixth among locally owned firms per Caribbean Business’ Top 300 list and was recognized as the largest locally owned pharmacy chain on the island. Employee count grew from approximately one thousand fifty in 2001 across fifty-five stores to about fifteen hundred employees operating sixty-one outlets by mid-2003.

On August 14, 2003 after inaugurating five stores earlier that June, Farmacias El Amal opened another location at San Patricio Plaza investing over $7 million into a facility featuring a drive-thru window and parking capacity for one hundred sixty-five vehicles within a former Telefónica building entirely owned by El Amal; however only the third floor housed the pharmacy while remaining space was leased out. At this time Farmacias El Amal remained Puerto Rico’s largest locally owned drugstore chain per Caribbean Business’ Book of Lists.

On March 23, 2006 it was announced that Farmacias El Amal intended to open three additional pharmacies by the conclusion of first quarter 2007 with an investment totaling approximately $4.5 million according to President Saleh Yassin. Planned sites included leased spaces averaging thirteen thousand square feet located in Manatí, Morovis, and Adjuntas. The Manatí location was expected before year-end while Morovis and Adjuntas stores were targeted for early next year openings creating around ninety new jobs collectively.

By December 6, 2007 reports revealed that Massachusetts-based CVS Pharmacy was progressing toward finalizing negotiations aimed at acquiring local chain El Amal as part of expansion efforts on the island. CVS had engaged local development teams along with architectural and engineering firms preparing store conversions pending completion of regulatory permits—a process known for delays—that could postpone rebranding until after February 2008. CVS/pharmacy operated approximately six thousand two hundred outlets across thirty-eight states making it America’s largest retail pharmacy chain at that time. However it remained unclear whether CVS intended full acquisition or selective purchase of underperforming locations within El Amal’s network which comprised more than sixty stores generating estimated annual revenues near $220 million supported by roughly one thousand one hundred fifty employees.

On December 13, 2007 Farmacias El Amal strongly refuted rumors regarding its sale to CVS Caremark with President Saleh Yassin labeling such claims "completely false." He expressed concern over potential negative impacts these unfounded speculations could have on staff morale and business partnerships given his longstanding dedication to Puerto Rico’s market presence. While Caribbean Business had cited anonymous sources within CVS’ real estate and engineering departments indicating ongoing acquisition talks believed accurate at publication time—El Amal’s leadership categorically denied any transaction underway describing rumors as malicious attempts undermining their local operations which consisted of over sixty locations generating more than $220 million annually with over thirteen hundred employees—and reaffirmed intentions for continued expansion within Puerto Rico.<ref>

Acquisition, bankruptcy, and closure

On January 16, 2008, Walgreens declared its intention to purchase 20 drugstore locations in Puerto Rico from Farmacias El Amal, a family-owned chain operating 61 stores on the island at that time. El Amal planned to maintain operations of its remaining 41 outlets in Puerto Rico. The deal was projected to finalize within the first quarter of 2008. Following the completion of the acquisition, Walgreens would initiate the process of rebranding the acquired locations, including renovations and updating store signage.

By July 17, 2008, reports indicated that over ten former El Amal stores had officially opened under the Walgreens banner. Although Walgreens did not publicly disclose the exact number of acquired outlets, industry insiders confirmed that fewer than the initially proposed 20 stores were included in the transaction. Certain sites, such as the Isla Verde El Amal location, remained under renovation. Walgreens' rapid conversion plan aimed to solidify its dominant position ahead of CVS Pharmacy's anticipated entry into the Puerto Rican market from Rhode Island. Previously, El Amal—Puerto Rico’s second largest pharmacy chain—had announced selling 20 of its 60 stores to Walgreens while transforming its other 40 into clinical centers. The financial terms were not revealed but were intended to support a $25 million investment to convert El Amal's remaining stores into clinical service centers offering specialized pharmacy treatments such as infusion therapy, preventive healthcare, and nutritional counseling. These revamped El Amal outlets would continue to offer a limited retail selection.

On March 20, 2009, Farmacias El Amal—the largest local pharmacy chain on Puerto Rico at that time—filed for federal bankruptcy protection due to debts totaling around $75 million.

By February 24, 2011, customers and staff discovered that Farmacias El Amal’s locations had unexpectedly closed. The chain had initially filed for Chapter 11 bankruptcy protection in March 2009 and embarked on a significant operational restructuring that reduced its store count to approximately 22—about half its pre-bankruptcy network. Subsequently, the company amended its filing to Chapter 7 liquidation in May of that year. Despite this setback, El Amal’s founder and president Mohammad Yassin announced plans in June to invest $5 million in refurbishing these remaining stores and allocate an additional $1 million toward marketing efforts aimed at repositioning the brand amid growing competition from national chains like Walgreens and CVS.

On May 4, 2011, it was reported that nearly three months after its sudden closure and Chapter 11 filing, El Amal began liquidating remaining inventory. Over $3 million worth of merchandise from 14 former outlets had been consolidated into two locations in Toa Baja and Carolina, where items were sold at discounts of up to 60 percent through that weekend. During a legislative hearing held Tuesday, President Mohammad Yassin attributed El Amal’s downfall to unfair competitive practices on the island. When filing for Chapter 11 earlier that year, the company disclosed debts amounting to $30 million. Yassin criticized Walgreens for allegedly receiving “special benefits” that hindered fair competition. He advocated for regulations ensuring equitable treatment among competitors, suggesting legislation requiring drug manufacturers who grant advantages to Walgreens must extend similar terms to community pharmacies. The hearing examined El Amal’s abrupt closure on February 18 without prior notice to customers—a move violating local regulations mandating advance warnings for pharmacy shutdowns. This sudden closure sparked numerous complaints from patients who lost access to prescriptions overnight. Yassin stated that all efforts to sustain operations had been exhausted and described El Amal as a casualty of Puerto Rico’s regulatory environment. He emphasized the need for lawmakers to establish a level playing field where all competitors have equal opportunities. While not explicitly mentioned by Yassin, it was widely understood that large retail chains leverage their purchasing power to secure bulk discounts passed on to consumers at checkout—advantages smaller chains like El Amal cannot match without sacrificing profitability.

External links

• Bnet Research