The demand for improving the immune system as well as health related issues of consumers are more focused after the Covid-19 pandemic. Therefore, Vietnam's pharmaceutical retail market is a delicious bait that drugstore chains strive to compete for market share.
Market size of pharmaceutical retail
According to research on consumer spending on health products, the amount of spending is increasing extremely rapidly. In the last five years, spending on medical products has grown from $16 billion to more than $20 billion. It is expected that by 2025 this number can reach more than $23 billion.
Until now, there are more than 60,000 retail pharmacies in Vietnam. The revenue of this market is approaching 10 billion USD, and it is expected that in 2026 the total revenue of this market will reach 16 billion USD.
With the influence of the wave of digital technology, modern pharmacy chains are gradually being deployed and developed in the market. Currently, the modern drugstores chain only accounts for about 15% of the market. However, it is expected that in the future this number will increase significantly. Modern drugstore chains will be the target that pharmaceutical retail businesses aim to achieve.
Competition of product retail chains
As a highly potential market for development, pharmaceutical retail has seen fierce competition on chains expanding. Many businesses have been intending to encroach on the pharmaceutical market, creating a lot of competition among pharmaceutical retailers.
In which, the 3 leading brands of the pharmacy chain are familiar names such as: Long Chau of FPT Retail, Pharmacity, or An Khang of Mobile World Group which are in an extremely fierce competition period. Besides, the presence of rookies in the pharmaceutical retail industry also makes this competition even fiercer.
Although the pharmaceutical retail market has a lot of potential for development, this is also a double-edged sword when there are too many businesses encroaching on this field. The pharmaceutical retail market is gradually becoming saturated, and the increasingly fierce competition makes the pharmaceutical business extremely difficult.
Pharmacity is one of the first retail pharmacy chains in Vietnam. It is the most famous pharmaceutical retail chain and the leader in terms of the number of stores.
However, in recent years, due to pressure from competitors, the number of Pharmacity's pharmacies has decreased significantly. From mid-2022 until now, Pharmacity's retail store chain has reduced by nearly 200 pharmacies, from 1,118 to 936. It has been overtaken by Long Chau in terms of the quantity of goods. While the competitor was trying to scale up, Pharmacity decided to focus on sustainable growth by implementing the strategy of "Innovation Holistic". Specifically, focus on 4 growth goals: Competition; Consistency; Responsibilities and Profits.
In 2022 Pharmacity has made improvements and solutions to optimize inventory at stores and distribution centers. Pharmacity has made remarkable progress when significantly reducing the number of days of inventory compared to 2021.
Accordingly, net revenue from drug sales in 2022 increased by 77% compared to 2021, especially increasing sharply in the last months of the year. Pharmacity's total revenue in 2022 will reach nearly 6,000 billion. This leaping growth was recognized by Pharmacity right after applying the "Medicine First" program, which is considered the first "shot" of the "Comprehensive Innovation" strategy.
However, due to the promotion and innovation strategies as well as the investment in the application of new programs, the investment costs of Pharmacity have also increased since then. Accordingly, the after-tax profit of this retail chain is negative to more than 1200 billion dong.
Long Chau Pharmacy
Long Chau is a chain of stores that is a brand of The Corporation for Financing Promoting Technology company. Long Chau is the only chain of retails and distribution of medical products present in all provinces of Vietnam.
Surpassing Pharmacity, Long Chau reaches 1009 retail stores by 2022 and is present in all 63 provinces and cities of Vietnam, making this pharmacy's system more and more sustainable.
2022 is a year of outstanding development for stores belonging to Long Chau. Long Chau chain recorded strong growth with revenue increasing 141%, reaching 9.596 billion VND, 2.4 times higher than in 2021. It was estimated that the average revenue of each store by quarter in the last 3 quarters of the year. 2022 is 2.7 - 3.2 billion VND.
Revenue from this retail chain accounted for 32% of the company's total revenue, nearly doubling from 18% in 2021. With stable development at the present time, it is expected that, in the next 5 years, the total number of Long Chau stores can reach 3000 stores.
On the way to compete to market share with the remaining pharmaceutical retail chains, Long Chau is showing steady steps and strong development to become the leading brand in Vietnam in terms of pharmaceutical retail chains
An Khang Pharmacy
An Khang pharmacy, forerunner of Phuc An Khang pharmacy, was established in 2002. In 2017, An Khang pharmacy officially became a member of Mobile World. This pharmacy specializes in providing all kinds of pharmaceuticals, functional products, medical equipment and much other health care products etc.
Initially, The Gioi Di Dong planned to increase the number of An Khang stores to 800 in 2022 and beyond to 2,000 pharmacies, covering from South to North and ambition to be at the top position in the field of pharmaceutical retail. However, by the end of September 2022, in the third quarter business results report, Mobile World decided to suspend the opening of all new chains from the fourth quarter of 2022, including An Khang.
In 2022, An Khang Pharmacy saw strong development when Mobile World actively expanded its scale. The number of pharmacies increases quickly from 187 to more than 500. By the end of 2022, An Khang officially became the leading pharmacy system in 13 western provinces.
Although the scale had been greatly expanded, the revenue of An Khang's chain was not high. In 2021, An Khang made a profit of more than 8 billion dong, but in 2022, the total revenue of An Khang's chain was only 1500 billion dong and suffered a loss of more than 300 billion dong.
ECO pharmacy system under ECO Pharmaceutical Joint Stock Company is the first pharmacy chain in Vietnam to meet three standards: WHO-GSP, GDP and GPP. Established on January 29, 2008. ECO Pharmaceutical Joint Stock Company operates mainly in the following fields: Importing rare drugs, special medicines for hospitals and pharmacy systems.
With a market in the current period of fierce competition, ECO Pharma's position is gradually being shaken. Revenue from this drugstore chain is only reaching VND 1600 billion.
In 2022, ECO Pharma's revenue has decreased significantly and reached just over 1400 billion VND. In addition, the fierce competition has also had a huge impact on this pharmacy chain when two years ago ECO Pharma had a stable profit after tax, but by 2022 it suddenly had to suffer a loss of up to 10 percent. to more than 28 billion.
Medicare is the leading retailer in the field of Health & Beauty in Vietnam with positive business prospects. Established in 2001 with its first store in District 1, Ho Chi Minh City, it currently has more than 150 pharmacies in Vietnam and Myanmar.
Although Medicare has a network of stores both at home and abroad, the business performance of this drugstore chain has not been too positive in recent years. In 2022, Medicare's revenue is expected to increase slightly compared to 2021. However, the profit after tax of this chain of stores is nearly 90 billion dong, down nearly 10 billion dong compared to 2021. This loss has been trending upwards over the years.
Phano Pharmaceutical Joint Stock Company was established in 2007, with a system of more than 60 pharmacies present in clinics, hospitals, and developed according to the model of pharmacy inside supermarkets and commercial centers.
After years of silence, Phano decided to cooperate with MaSan Group and become part of the supermarket and convenience store chains WinMart and Winmart+. With the cooperation with MaSan Group, Phano's business situation is better than other retail chains, with profits always being positive. In 2022, Phano achieved a profit of 1.5 billion dong, a slight increase compared to 2021.
Dpharma is a combination of experience from Digiworld's Market Expansion Service and Dai Tin Pharma's deep understanding of medicine. Specializing in the distribution of all products in the medical field, such as drugs, vaccines, medicinal ingredients, medical machinery and equipment, functional foods, and medical consumables.
Dpharma has a potential market. As a result of Digiworld pouring capital into Dai Tin Pharma to acquire Dpharma, created an extremely competitive has been position for this business. Digiworld's participation in the pharmaceutical retail industry challenges for the "big guys" in the industry and is expected to create a sustainable position in the pharmaceutical distribution market in Vietnam.
It could be said that, in the present time, the big companies in the domestic pharmaceutical retail industry are starting to accelerate, racing to capture the market share of the potential field. In addition, many newcomers are entering this market, creating an extremely fierce competition.
Therefore, in the current competition for market share, finding new directions is very important for modern retail chains. The victory will belong to the retail chains that can adapt quickly to new consumer trends, fully meeting the needs of customers.