Pharmaceutical retail development tendency in the future
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Overview of Vietnam’s pharmaceutical market – the pharmaceutical retail market has a hot growth
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Large corporations race to enter the pharmaceutical market
In the pharmaceutical retail market, there is fierce competition between big names such as Pharmacity, Long Chau, An Khang, and Phano.
Pharmacity pharmacy
Launched in 2011 and after more than 10 years, Pharmacity chain is currently leading the market in terms of a number of stores. In 2021, although it has opened 200 pharmacies to bring the total to 700, Pharmacity has not yet reached the plan, because Pharmacity plans to have 1,000 stores by the end of 2021.
Pharmacity has just reached the milestone of 1,000 stores in April 2022. This pharmacy chain is also supported by Mekong Capital, in 2022, Pharmacity strives to achieve the goal of 1,750 pharmacies, and the goal is to have 5,000 pharmacies nationwide by 2025. This ambitious plan will bring the brand to more than $3 billion in revenue and a staff of more than 35,000.
In the pharmaceutical retail market, there is fierce competition among big names such as Pharmacity, Long Chau, An Khang, and Phano.
Long Chau pharmacy
FPT Retail purchased the Long Chau pharmacy chain with a long history in January 2017, at that time there were only four stores in Ho Chi Minh City. With expertise in managing a large number of stores, along with Long Chau’s “know-how” in the pharmaceutical retail business, by the end of 2021, Long Chau pharmaceutical has surpassed the target of 400 stores. across 53 provinces and according to FPT Retail, Long Chau has led the pharmaceutical retail market with a market share of 45% according to statistics from suppliers.
Currently, Long Chau has 800 stores; It is expected that by the end of 2022, Long Chau plans to increase the number of stores across the country to more than 800 stores. In the next 5 years, FPT Retail plans to increase the total number of Long Chau stores to 3,000 stores, covering all 63 provinces.
An Khang pharmacy
Although coming later, Mobile World Group has recently shown its determination to break into the pharmaceutical industry by massively opening An Khang stores in major cities. Mobile World acquired An Khang pharmacy chain in 2017, with 14 stores at that time.
In the fourth quarter of 2021, the shift from traditional channels to modern channels becomes more obvious. The Gioi Di Dong accelerated the opening of a new An Khang pharmacy chain and switched to full ownership in November 2021 – raising the ownership rate from 49% to 99%. An Khang drugstore chain currently has more than 500 stores, covering 33 provinces and cities across the country, The Gioi Di Dong has set a goal that by the end of 2022, An Khang can be in the top 3 of the pharmaceutical industry in terms of both sales and revenue.
Phano pharmacy
In 2016, Phano cooperated with the leading manufacturer Imexpharm – a unit that has experience in drug processing for Novartis, Sandoz, CFR… through holding 10% of shares in this company, to create a process. closed process of production – distribution – retail of pharmaceuticals.
Although opening the chain in moderation, Phano is focused on the online segment, in addition to selling online on its website, this unit also cooperates with eDoctor and Medigo (in October 2021) to distribute drugs online. Phano Pharmacy also has a points system, flexible online payment, building a loyal customer file.
In addition, in 2022, many new companies will enter the market, including Wincommerce, which owns the Winmart department store chain, with about 3,000 small supermarkets, and Viettel Store, which owns a retail network. with about 370 telecom shops. The pharmaceutical retail market is increasingly competitive.
- The golden time for the growth of the retail pharmacy market
The World Bank (WB) predicts that the number of people aged 65 and above in Vietnam will double by 2040, accounting for 18% of the total population and driving up healthcare spending. Therefore, the growth potential for pharmaceutical expenditure in Vietnam is still very promising, especially in a fragmented and potential-rich market like the retail pharmacy sector.
The prospects for the pharmaceutical market in Vietnam are expected to continue to grow in 2022 and 2023, amid the increasing demand for healthcare after COVID-19. SSI Research expects that in 2022, healthcare demand will recover and grow by 13% compared to 2021.
According to FPTS analysis, pharmaceutical consumption through the retail channel is expected to increase by 5-8.5% compared to the same period due to the demand for epidemic prevention products, immune system improvements such as vitamin C, B-complex vitamins, herbal medicines, functional foods, and products such as anti-allergy, anti-inflammatory, immune system inhibitors.
Long-term opportunities in the retail pharmaceutical market
- Firstly, safety is a key factor. In Vietnam, the risk of buying fake or poor-quality drugs from small retail stores is widespread. Therefore, people are increasingly paying attention to their health and turning to reputable pharmacy chains.
- Secondly, customer loyalty is highly valued in the pharmaceutical industry. If customers have already become accustomed to buying products from a certain pharmacy chain, the trend to continue purchasing from that chain will persist as long as the quality and service remain good.
- Thirdly, large retail chains often apply high technology, serving and delivering products 24/7 to customers, which can only be applied and strongly developed by large product chains.
Future trends in the retail pharmacy market
Expanding customer care services
Nowadays, consumers always want to be fully informed, especially about their health information. Therefore, to meet this demand, retail pharmacies are expanding their services, including accessing experts and doctors in the field to provide more in-depth information on patient’s health status.
Online pharmacy services
In the world of e-commerce, Amazon is leading in comprehensive pharmaceutical services. The acquisition of the online pharmacy company PillPack and renaming it Amazon Pharmacy marked a significant turning point and built a solid platform for this giant e-commerce company to penetrate deeper into the pharmaceutical industry, which is currently dominated by large physical store chains.
Amazon is perhaps just one of the largest online retailers starting to expand into the pharmaceutical industry, as many other well-known corporations are vying for a share of this market. Tokopedia, an e-commerce retailer in Indonesia, recently collaborated with the online pharmacy GoApotik to build a similar service.
In this partnership, GoApotik will provide its official partner locations for prescription ordering, packaging orders according to online requests, and then delivered directly to consumers through Tokopedia’s distribution network. Created to provide safe and reliable prescriptions, this service has seen continuous growth and popularity within the Indonesian community since its establishment.
In Vietnam today, Phano is also one of the rapidly developing online store chains. Quickly catching up with this trend has helped Phano achieve great success. In addition to selling online on its website, the company also collaborates with eDoctor and Medigo (in October 2021) to distribute medicine online. Phano Pharmacy also has a flexible online payment system, builds a loyalty customer file, and offers reward points.
As online and offline become more integrated, combining online and offline distribution services will be one of the strategies to achieve success in the future.
AI-supported processes
In recent years, retail pharmacy chains have invested more in AI tools to improve services, reduce costs, and optimize the available inventory.
Walgreens Boots Alliance (WBA) has partnered with Microsoft to apply the power of AI in Azure cloud and digitize health data. Their goal is to improve patients’ access to virtual care services via mobile devices and use AI analysis to find the most effective way to share health information between patients, healthcare providers, and treatment centers.
This is the trend in the retail pharmaceutical industry worldwide. The market is becoming increasingly competitive, so pharmacies need to grasp trends and be flexible to adapt to the market. To learn about each trend specifically, register for the topic HERE.
The information above is collected and summarized from the VIRACE information platform, the quarterly updated report “Vietnam Pharmaceutical Industry Report” along with VIRAC’s in-depth industry reports.
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