Pharmacy chain players change tack

Pharmacy chain players change tack

Pharmacy chains in Vietnam are venturing into uncharted territory as development space in the market becomes more limited.

Long Chau is racing ahead of its competition in terms of store numbers and diverse portfolio, Le Toan

FPT Retail is planning to open 500 Long Chau pharmacies nationwide in 2025 to meet local demands and deepen its market share.

A representative of FPT Retail told VIR, “The expansion will focus on districts and communities to get closer access to people amid narrower development space in big cities. We will open pharmacies and vaccination centres together.”

The Vietnamese pharmaceutical market remains fragmented, with more than 60,000 private-run pharmacies, accounting for about 85 per cent of the market share. Modern pharmacy chains are expanding rapidly, accounting for about 5.7 per cent of the market.

The over-the-counter (OTC) channel has grown more rapidly than the hospital channel in recent three years due to its convenience, time-saving, and high-quality service. Consumers save more time when shopping at modern stores, with the big pharma chains including Long Chau, Pharmacity, An Khang, and Trung Son.

Long Chau is in the lead with about 1,600 drug stores nationwide, making a profit annually and holding a market share of 20 per cent.

However, Pharmacity and An Khang are still struggling. Pharmacity entered the retail pharma market in 2011 and has continued to face losses in recent years. It has had to close over 100 pharmacies to the current number of 900 since 2022.

An Khang, run by local retailer Mobile World Investment Corporation (MWG) reported in 2022 a loss of $12.24 million, with the loss increasing to $13.72 million in 2023 and $13.88 million last year. By the end of 2024, An Khang owned 326 drug stores, a drop of over 200 stores from the year previously.

Meanwhile, Trung Son Pharma, since being acquired by Dongwha Pharma, has been expanding rapidly with many new stores in southern provinces like Dong Thap, Vinh Long, Tien Giang, Hau Giang, and Ben Tre. It now has more than 200 pharmacies and plans to increase the figure to 460 in 2026.

To stand firm and keep growth, pharma chains are changing their business strategy, looking towards new areas of development space.

According to industry insiders, the dense coverage of modern pharmacy chains such as Long Chau, An Khang, and Pharmacity in big cities makes expansion in such locations no longer easy and with limited room. Thus, their target markets are now tier 2-3 areas, especially in remote areas, where people have little access to drug stores with full product groups.

Pharma expert Hai Ngo said, “The speed of store expansion in big cities is slowing down, but in tier 2 and 3 provinces this is still untapped. In this situation, Long Chau may find that it cannot keep expanding in the same places.”

Financial and investment services provider Bao Viet Securities (BVSC) said that Long Chau’s business prospects in the next 3-5 years are still very positive. The number of Long Chau stores will continue to be opened, but the opening speed will slow down in the following years. After the period of focusing on store expansion, Long Chau will focus on improving gross profit margin by increasing non-pharmaceutical products, or possibly private label products with high profit margins.

BVSC expert Huy Truong Minh explained that compared to other competitors, Long Chau has many more competitive advantages that help it maintain the dominant position in the future.

“Long Chau was the first to be integrated into the VNeID application for online drug purchases. This utility is a component of the electronic health record, aiming to complete the entire healthcare process for the people,” Minh said. “Its drug portfolio is also more diverse and larger, along with the fast speed of opening stores in good locations, thereby enabling it to gain better profit margins.”

For MWG, in its 2025 business orientation, after restructuring the An Khang pharmacy chain, it plans to complete its drug portfolio, improve pharmaceutical expertise, and supplement operational capacity this year. “We will focus on the quality of each pharmacy and aim to break even in the second quarter of 2025, then consider slow and steady expansion,” said a MWG representative.

Vietnam’s pharma retail revenue only makes up about 30 per cent of the total pharmaceuticals revenue, while this rate is 64 per cent in Brazil and 80 per cent in the Philippines.

Tititada Research forecast that the expansion rate of local pharmacy chains will reach 15-20 per cent annually from 2025 onward, creating increasingly fierce competition. OTC sales are forecast to reach $1.8 billion in 2025, accounting for 23.4 per cent of total pharma sales. By 2030, OTC sales could be as much as $2.4 billion.

“Opportunities and development space remain widely open for players who have appropriate business strategies. As MWG and Pharmacity are looking into future changes, competition in the local market is expected to heat up, and more new players will emerge,” expert Hai Ngo noted.

VIR