China Pharma Retail Market: Pharmacy Chains and E-commerce Are Growing

by Grace Wang Sep 28, 2022

In 2021, China's medical product sales reached 2,606.4 billion yuan (circa 365.24 billion USD), of which 5,449 billion yuan1 was contributed by retail pharmacies, one of the three medical market terminals* in China.

*Three medical market terminals refer to

1. Public hospitals (including municipal-level and county-level public hospitals)

2. Retail pharmacies (including offline and online pharmacies)

3. Public healthcare centers (including community-level and town-level healthcare centers)

The first and third terminals are known as public medical institutions. 

In recent years, retail pharmacies manifest two trends:

  1. Pharmacy chains expand to more stores and account for a high market share;  

  2. E-commerce is growing faster than offline business.

Pharmacy Chains Outperform Independent Stores

Year

Total Retail Pharmacies

Pharmacy Chain Headquarters

Pharmacy Chain Stores

Independent Pharmacies

Pharmacy Chain Stores / Total Retail Pharmacies

2011

424,000

2,607

147,000

277,000

34.67%

2012

424,000

3,107

153,000

271,000

36.08%

2013

432,000

3,570

158,000

274,000

36.57%

2014

434,000

4,266

171,000

263,000

39.40%

2015

448,000

4,981

205,000

243,000

45.76%

2016

447,000

5,609

221,000

226,000

49.44%

2017

454,000

5,409

229,000

225,000

50.44%

2018

489,000

5,671

255,000

234,000

52.15%

2019

524,000

6,701

290,000

234,000

55.34%

2020

554,000

6,298

313,000

241,000

56.50%

2021

609,700

6,596

337,400

252,300

57.20%

Data source: National Medical Products Administration

In terms of store number, pharmacy chain stores have outnumbered the independent stores since 2017, and continues increasing until 2021. By the end of 2021, there had been 609,700 pharmacies in China, among which 337,400 were chain stores (belonging to 6,596 companies) and 252,300 were independent ones. As for sales, pharmacy chains accounted for 78% of the retail market share in 2021.

Independent stores lag behind in store number and sales due to several reasons:

  1. Independent store brands are not famous or competitive enough;

  2. Independent stores face challenges from pharmacy chain stores that ambitiously expand to more geographical room;

  3. Some independent stores only manage offline sales but without online businesses;

  4. Independent stores are not professional enough to offer pharmaceutical trainings to their staff;

  5. Due to insufficient professionalism, independent stores are susceptible to punishments for regulatory non-compliance found out in unannounced inspections by regulators.

Meanwhile, pharmacy chains are engaging in mergers and acquisitions to increase the number of stores and enhance professional services. In the first half of 2022, the major six pharmacy chain companies acquired a total of 2,141 stores2. Now every of them has more than 3,000 stores.

Number of Stores Owned by Six Major Pharmacy Chain Companies in China by June 30, 2022

Laobaixing

Yifeng

Yixintang

Dashenlin

Shuyu Pingmin

Jianzhijia

10,009

9,200

8,990

8,896

4,009

3,283

With more stores, pharmacy chains can be more widely known in the area where the stores are located in, faster in delivering drugs to the customers in the area, and more advantageous in procuring large quantity of drugs from upstream suppliers.

E-commerce Boosts Online Pharmacy Sales

In addition to offline sales, pharmacies can participate in e-commerce, which means selling drugs via online platforms, such as Tmall, JD, Meituan, and Ele.me. After individual customers order the drugs online, the suppliers or their logistic/delivery partners will send the drugs to the customers.

In terms of medical e-commerce, Tmall and JD mainly engage in B2C businesses where delivery usually takes more than one day from warehouses. Differently, Meituan and Ele.me adopt the O2O (online to offline) business mode, where couriers deliver drugs to customers generally within an hour from nearby drugstores. 

Drug Sales of Offline and Online Retail Pharmacies from 2016 to 2021Drug Sales of Offline and Online Retail Pharmacies from 2016 to 2021 [Data Source: sgpjbg.com]

As shown in the figure above, online pharmacy sales have been growing much faster than offline ones. Besides OTC drugs, prescription drugs will also be permitted to be sold online from Dec. 1, 2022. Therefore, medical e-commerce is expected to gain more growth momentum.

BaiPharm's Cross-border E-commerce Service

BaiPharm has established online stores on Tmall Global and JD Worldwide, which are licensed to help foreign pharmaceutical companies sell OTC drugs to individual Chinese consumers. Also, we can help foreign suppliers open their own online pharmacies and serve as a local agency for running the online business.

BaiPharm's specific CBEC services include

  • Local Agency Services

    • Selecting suitable e-commerce model and platforms

    • E-commerce store operation

    • Distribution channel

    • China e-commerce platform agency (Tmall Global, JD Worldwide, TikTok)

  • Pre-market Research

    • Market analysis

    • Competitive analysis

  • Marketing and Branding

    • Brand strategy

    • Content promotion and dissemination (Little Red Book, TikTok, Kuaishou, etc.)

Contact BaiPharm and get professional solutions to market your OTC drugs in China.

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Grace Wang
ChemLinked Regulatory Analyst
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