Editor’s Notes:
Pharmaceutical market terminals mean the endpoints of drug sales channels. They serve as the link between the upstream, which includes manufacturers, wholesalers, and the downstream, which consists of distributors. In the Chinese pharmaceutical market, there are three categories of market terminals:
Public hospitals, which include municipality-level and county-level public hospitals.
Retail pharmacies, encompassing both offline and online pharmacies.
Healthcare centers, consisting of urban community healthcare centers and rural town healthcare centers).
In H1 2023, the total sales of the three medical market terminals in China reached CNY 965.5 billion (circa USD 134.95 billion), reflecting a year on year (YoY) growth rate of 10.4%. Sales in public hospitals counted for 62.8% of the total, while retail pharmacies and healthcare centers contributed to 27.6% and 9.6%, respectively.
Figure 1- Sales value and growth rate of pharmaceutical market terminals in China (2016-H1 2023), data source: menet.com.cn
Figure 2: Chinese pharmaceutical market shares of three terminals (H1 2023), data source: menet.com.cn
Despite not holding the largest market share, retail pharmacies exhibited the strongest sales growth among the three terminals. Retail pharmacy sales in H1 2023 amounted to CNY 266.8 billion, representing a significant increase of 12.4% compared to H1 2022.
Figure 3: Sales value and YoY sales growth of retail pharmacies in China (2016-H1 2023), data source: menet.com.cn
During H1 2023, offline pharmacies generated sales of CNY 233.6 billion, marking a 9.4% YoY growth, while online pharmacies achieved sales of CNY 33.2 billion, soaring by an impressive 39.1%.
Figure 4: Sales value and YoY sales growth of offline retail pharmacies in China (2016-H1 2023), data source: menet.com.cn
Figure 5: Sales value and YoY sales growth of online retail pharmacies in China (2016-H1 2023), data source: menet.com.cn
From 2016 to the first half of 2023, retail pharmacies consistently accounted for over 20% of the market share, second only to public hospitals.
Figure 6: Pharma market shares of three terminals (2016-H1 2023), data source: menet.com.cn
Retail pharmacies hold great promise thanks to favorable regulations and policies. For example, the “dual channel” system allows medicines on the National Reimbursement Drug List (NRDL) to be sold and reimbursed at both designated retail pharmacies and hospitals. Additionally, China has permitted online sales of prescription drugs since December 2022. These policies and regulations could contribute to the “outflow of prescriptions”, where patients obtain prescriptions from hospitals but purchase the prescribed drugs from pharmacies outside the hospital setting.
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