Fluctuations felt in pharma retail sphere

At An Khang Pharmacy in Hoang Mai district in Hanoi last week, customers were queuing to buy medicines for flu and colds as the capital saw the start of cold weather.

Nguyen Thi Lan, a local living in Dinh Cong ward near the store, said, “I usually go to An Khang Pharmacy when my family needs medicine. It has professional staff who can provide good advice. An Khang also has online services so that I can buy there when necessary. My neighbours and relatives also trust An Khang medicines.”

An Khang, run by Mobile World, is one of the three biggest pharma retail chains in Vietnam’s pharmaceutical retail industry, alongside Long Chau, from FPT Retail, and Pharmacity.

The three chains have seen growth in the local pharma retail market, in which locals tend to prefer modern pharmacies to traditional ones, and have made expansion plans accordingly.

According to Doan Van Hieu Em, CEO of An Khang Pharma, Vietnam’s population now prefer to buy drugs at modern pharmacies to get better services and medicines.

“We see a strong increase in the number of customers compared to 2022,” Em told VIR. “The increase began after we renewed our branding several months ago.”

Em said that An Khang operates under a model of modern pharma stores, with a sufficient list of drugs. It has also been paying due attention to improving advice services and the image of staff in a move to increase customer experience and satisfaction.

The biggest pharma retail chains have been attempting to open new stores, but it has not been easy, photo Le Toan

In 2023, An Khang Pharma expanded its chain from around 500 stores to 527. “We will increase our efforts to keep the fullest range of products possible, offer whole-hearted advice through our staff, and provide the best customer experience in 2024,” Em added.

Similarly, Long Chau continued its expansion plans in 2023 to more than 1,000 stores, compared to 546 in the first quarter of 2022.

Explaining the operational efficiency, Nguyen Bach Diep, chairman of the board at FPT Retail, said that every newly opened Long Chau drug store was required to be profitable after six months. “This is a whole preparation process, from comprehensive assessment to choosing location to negotiating rental prices, to training pharmacists to create prestige for the chain,” she said.

Pharmacity is now no longer the biggest chain, as Long Chau rose to the top with just over 1,000 drug stores. Pharmacity has over 900, and An Khang more than 500.

An Khang planned to open a drug store every day with the ambitious target of having 800 pharmacies nationwide. However, it had to slow its plan in early 2023 and only hold on to its more profitable outlets.

“Compared to the previous goal of having 800 stores, slowing down has helped us consolidate everything and find opportunities to increase revenue for An Khang in the near future. Currently, over 500 stores is big enough for the market,” CEO Hieu Em said.

Pharmacity is in the same boat. Established in 2011, it expanded to over 1,100 stores nationwide. However, since mid-2022, it had to close nearly 200 stores. In 2023, it has focused on improving gross profit margins and optimising operating costs. Last year, the chain’s net revenue from selling drugs increased by 77 per cent over the same period.

In late November, Pharmacity announced Deepanshu Madan as the new CEO, aiming to lead the pharmaceutical retail industry in Vietnam. Deepanshu has extensive experience in business management and has led successful investments in pharmacy chains in China and retail drug store chains in India.

More foreign players are eyeing expansion in the local pharmaceutical retail market. In August, South Korea’s DongWha Pharm pumped in $30 million to acquire the Trung Son Pharma chain. Trung Son operates around 140 stores, mainly concentrated in the south.

Last year, its revenues reached about $568 million, with a strong average annual growth rate of 46 per cent since 2019. With a team of more than 1,000 pharmacists, the chain is hoping to expand its scale to 460 stores by 2026.

According to the Global Use of Medicines 2022 report from the IQVIA Institute, Vietnam’s pharmaceutical revenues could reach $7.51 billion by 2025, accounting for 1.8 per cent of GDP and almost one-third of healthcare spending, with a compound annual growth rate of 8 per cent in 2020-2025.

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