Pharmacy chains boost tech capacities

The Long Chau pharmacy chain, owned by FPT Digital Retail JSC, is pioneering AI-driven healthcare solutions. In October, Long Chau received the “Breakthrough App for Health Needs” award at the Better Choice Awards held by the Ministry of Planning and Investment, recognising its efforts to improve customer experience through AI technology.

New technology offers more varied services for patients, photo Le Toan

The healthcare app offers personalised treatment plans and advanced features such as medication reminders, electronic vaccination records, prescription tracking, and home delivery.

“The key to FPT Long Chau’s app making a strong impact on users is its convenience and comprehensive approach,” said Pham Dang Khoi, FPT Retail’s CTO. “Looking ahead, we plan to integrate more personalised health monitoring features powered by user data and AI-driven healthcare consultations.”

Long Chau has implemented machine learning, big data, and network robots into customer care activities and inventory management to optimise its operational processes. Thanks to these strengths, the Long Chau pharmacy chain currently leads in the store number, reaching almost 1,800 stores as of September. The chain is also taking bold steps by venturing beyond traditional offerings to include healthcare services, such as vaccinations.

In August 2023, South Korea’s Dongwha Pharm Group acquired a 51 per cent stake in Trung Son Pharma for nearly $30 million, valuing the company at approximately $60 million. Following its partnership with Dongwha Pharm, Trung Son Pharma aims to expand its network to 460 pharmacies by 2026, over double its current size, and to enter major cities where competition will be much fiercer due to the strong presence of Long Chau, An Khang, and Pharmacity.

As of September, Trung Son has a presence in Ho Chi Minh City with three branches and several provinces in the Mekong Delta region, primarily in Can Tho, An Giang, Dong Thap, and Vinh Long. Besides its pharmacy chain, Trung Son Pharma also owns a cosmetic clinic called Trung Son Cosmetic.

According to a report by Viet Dragon Securities Corporation (VDSC) in early October, there are approximately 50,000 pharmacies in Vietnam, with small family drug stores dominating the market, holding about 85 per cent market share. Modern pharmacy chains, led by Long Chau, are continuously expanding their scale. However, it is anticipated that competition in the pharma retail market will increase in the near future.

Quyen Nguyen, an analyst of VDSC pointed out that Pharmacity led Vietnam’s modern pharmacy retail market during 2018-2022. Pharmacity’s position was upheld until August 2022, with a network of 1,100 pharmacies. However, despite its rapid expansion, Pharmacity’s approach turned out to be less suited to Vietnam’s conditions.

“Pharmacity followed a strategy of developing a modern pharmacy model inspired by developed countries – a convenience store where customers could buy not only drugs but also cosmetics and fast-moving consumer goods (with non-drug items accounting for about 70 per cent of its product portfolio) and emphasising the self-service model.” Nguyen said.

“In our assessment, this model did not align with the needs of Vietnamese consumers, who primarily visit pharmacies to purchase drugs for treatment. Additionally, Pharmacity’s higher pricing strategy compared to other pharmacies weakened its price competitiveness,” she added.

To turn things around, Pharmacity has gone through a period of transformation by adjusting pricing policies and getting the right medicines in its stores, with an emphasis on fulfilling prescriptions. Additionally, Pharmacity is positioning itself as a healthcare hub, as evidenced by its plans to develop a super app that will provide a range of services, including e-pharmacist and e-doctor consultations, healthcare records, emergency ambulance bookings, and both at-home and inpatient care services. Cumulatively as of September, Pharmacity has a network of 900 pharmacies.

Another chain, An Khang, rapidly increased the number of its pharmacies from 170 at the end of 2021 to 500 by the end of 2022. However, the expansion slowed, reaching 527 pharmacies by the end of 2023. Cumulatively as of September, MWG had closed 200 An Khang stores and announced that the chain was undergoing restructuring, shutting down non-performing stores and reducing the number of stock-keeping units.

Following the store closures, An Khang’s average monthly revenue per store reached VND 500 million ($20,000), up from $18,000 at the end of 2023, but still below the breakeven target indicated by the company of $22,000.

Potential FIE impacts through Law on Pharmacy adjustments The newest amendment draft of the Law on Pharmacy (LoP), proposing changes to 44 out of 116 articles from the current law, has been published for feedback and is expected to be adopted soon.

Navigating turbulence in logistics and supply chains In 2024, Vietnam’s logistics and supply chain sector showcased remarkable resilience amidst an array of challenges, painting a complex picture of recovery, adaptation, and potential growth. Despite the hurdles, the sector has maintained a trajectory that promises gradual improvement, though not without facing significant setbacks that test its stability and future prospects.