Reordering phase reflects pharmacy chain challenges

Smaller pharmacy businesses may struggle to meet new rules on invoicing, tax, and more, photo Le Toan

After the success of its first two stores in Ho Chi Minh City, in August, Phoenix advanced to the north with its first store in Hanoi, while also appointing a new CEO in Phillip Wray.

According to its development roadmap, Phoenix targets a presence in all localities across the country.

In July, Japan’s Tsuruha pharmacy chain opened its first store in Vietnam, boasting more than 10,000 products of more than 500 brands across prescription and non-prescription drugs, functional foods, cosmetics, personal hygiene, and more.

Yano Daisuke, managing director of Tsuruha Drug Store Vietnam, said, “Tsuruha is operated according to the same standards as the system in Japan. Coming to Vietnam, we hope to become a Japanese-standard pharmacy trusted by Vietnamese people, meeting the needs of healthcare, beauty, and family products.”

Tsuruha is now operating more than 2,600 branches in Japan and Thailand, along with additional branches in many other Southeast Asian countries.

“The new moves are expected to heat up the market competition and reorder the market ranking among players,” health expert Hai Ngo said. “This is a game-changing phase. Traditional brands will have to make changes in line with the higher market requirements, otherwise they will lose out.”

Another health expert, Hoa Duong, explained that on the market consumer side, drug purchasing habits have also changed significantly in the past few years, with an average spending of almost $70 per person annually, an increase of 10 times compared to 2000.

“People not only need medicines to treat diseases but also use functional foods, supplements, and health support products more often,” Duong said. “More importantly, transparency and safety are increasingly becoming top criteria. Buyers now prioritise places with clear invoices, traceable products, listed prices and transparent after-sales policies. This is the environment where modern pharmacy chains are clearly dominating.”

Aware of this trend, pharmacy chain Long Chau is developing a modern model used in both cities and rural areas. Starting with only eight stores in 2017, it now has about 2,000 pharmacies, with revenue in 2024 reaching VND25 trillion ($1 billion), equivalent to one-fifth of the national drug retail market share.

Long Chau is focused on expanding in the provinces, with 1,420 stores located outside Hanoi and Ho Chi Minh City. This number is more than four times the number in Ho Chi Minh City and nearly six times the number in the capital.

As shown in the financial report of parent company FPT Retail, in 2024, Long Chau made $1 billion in revenues, an increase of 59 per cent on-year. It achieved revenues of up to $322 million in the first quarter of 2025, accounting for nearly 70 per cent of FPT Retail’s total revenues.

According TechSci Research, Vietnam’s pharmaceuticals market was valued at $7.60 billion in 2024 and is expected to reach $12.12 billion by 2030.

However, some major pharmacy chains are showing signs of slowing down. Pharmacity has scaled back from 1,100 stores to more than 900, of which 425 are located in other provinces and cities. This illustrates that the firm is still steadfast in its parallel development strategy in both urban and suburban areas.

“Compared to Long Chau, Pharmacity’s expansion is slower; and the gap between the two brands is widening. If this trend continues, Long Chau may dominate market share in the near future,” expert Ngo said.

Meanwhile, An Khang, a pharmacy chain owned by Mobile World Group (MWG), has retained 326 stores and has not expanded in the past two years, even withdrawing from the Hanoi market.

By the end of 2024, An Khang accumulated losses of more than VND1 trillion ($40 million) and had yet to break even. Although MWG announced that it would continue to perfect its business model at shareholder meetings, actual figures suggest that the chain is reducing the number of stores to restructure and limit financial risks.

In addition to the three main brands, the market also has the presence of small chains such as Guardian (126 stores) and Medicare (64 stores).

However, their small size and slow growth rate make it difficult for these them to compete directly with the big players, which boast professional operating models and ability to invest heavily in technology, marketing, and supply chains.

In this context, more than 50,000 small pharmacies nationwide, mostly family businesses, are facing major issues as they cannot simultaneously meet requirements for invoices, drug origin control, and tax obligations.

“These adjustments reflect the difficulties of maintaining operations according to new standards, especially when profits are thin and compliance costs are rising,” expert Ngo said. “Moreover, selling drugs on e-commerce platforms, once considered a way out for small pharmacies, is now as tightly regulated as physical stores. With new regulations from April, online sales must register for a tax code, declare and pay taxes in full, causing the price advantage and flexibility of the old model to gradually disappear.”