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More money poured into drugstores, medicine supply

MWG (Mobile World), FRT (FPT Retail) and Wincommerce are racing to open more drugstores to scramble for a bigger market share.

The retail drug market is bustling with an increasing number of newly opened modern stores. They mostly belong to the three largest chains – Long Chau (FPT Retail), An Khang (MWG) and Pharmacity (with relations to Korean SK Group).

The drug market has also welcomed newcomers, including Wincommerce of Masan Group and Viettel Group.

According to EIU (Economist Intelligence Unit, Vietnam’s revenue from medicine in 2021 reached $5.9 billion, an increase of 9.6 percent over the same period last year.

SSI Research noted that the drug retail industry is switching to modern trade. Drug retail chains have been expanding networks rapidly in recent years thanks to three factors. 

First, the government has set stricter regulations on drug retailers (strictly controlling prescription medicine and using e-prescriptions). Second, the drugstores belonging to hospitals have become more cautious in attending bids. Third, the consumption of vitamins and food supplements is on the rise.

This explains why modern drugstore chains have been opening more stores since 2021.

According to IQVIA, Vietnam had 55,300 drugstores in 2016, including 185 belonging to modern drug store chains. In 2021, the figure dropped to 44,600, but the number of modern drugstores rose to 1,600. 

IBM predicted that Vietnam’s drug industry may exceed $16 billion by 2026 because of the aging population, higher spending on healthcare services, higher coverage of medical insurance, and increased average life expectancy.

The pharmacy industry in the post-Covid period is becoming more attractive which has prompted retailers to open new retail stores. Meanwhile, pharmaceutical enterprises are attracting foreign investments.

Pharmacity (debuting in 2011), which leads the market with more than 1,100 stores, plans to open 5,000 stores by 2025.

Long Chau has grown rapidly after being acquired by FPT Retail (FRT). To date, FRT has 700 Long Chau drugstores in 63 cities/provinces. The retailer plans to increase the number of stores to 3,000 in the next five years.

MWG has acquired the remaining shares to obtain 100 percent of shares of An Khang drugstore chain. It has opened a series of new stores in large cities. With more than 600 stores, it plans to have 800 and 2,000 stores by 2022 and 2023, respectively. 

According to Nguyen Duc Tai, chair of Mobile World, since Covid-19 broke out, food supplements and supportive drugs have increased in demand.

The drug retail market is predicted to get hotter with the appearance of big players such as Digiworld (behind Dai Tin Pharma) and Bamboo Capital (Tipharco). According to SSI (Saigon Securities Incorporated) Research, retail chains will build 7,300 drugstores throughout the country by 2025.

Analysts say the stricter control over prescribed medicine is one of the factors encouraging large companies to join the market. Since September 7, 2017, drugstores must sell certain medicines to patients with prescriptions, under the Ministry of Health’s Decision 4041.

On November 15, 2020, the government released Decree 117 which increased punishments on selling these medicines without prescription (from VND200,000-500,000 to VND5-10 million, and drugstores were even forced to suspend operation). 

As a result, small and independent drugstores have become less competitive and many of them have shut down.

However, with over 50,000 drug stores across the country, it is very difficult to control compliance to the law.

E-prescriptions also help modern drugstores obtain market share from small stores. According to the Ministry of Health, by the end of 2022, Level 1-3 hospitals will have to use electronic invoices. The deadline is June 30, 2023 for other hospitals and clinics.

Manh Ha

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