Pharmacy Chains Continue to Expand

The entry of several major retail companies into the pharmaceutical market has drawn attention in recent years to the lucrative potential of the sector. FPT Retail (stock code FRT) with its Long Châu pharmacy chain, and Mobile World Investment Corporation (stock code MWG) with the An Khang pharmacy chain, are notable examples. Digiworld Corporation (stock code DGW) has also joined the race by entering the dietary supplement distribution sector. Meanwhile, an unlisted company, Pharmacity Pharmaceutical Joint Stock Company, continues to expand its Pharmacity pharmacy chain.

In terms of chain size, FPT Long Châu currently operates 1,600 pharmacies, Pharmacity nearly 900, and An Khang 526. These chains are continuously expanding alongside private and smaller independent pharmacies.

Vietnam’s retail pharmaceutical market is forecasted to grow from 7.7 billion USD in 2021 to 16.1 billion USD by 2026.

FPT Long Châu reached 1,600 pharmacies in December 2023, surpassing its expansion targets and becoming the largest pharmaceutical retail chain in Vietnam by number of outlets.

FPT Long Châu has put into operation two GDP- and GSP-standard central warehouses, covering 35,000 m² in Mê Linh, Hanoi, and 45,000 m² in Hựu Thạnh, Long An. These central warehouses are considered the largest pharmaceutical retail storage facilities in Vietnam in terms of both size and capacity.

 

 

The retail pharmaceutical market previously had around 62,000 private pharmacies. With the growth of chain pharmacies, the number of private pharmacies has decreased to approximately 45,000.

 

The competition among pharmacy chains goes beyond scale, extending to strategies for customer service and retention. During the recent Lunar New Year, some chains “scored points” by providing services throughout the holiday. For example, Pharmacity announced that 107 pharmacies operated during the holiday from February 9 (New Year’s Eve) to February 13 (fourth day of Tết), while 554 pharmacies followed operating hours from February 11 (second day of Tết) or February 12 (third day of Tết).

The healthcare sector continues to show strong growth potential in the Vietnamese market. MB Securities estimates that the pharmaceutical market in Vietnam is currently around 7 billion USD, with 70% belonging to the ETC channel (hospital drug bidding), and retail pharmaceuticals accounting for nearly 2 billion USD, facing competition from almost 60,000 pharmacies.

Notably, the pharmaceutical M&A market in 2023 saw Dongwha Pharm spend 30 million USD to acquire the Trung Sơn Pharma retail chain in August. Trung Sơn Pharma has been in the market for 25 years, and as of early 2024, operates 147 pharmacies across the Mekong Delta and Ho Chi Minh City.

Kinrin Capital notes that investment activity in Vietnam’s healthcare sector will continue to be vibrant, with broad investment opportunities. The diversity in deal structures and the variety of buyers and sellers will drive growth in M&A activities in this field.

Growth Targets

FPT Long Châu remains a key growth driver for FPT Retail. The Long Châu pharmacy chain achieved 1,500 billion VND in revenue in 2023, expanding rapidly from just 4 stores in 2017 to 1,600 stores, serving 16 million customers. FPT Retail leadership aims for double-digit revenue growth (over 10%) for Long Châu in 2024, while continuing to solidify its position as the top pharmacy chain for prescription drugs, offering customers the best options at competitive prices. Enhancing customer experience, product assortment, and service quality are central strategies for retaining clients.

Meanwhile, Thế Giới Di Động (MWG) targets 125,000 billion VND in revenue and 2,400 billion VND in net profit for 2024, representing a 6% revenue increase and a 14.2-fold growth in profit compared to 2023. For its An Khang pharmacy chain, the company aims for double-digit growth and plans to reach break-even by December 31, 2024, while investing in service depth to position An Khang as a leading healthcare pharmacy chain.

Pharmacity has not yet disclosed 2023 results or 2024 targets, but previously announced a goal of 5,000 stores by 2025. Currently, Pharmacity operates nearly 900 stores, meaning it needs to open over 4,100 new stores in two years—an ambitious plan requiring extensive preparation in supply, warehousing, and logistics, despite the significant potential in Vietnam’s retail pharmaceutical market.

According to market research firm BMI, Vietnam’s retail pharmacy market revenue is projected to rise from 7.7 billion USD in 2021 to 16.1 billion USD by 2026. Increasing health expenditure, especially after the Covid-19 pandemic, and the growing population aged 65 and above, continue to drive stable growth. The competition to expand pharmacy chains is expected to intensify in the coming years.