Today, the report I would like to share with you is the "2024 Annual Strategy Report of the Retail Pharmacy Industry: Unabated Expansion, Embracing Outpatient Co-ordination", with a total of 43 pages.
This report provides an in-depth analysis of the operating conditions and development trends of China's retail pharmacy industry. The report pointed out that although the current industry growth rate has been somewhat suppressed, it is expected that by 2024, with the improvement of multiple factors, the industry growth rate is expected to usher in new growth. In addition, there is a huge potential incremental space for outpatient co-ordination, which will have a positive impact on the industry. At the same time, the industry concentration continues to increase, providing greater development space for advantageous enterprises.
1.Same-store growth was suppressed by multiple factors
In 2023, the same-store growth rate of the retail pharmacy industry will be affected by factors such as changes in the demand for influenza A and Eryang drugs, non-drugs in the stage of household destocking, and the return of customers to hospitals. However, it is expected that by 2024, as the demand for drugs returns to normal and the proportion of co-ordinated pharmacies increases, the growth rate of the industry is expected to pick up.
2.There is a huge potential incremental space for outpatient co-ordination
Nearly half of the more than 1 trillion yuan of drug sales in public hospitals are in outpatient and emergency departments. This means that there is a huge potential for incremental growth in outpatient co-ordination. As of August 2023, 29% of designated pharmacies have been connected to the overall plan, which will effectively improve the growth rate of stores. In the short term, there is a phenomenon that primary medical institutions attract customer flow after accessing and co-ordinating, but in the long run, the convenience, professionalism and reimbursement conditions of pharmacies are friendly, and the follow-up customer flow is expected to increase. At present, there are still fewer prescriptions flowing out of hospitals, but leading pharmacies are actively building Internet hospitals and prescription circulation platforms to obtain more prescriptions, which will continue to benefit them.
3.Performance growth depends on the improvement of concentration
In the medium term, the core factor supporting the steady growth of pharmacy performance is the improvement of industry concentration. Although in 2022 the CR10 of retail pharmacies is only 223%, but in most provinces, the market share of TP1 pharmacies is still less than 25%, which means that there is huge potential for improvement. At present, the leading pharmacies are different in the advantageous provinces, and they are more squeezing the space of small and medium-sized chain stores.
4.The impact of 020 is limited, and the access to medical insurance improves the concentration of platform merchants
Considering the high density of brick-and-mortar pharmacies, the increase in 020 penetration rate is expected to be limited. However, leading pharmacies can obtain a higher 020 market share by virtue of the ** chain advantage. In addition, leading pharmacies with a higher degree of compliance are expected to benefit from access to health insurance due to regulatory difficulties.
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