Pharmaceutical retail market - Potential growth in the mid-term but beware of risk
• Pharmacies are one key distribution channel for not only pharmaceuticals but also other products (supplements, cosmetics, FMCG,….) directly to end consumers.• According to IQVIA, pharmaceutical retail revenue reached VND 125,203 billion (USD 4,968 million) in 2023, growing at an average annual rate of 13.0% from 2018 to 2023. Both IQVIA and our projections estimate that retail revenue will reach VND 186,390 billion (USD 7,399 million) by 2028, growing at an average rate of 8.3% per year. However, the retail channel is expected to lose market share in the overall pharmaceutical sector due to the increasing coverage of Social Healthcare Insurance (SHI), as directed by the government, and improvements in the infrastructure of both public and private hospitals.
• Long Chau is the only pharmaceutical retail chain in the market to have profited since 2021, and currently leading in the number of pharmacy outlets.
• A major risk we highlight, which could impact the current pharmaceutical retail model, is the habit of purchasing prescription drugs without a doctor’s prescription at pharmacies in Vietnam. Regulations clearly prohibit such sales. When these rules are enforced strictly (which we expect will happen in the future, as it is already implemented in many developed countries), it will affect the business operations of current pharmacy retailers significantly.
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