Table of Contents
Executive Summary
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- The market
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- Figure 1: Total independent and chained retail pharmacies, number of chains and average chain size, 2007-12
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- Figure 2: Total pharmaceutical sales value, by sector, 2007-12
- Figure 3: Pharmacy and drug store and outlet retail sales, 2007-12
- The forecast
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- Figure 4: Forecast total Pharmacy and drug store retail sales, 2013-17
- The companies
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- Figure 5: Top 10 retail pharmacy chains’ share of top 10 and top 100 value retail sales, 2009-11
- The issues
- Government healthcare reform creates potential for new pharmacy retail development
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- Figure 6: Consumer attitudes towards checking for authenticity of drugs before purchase, by household income, July 2012
- Population ageing and the building of consumer trust
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- Figure 7: Practices when having a minor ailment, July 2012
- Leading chains adapting to increase share in a fragmented market
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- Figure 8: Top 3 factors considered by consumers when shopping at bricks-and-mortar pharmacies, July 2012
- Leading chains begin focusing on growing regional market shares
- Online pharmacies beginning to shake off shady image
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- Figure 9: Top factor considered by consumers when shopping at online pharmacies, July 2012
- Significant market potential in traditional Chinese medicine (TCM)
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- Figure 10: TCM and OTC combined retail sales compared, 2008-11
- What We Think
Healthcare Reform Creates Potential For New Pharmacy Retail Development
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- Key points
- Public sector still competes on drug sales with the pharmacy retailers
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- Figure 11: Western pharmaceuticals sales value, by OTC and prescription, 2007-12
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- Figure 12: Ten-year growth in healthcare expenditure in China, by expenditure source, 2001 and 2010
- Figure 13: Forecast growth in healthcare expenditure in China, by expenditure source, 2011 and 2014
- Private health insurance cover still inadequate
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- Figure 14: Health insurance coverage in China according to the National Health Services Survey, by location, 2003, 2008 and 2011
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- Figure 15: Health insurance coverage in China, by region, 2003, 2008 and 2011
- Figure 16: Health spending as a share of total household expenditure in China according to the National Health Services Survey, by location and region, 2003, 2008 and 2011
- How does health insurance work in China?
- Consumers still foot the healthcare bill through self-taxation
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- Figure 17: Urban average household income, expenditure, savings and potential expendable income after basic outgoings, 2006-10
- Figure 18: Monthly savings rate, April 2012
- Capping of drugs prices constrict revenues and narrows margins on drugs sales
- Case study: How price capping affected China Jo-Jo Drugstores (杭州九洲大药房) sales revenues
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- Figure 19: China Jo-Jo Drugstores Inc. quarterly retail pharmacy revenue, financial years 2010/11 and 2011/12
- Case study: Nepstar (中国海王星辰) – China’s largest chain also feels the pinch from price capping
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- Figure 20: China Nepstar revenues, by product type, December 31st 2007-11
- Figure 21: Attitudes towards shopping at retail pharmacies, July 2012
- Foreign company shareholding limit reduces operational control
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- Figure 22: Hutchison Whampoa: Watson’s Stores financial results and outlets in China and Asia compared, 2010 and 2011
- Continued reform should bring benefits to the pharmacy retail sector
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- Figure 23: Western pharmaceuticals sales growth, by sector, 2007-12
- Figure 24: China Nepstar Drugstore operating profit trends, 2007-11
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- Figure 25: Total retail sales, OTC medications retail sales and health and beauty retailing growth rates compared, 2007-11
- What does it mean?
Population Ageing and the Building of Consumer Trust
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- Key points
- How fast is the Chinese population ageing?
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- Figure 26: Population breakdown, by age group according to national censuses, 2000 and 2010
- The ageing population is already beginning to frequent retail pharmacies
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- Figure 27: Practices when having a minor ailment, by age group, July 2012
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- Figure 28: Practices when having a minor ailment, by monthly household income group, July 2012
- Population ageing will increase self-medication need
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- Figure 29: China per capita pharmaceutical expenditure compared with developed countries, 2007
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- Figure 30: Out-of-pocket expenditure as a percentage of total healthcare expenditure in China compared with other countries, 2007-10
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- Figure 31: China’s urban and rural population ages 60 and older, main source of support, November 2008
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- Figure 32: Urban employees’ basic pension insurance coverage, 2005-10
- Consumer trust in pharmacies has room to be improved
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- Figure 33: Pharmacy and drug store outlet retail sales, 2007-12
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- Figure 34: Consumer attitudes relating to trust in pharmacy retail outlets, July 2012
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- Figure 35: Practices when having a minor ailment, July 2012
- What pharmacies can do to improve consumer trust
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- Figure 36: Attitudes towards buying OTC or prescribed medicines (I), July 2012
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- Figure 37: Attitudes towards buying OTC or prescribed medicines (II), July 2012
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- Figure 38: Attitudes towards buying OTC or prescribed medicines, by city, July 2012
- Retail outlets seeing strong growth
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- Figure 39: Frequency of buying OTC or prescribed medicines from different store formats, July 2012
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- Figure 40: Frequency of buying OTC or prescribed medicines from different store formats, July 2012
- What does it mean?
Leading Chains Adapting to Increase Share in a Fragmented Market
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- Key points
- The differing expansion models of the top 10 pharmacy chains
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- Figure 41: Top 10 pharmacy retail chains ranked by directly-owned outlets, 2011
- Figure 42: The top 10 pharmacy chains’ significance of the top 100 pharmacy chains, 2011
- Even the top 10 chains remain only a small part of the market
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- Figure 43: Total retail pharmacy outlets, by type, 2007-11
- Narrow margins force greater need for competitive innovation
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- Figure 44: China Nepstar drugstore financial results, 2007-11
- Figure 45: Shanghai Fosun Pharmaceutical (Group) Co., Ltd.: revenue and net profit of key pharmaceutical retailing units and associates, 2007-11
- Consolidation of store numbers to improve operational results
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- Figure 46: Attitudes towards trust of chain and independent pharmacies, July 2012
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- Figure 47: China Nepstar annual same store sales % growth, 2007-11
- Leading chains reduce emphasis on drugs
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- Figure 48: China Nepstar revenues, by product type, December 31st 2007-11
- Figure 49: Jo-Jo drugstores sales revenues, by product type, 2010/11-2011/12
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- Figure 50: Attitudes towards buying TCM products from retail pharmacies, July 2012
- Figure 51: OTC medications and vitamins and minerals retail sales, 2008-12
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- Figure 52: Pharmacy and drug store retail sales compared with beauty/perfumery outlet sales, 2007-12
- Store formats are embracing “big health”
- Private label presents opportunity to improve margins
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- Figure 53: Nepstar significance of private label products, 2006-11
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- Figure 54: Top three factors considered by consumers when shopping at bricks-and-mortar pharmacies, July 2012
- Chains increasingly focus on loyalty
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- Figure 55: Nepstar shopper loyalty card membership and revenue contribution, 2007-11
- Variety of marketing tactics employed to drive loyalty
- What does it mean?
Leading Chains Begin Focusing on Developing Regional Market Shares
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- Key points
- Nepstar strong in the south but is looking northwards
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- Figure 56: Nepstar store numbers, by key cities, 2009-11
- Figure 57: Physical pharmacies shopped at all in past 12 months, Guangzhou, July 2012
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- Figure 58: Physical pharmacies shopped at all or most often in past 12 months, Beijing, July 2012
- Figure 59: Physical pharmacies shopped at all or most often in past 12 months, Shanghai, July 2012
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- Figure 60: Physical pharmacies shopped at all or most often in past 12 months, Chengdu, July 2012
- Figure 61: Physical pharmacies shopped at all or most often in past 12 months, Changchun, July 2012
- What does it mean?
Online Pharmacies Beginning to Shake Off Shady Image
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- Key points
- Online pharmacies suffer association with black market trade
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- Figure 62: List of permitted online pharmacy websites, 2011
- Figure 63: Numbers of illegal online pharmacy websites blacklisted, 2008-12
- Penetration of counterfeit drugs online causing damage
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- Figure 64: China – total OTC medications and vitamins and minerals retail sales, 2007-11
- Consumers show strong concern about fake drugs
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- Figure 65: Consumer attitude towards checking for authenticity of drugs before purchase, July 2012
- Figure 66: Consumer attitude towards checking for authenticity of drugs before purchase, by household income, July 2012
- Online pharmacy only just beginning to take off
- Consumers focus on online pharmacy product quality and speed of service
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- Figure 67: Frequency of buying OTC or prescribed medicines from different store formats, July 2012
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- Figure 68: Top three factors to consider when shopping at online pharmacies, July 2012
- Figure 69: Frequency of buying OTC or prescribed medicines from different store formats, by city, July 2012
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- Figure 70: Online pharmacies shopped at all or most often in past 12 months, Beijing, July 2012
- Figure 71: Consumer attitude towards trust in pharmacy retail outlets, July 2012
- Regional market share of online pharmacy stores
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- Figure 72: Online pharmacies shopped at regularly or occasionally in past 12 months, Shanghai, July 2012
- Figure 73: Online pharmacies shopped at all regularly or occasionally in past 12 months, Guangzhou, July 2012
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- Figure 74: Online pharmacies shopped at regularly in past 12 months, Hefei, Changchun and Shijiazhuang, July 2012
- Figure 75: Online pharmacies shopped at regularly in past 12 months, Wenzhou, Fuzhou and Zhengzhou, July 2012
- What does it mean?
Significant Market Potential In Traditional Chinese Medicine
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- Key points
- What are the core differences between OTC and TCM?
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- Figure 76: Usage of TCM products from retail pharmacies, by gender and age group, July 2012
- TCM continues to be a significant part of the self-medication market
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- Figure 77: TCM and total pharmaceutical industry output value compared, 2008-11
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- Figure 78: TCM and OTC combined retail sales compared, 2008-11
- Figure 79: Attitudes towards buying TCM products from retail pharmacies, July 2012
- TCM drug price increases reduce competitive advantage
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- Figure 80: Average price of Rhizoma paridis per kilogram, 1992-2012
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- Figure 81: Average price of Sanqi per kilogram between 2009 and 2012
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- Figure 82: Shanghai Pharmaceuticals Holding Co.’s TCM subsidiaries and invested firms 2009-11
- The difference in consumer perception between TCM and OTC
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- Figure 83: Purchasing of traditional chinese medicine products in the past 12 months, by age group and gender and income group, July 2012
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- Figure 84: 1999-2008 percentage of revenue from OTC drugs and TCM from TCM and other hospitals*
- Figure 85: Total TCM hospital revenue, 2008-12
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- Figure 86: Attitudes towards traditional Chinese medicine purchasing among consumers, by age group and gender , July 2012
- TCM could see an increasing role in retail pharmacy business in the future
- What does it mean?
The Future of The Market
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- Figure 87: Forecast total pharmacy and drug store outlet retail sales, 2013-17
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Appendix – Frequency of Buying OTC or Prescribed Medicines from Different Store Formats
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- Figure 88: Weekly buying of OTC or prescribed medicines from different store formats, July 2012
- Figure 89: Monthly buying of OTC or prescribed medicines from different store formats, July 2012
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- Figure 90: Weekly buying of OTC or prescribed medicines from pharmacy chain, by demographics, July 2012
- Figure 91: Monthly buying of OTC or prescribed medicines from pharmacy chain, by demographics, July 2012
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- Figure 92: Weekly buying of OTC or prescribed medicines from discount pharmacy, by demographics, July 2012
- Figure 93: Monthly buying of OTC or prescribed medicines from discount pharmacy, by demographics, July 2012
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- Figure 94: Weekly buying of OTC or prescribed medicines from pharmacy contracted by medical insurance, by demographics, July 2012
- Figure 95: Monthly buying of OTC or prescribed medicines from pharmacy contracted by medical insurance, by demographics, July 2012
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- Figure 96: Weekly buying of OTC or prescribed medicines from hospital, by demographics, July 2012
- Figure 97: Monthly buying of OTC or prescribed medicines from hospital, by demographics, July 2012
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- Figure 98: Weekly buying of OTC or prescribed medicines from independent pharmacy, by demographics, July 2012
- Figure 99: Monthly buying of OTC or prescribed medicines from independent pharmacy, by demographics, July 2012
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- Figure 100: Weekly buying of OTC or prescribed medicines from medicare centre, by demographics, July 2012
- Figure 101: Monthly buying of OTC or prescribed medicines from medicare centre, by demographics, July 2012
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- Figure 102: Weekly buying of OTC or prescribed medicines from supermarkets, by demographics, July 2012
- Figure 103: Monthly buying of OTC or prescribed medicines from supermarkets, by demographics, July 2012
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- Figure 104: Weekly buying of OTC or prescribed medicines from hypermarkets, by demographics, July 2012
- Figure 105: Monthly buying of OTC or prescribed medicines from hypermarkets, by demographics, July 2012
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- Figure 106: Weekly buying of OTC or prescribed medicines from online pharmacy, by demographics, July 2012
- Figure 107: Monthly buying of OTC or prescribed medicines from online pharmacy, by demographics, July 2012
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- Figure 108: Weekly buying of OTC or prescribed medicines from convenience stores, by demographics, July 2012
- Figure 109: Monthly buying of OTC or prescribed medicines from convenience stores, by demographics, July 2012
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Appendix – Pharmacies Shopped at in Past 12 Months
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- Figure 110: Pharmacies shopped at in past 12 months, Beijing, July 2012
- Figure 111: Pharmacies shopped at physical stores in past 12 months, by demographics, Beijing, July 2012
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- Figure 112: Pharmacies shopped at in past 12 months, Shanghai, July 2012
- Figure 113: Pharmacies shopped at physical stores in past 12 months, by demographics, Shanghai, July 2012
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- Figure 114: Pharmacies shopped at in past 12 months, Guangzhou, July 2012
- Figure 115: Pharmacies shopped at physical stores in past 12 months, by demographics, Guangzhou, July 2012
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- Figure 116: Pharmacies shopped at in past 12 months, Chengdu, July 2012
- Figure 117: Pharmacies shopped at physical stores in past 12 months, by demographics, Chengdu, July 2012
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- Figure 118: Pharmacies shopped at in past 12 months, Changchun, July 2012
- Figure 119: Pharmacies shopped at physical stores in past 12 months, by demographics, Changchun, July 2012
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- Figure 120: Pharmacies shopped at in past 12 months, Shijiazhuang, July 2012
- Figure 121: Pharmacies physical stores shopped at in past 12 months, by demographics, Shijiazhuang, July 2012
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- Figure 122: Pharmacies shopped at in past 12 months, Wenzhou, July 2012
- Figure 123: Pharmacies physical stores shopped at in past 12 months, by demographics, Wenzhou, July 2012
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- Figure 124: Pharmacies shopped at in past 12 months, Hefei, July 2012
- Figure 125: Pharmacies physical stores shopped at in past 12 months, by demographics, Hefei, July 2012
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- Figure 126: Pharmacies shopped at in past 12 months, Fuzhou, July 2012
- Figure 127: Pharmacies physical stores shopped at in past 12 months, by demographics, Fuzhou, July 2012
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- Figure 128: Pharmacies shopped at in past 12 months, Zhengzhou, July 2012
- Figure 129: Pharmacies physical stores shopped at in past 12 months, by demographics, Zhengzhou, July 2012
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Appendix – Pharmacies Shopped at Regularly in Past 12 Months
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- Figure 130: Pharmacies shopped at regularly in past 12 months, Beijing, July 2012
- Figure 131: Pharmacies shopped at regularly in past 12 months, Shanghai, July 2012
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- Figure 132: Pharmacies shopped at regularly in past 12 months, Guangzhou, July 2012
- Figure 133: Pharmacies shopped at regularly in past 12 months, Chengdu, July 2012
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- Figure 134: Pharmacies shopped at regularly in past 12 months, Changchun, July 2012
- Figure 135: Pharmacies shopped at regularly in past 12 months, Shijiazhuang, July 2012
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- Figure 136: Pharmacies shopped at regularly in past 12 months, Wenzhou, July 2012
- Figure 137: Pharmacies shopped at physical stores regularly in past 12 months, by demographics, Wenzhou, July 2012
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- Figure 138: Pharmcies shopped at regularly in past 12 months, Hefei, July 2012
- Figure 139: Pharmacies shopped at regularly in past 12 months, Fuzhou, July 2012
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- Figure 140: Pharmacies shopped at regularly in past 12 months, Zhengzhou, July 2012
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Appendix – Pharmaceutical Products Bought in the Past 12 Months
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- Figure 141: Pharmaceutical products bought in the past 12 months, July 2012
- Figure 142: Most popular OTC drugs products bought in the past 12 months, by demographics, July 2012
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- Figure 143: Next most popular OTC drugs products bought in the past 12 months, by demographics, July 2012
- Figure 144: Most popular prescription drugs products bought in the past 12 months, by demographics, July 2012
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- Figure 145: Next most popular prescription drugs products bought in the past 12 months, by demographics, July 2012
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Appendix – Pharmaceutical Products Bought Most Often in the Past 12 Months
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- Figure 146: Pharmaceutical products bought most often in the past 12 months, July 2012
- Figure 147: Most popular OTC drugs products bought most often in the past 12 months, by demographics, July 2012
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- Figure 148: Next most popular OTC drugs products bought most often in the past 12 months, by demographics, July 2012
- Figure 149: Most popular prescription drugs products bought most often in the past 12 months, by demographics, July 2012
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- Figure 150: Next most popular prescription drugs products bought most often in the past 12 months, by demographics, July 2012
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Appendix – Top Three Factors to Consider When Shopping at Bricks-and-Mortar Pharmacies
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- Figure 151: Top three factors to consider when shopping at bricks-and-mortar pharmacies, July 2012
- Figure 152: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 1), by demographics, July 2012
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- Figure 153: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 1), by demographics, July 2012
- Figure 154: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 2), by demographics, July 2012
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- Figure 155: Top three factors to consider when shopping at bricks-and-mortar pharmacies, by demographics, July 2012
- Figure 156: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 2), by demographics, July 2012
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- Figure 157: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 3), by demographics, July 2012
- Figure 158: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 3), by demographics, July 2012
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- Figure 159: Top three factors to consider when shopping at bricks-and-mortar pharmacies (rank 3), by demographics, July 2012
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Appendix – Top Three Factors to Consider When Shopping at Online Pharmacies
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- Figure 160: Top three factors to consider when shopping at online pharmacies, July 2012
- Figure 161: Top three factors to consider when shopping at online pharmacies (rank 1), by demographics, July 2012
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- Figure 162: Top three factors to consider when shopping at online pharmacies (rank 2), by demographics, July 2012
- Figure 163: Top three factors to consider when shopping at online pharmacies (rank 2), by demographics, July 2012
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- Figure 164: Top three factors to consider when shopping at online pharmacies (rank 3), by demographics, July 2012
- Figure 165: Top three factors to consider when shopping at online pharmacies (rank 3), by demographics, July 2012
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Appendix – Attitudes Relating to Trust in Pharmacies
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- Figure 166: Attitudes relating to trust in pharmacies, July 2012
- Figure 167: Most popular attitudes relating to trust in pharmacies, by demographics, July 2012
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- Figure 168: Next most popular attitudes relating to trust in pharmacies, by demographics, July 2012
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Appendix – Practices When Having a Minor Ailment
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- Figure 169: Practices when having a minor ailment, July 2012
- Figure 170: Most popular practices when having a minor ailment, by demographics, July 2012
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- Figure 171: Next most popular practices when having a minor ailment, by demographics, July 2012
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Appendix – Attitudes Towards Pharmacies
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- Figure 172: Attitudes towards pharmacies, July 2012
- Figure 173: Agreement with the statements ‘I always check the product sell-by date to ensure the product is in-date’ and ‘I prefer to buy products I have been recommended by friends or family members ‘, by demographics, July 2012
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- Figure 174: Agreement with the statements ‘I treat the local pharmacy as a convenience store’ and ‘I prefer to shop at pharmacies that have the best products, not just the widest range of products ‘, by demographics, July 2012
- Figure 175: Agreement with the statements ‘I always check the product certification sticker to check it is not fake’ and ‘I prefer to buy branded pharmacy products’, by demographics, July 2012
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- Figure 176: Agreement with the statements ‘I prefer to buy products with the medical advice and assistance of pharmacy staff’ and ‘I prefer the layout of chain pharmacies’, by demographics, July 2012
- Figure 177: Agreement with the statements ‘I always check the product sell-by date to ensure the product is in-date’ and ‘I prefer to buy products I have been recommended by friends or family members ‘, by demographics, July 2012
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- Figure 178: Agreement with the statements ‘I always check the product sell-by date to ensure the product is in-date’ and ‘I prefer to buy products I have been recommended by friends or family members ‘, by demographics, July 2012
- Figure 179: Agreement with the statements ‘I always check the product sell-by date to ensure the product is in-date’ and ‘I prefer to buy products I have been recommended by friends or family members ‘, by demographics, July 2012
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- Figure 180: Most popular attitudes towards pharmacies (Any agree), by demographics, July 2012
- Figure 181: Next most popular attitudes towards pharmacies (any agree), by demographics, July 2012
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- Figure 182: Other attitudes towards pharmacies (any agree), by demographics, July 2012
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