Leading in the number of stores, Pharmacity was surpassed by revenue and profit by Long Chau

Established in 2011, Pharmacity is one of the first pharmaceutical retail chains in Vietnam. Last year, Pharmacity opened 200 pharmacies, increasing the number of 700 units, but it has not yet reached the plan of 1,000 stores set out earlier.

By March, Pharmacity had reached the milestone of 1,000 stores and now it has increased to 1,143 pharmacies meeting GPP standards (Good Pharmacy Practices) nationwide. Thus, Pharmarcity’s number of stores continues to lead the market and is far ahead of its nearest competitor, Long Chau, with only 546 stores by the end of the first quarter or 400 by the end of 2021.

Source: NDH Summary

The year 2021 also marks the exchange of revenue positions between the two largest drugstore chains in the market. According to the data Partner, Long Chau recorded an acceleration in revenue with VND 3,977 billion, 3.3 times higher than in 2020 and surpassing the figure of VND 3,618 billion of Pharmacity. More importantly, Long Chau was profitable while Pharmacity continued to lose hundreds of billions of dong.

Pharmacity continues to lose more than 363 billion dong in 2021, pulling the accumulated loss to 1,374 billion dong. Losses have decreased compared to 2020 as Pharmacity’s profit margin improved and expenses increased less than revenue growth.

Specifically, gross profit margin increased from 27.1% in 2020 to 31.8%. The proportion of selling and administrative expenses – which are important expenses – also decreased significantly compared to revenue. Selling and administrative expenses in 2021 accounted for 29.5% and 11.7% of net revenue, respectively, compared with 33.2% and 14.4% in 2020.

As of the end of 2021, Pharmacity’s equity is 2,565 billion VND, compared to only 405 billion VND in the previous year. Owner’s equity increased sharply despite the company’s continued loss, partly due to an increase in charter capital from VND 528 billion to VND 927 billion and mainly due to an increase in equity surplus from VND 888 billion to VND 3,012 billion.

Three years ago, Pharmacity was invested by Mekong Capital but did not disclose the amount. Then, by 2020, this chain will raise about VND 730 billion in Series C round. Next, at the beginning of last year, parent company Maroon Bells also issued more than VND 1,000 billion of convertible bonds to have resources for expansion. by Pharmacity.

The reason for the backwardness of Pharmacity compared to Long Chau

Pharmacity CEO Chris Blank once shared at an event in 2020 that: “The failure of Pharmacity in the past year is that the number of goods supplied to the market is not enough, customers complain a lot.

One of the main reasons is that the stockpile is too small and always overloaded. Therefore, in order to meet the goal of opening one new store/day, aiming to meet the needs of 1,000 stores nationwide by 2021, Pharmacity has researched supply chain partners in Vietnam.”

To realize this ambition, Pharmacity has cooperated with DH Logistic Property Vietnam (under Daiwa House Group, Japan) to open a distribution center in Loc An industrial park (Dong Nai) with leased area. 10,635 m2 in 20 years. The total amount of Pharmacity invested in this project is about 3 million USD.

However, this addition has not yet made Pharmacity’s business profitable. In addition, Mr. Chris Blank once shared that Vietnamese people are not familiar with Pharmacity’s “hybrid” shopping style between pharmacies and convenience stores, even though the company has offered promotions to promote consumer demand. customer use.

Meanwhile, Ms. Nguyen Bach Diep, CEO of FPT Retail (HoSE: FRT) – the parent company of FPT Long Chau Pharmaceutical, once explained that the reason why Long Chau has not developed according to the combined procurement model of Pharmacity is because of the model. This is the future, not the present time, Vietnamese people are not ready to go to a pharmacy to buy consumer goods.

According to SSI Research, although they are all pharmaceutical retail chains, the structure of these three chains is different. If Pharmacity has a proportion of non-medicinal products accounting for more than 70%, in Long Chau, the proportion of drugs is 70-80%.

An Khang is currently balanced between the two groups. In addition to pharmaceuticals, functional foods and medical equipment, Pharmacity also sells products in such areas as personal care, health care, beauty care, mother and baby…

Commenting on the future, Mr. Chris Blank assessed that the Vietnamese pharmaceutical industry has a size of about 7.4 billion USD and spending on pharmaceuticals has increased by 14% per year on average over the past decade.

Pharmacity’s 5-year plan 2021 – 2025 is to achieve revenue of 1.5 billion USD (about 35,000 billion VND) and create a workforce of more than 20,000 employees. The CEO expects that by 2025, the Pharmacity system will be expanded to 5,000 pharmacies across the country, the goal is that 50% of Vietnamese people can access a pharmacy within 10 minutes of walking.

Thus, to achieve the goal, Pharmacity needs to nearly 10 times the revenue in the next 4 years, along with the expansion of nearly 5 times the number of stores.

Not only Pharmacity, two large drugstore chains such as An Khang and Long Chau have ambitions to expand their scale. SSI Research said that the ambitious plan of the top 3 drugstore chains will bring the total number of drug stores in the drugstore chain to 7,300 stores in 2025. However, this number is only equivalent to 16% of the digital market share. drug stores nationwide.