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Pharmacy Retail - China - December 2014

“The ability for a store to embrace the latest technology innovation to provide seamless services and shopping experience will become the key differentiator for retailers to stand out while segmenting the consumer based on their different behaviour and attitude would make a pharmacy retailer more efficient. For large players, designing locally-specific retailing strategies according to local demographic and needs is crucial.”
– Wenwen Chen, Senior Beauty & Personal Care Analyst

This report looks at the following issues: 

  • Technology embracement defines future success for Chinese pharmacy 
  • Trust is everything
  • Targeting different demographics based on their needs
  • City specific solution

Total retail sales of pharmacy products reached RMB255 billion in 2013, a staggering increase of 71% from 2009 driven by the rapid penetration of both chain and independent stores. That said, the current Chinese pharmacy retailing market is very fragmented.

Looking ahead, market consolidation is underway while players are facing the challenges of diversification and differentiation. Embracing the latest the technology and digital revolution is a crucial factor to stay ahead of the competition

 

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Table of contents

  1. Introduction

      • Issues and insights discussed in the report:
        • Methodology
          • Research scope
            • Market sizing scope
              • Survey scope
                • Abbreviations
                  • China’s main basic medical insurance schemes
                    • The New Rural Cooperative Medical Scheme (NCMS)
                      • Urban Employed Basic Medical Insurance (UEBMI)
                        • New Rural Cooperative Medical Insurance (NRCMI)
                          • Urban Resident Basic Medical Insurance (URBMI)
                          • Executive Summary

                              • Big health, diversification, differentiation
                                • Figure 1: best- and worst-case forecast of China retail value sales of pharmacy retailing, 2009-19
                              • Trust is everything
                                • Figure 2: Important factor when deciding where to shop offline and online and buying habit, August 2014
                              • Technology embracement defines future success for Chinese pharmacy
                                • Figure 3: Important factor when deciding where to shop offline and online and buying habit, August 2014
                              • Targeting different demographics based on their needs
                                • City specific solution
                                  • What we think
                                  • Issues and Insights

                                      • Technology embracement defines future success for Chinese pharmacy
                                        • The facts
                                          • The implications
                                            • Trust is everything
                                              • The facts
                                                • The implications
                                                  • Targeting different demographics based on their needs
                                                    • The facts
                                                      • The implications
                                                        • City specific solution
                                                          • The facts
                                                            • The implications
                                                            • Trend Application

                                                              • Who Needs Humans
                                                                • Transumers
                                                                  • Mintel Futures: Human
                                                                  • Market Drivers

                                                                    • Health-care reform: a top national priority
                                                                        • Figure 4: designated government agencies for china’s healthcare reform implementation
                                                                      • Health care future focus
                                                                        • Separate Hospitals from Medicine Sales to Lower Costs
                                                                          • Foreign-owned hospitals in more cities
                                                                            • Pharmaceutical multinationals rethink rebate marketing in China
                                                                              • The future of online OTC sales
                                                                                • Portfolio diversification to increase traffic
                                                                                  • Demographics challenges: an ageing society and one-child policy
                                                                                    • Figure 5: proportion of three age groups, 2007-13
                                                                                  • Economic development: growth in demand
                                                                                  • Market Size and Forecast

                                                                                    • Key points
                                                                                      • A fast evolving market with high level of dynamics
                                                                                        • Figure 6: china pharmacy retailing market, value and volume, 2009-2013
                                                                                      • Market Forecast
                                                                                        • The future – big health, diversification, differentiation
                                                                                          • Figure 7: best- and worst-case forecast of China retail value sales of pharmacy retailing, 2009-19
                                                                                          • Figure 8: best- and worst-case forecast of China retail volume of pharmacy retailing, 2009-19
                                                                                      • Market Segmentation and Market Share

                                                                                        • Key points
                                                                                          • Market segment: a highly fragmented market
                                                                                            • Market share: large number of players with small shares
                                                                                              • Figure 9: market share by value, 2011-2013
                                                                                              • Figure 10: market share by volume 2011-2013
                                                                                          • Who’s Innovating?

                                                                                            • Key points
                                                                                              • Innovations for Transumers
                                                                                                • Vending medicines
                                                                                                  • Figure 11: medicine vending machine at shanghai metro stations, july 2014
                                                                                                • Welcome to GPS drug couriers
                                                                                                  • Who needs human
                                                                                                    • Robot in the skies
                                                                                                      • Second skin: wearable health hub
                                                                                                        • Trust is everything
                                                                                                          • Technology reassuring authenticity
                                                                                                            • Return to experts
                                                                                                              • Internet giants tap into health market
                                                                                                              • Companies and Brands

                                                                                                                • Guo Da Pharmacy Drugstore
                                                                                                                  • Company background
                                                                                                                    • Business strategies
                                                                                                                      • Recent activities
                                                                                                                        • Guangdong Dasenlin Chain Drugstore Co. Ltd.
                                                                                                                          • Company background
                                                                                                                            • Business strategies
                                                                                                                              • Recent activities
                                                                                                                                • Chongqing Tong Jun Ge Drugstore Ltd
                                                                                                                                  • Company background
                                                                                                                                    • Business strategies
                                                                                                                                      • Recent activities
                                                                                                                                        • Chongqing Peace Drugstore Ltd.
                                                                                                                                          • Company background
                                                                                                                                            • Business strategies
                                                                                                                                              • Recent activities
                                                                                                                                                • China Nepstar Chain Drugstore Ltd.
                                                                                                                                                  • Company background
                                                                                                                                                    • Business strategies
                                                                                                                                                      • Recent activities
                                                                                                                                                      • The Consumer – Behaviour towards Ailments

                                                                                                                                                        • Key points
                                                                                                                                                          • Trustworthy branding is crucial for pharmacy retailing in China
                                                                                                                                                            • Figure 12: Consumer behaviour towards ailments, August 2014
                                                                                                                                                          • Cultivate loyalty amongst young generations
                                                                                                                                                            • Figure 13: Consumer behaviour when suffering ailments, by demographics, August 2014
                                                                                                                                                          • Making pharmacy and health services more accessible to low-income consumers
                                                                                                                                                            • Figure 14: Consumer behaviour towards ailments, by demographics, August 2014
                                                                                                                                                          • City-specific solutions
                                                                                                                                                          • The Consumer – Channel Usage

                                                                                                                                                            • Key points
                                                                                                                                                              • Chain store is the most popular channel
                                                                                                                                                                • Figure 15: Pharmacy retailer visited in the past six months, August 2014
                                                                                                                                                              • Clear demographic differences
                                                                                                                                                                • Figure 16: Pharmacy retailer visited in the past six months, by demographics, August 2014
                                                                                                                                                                • Figure 17: Pharmacy retailer visited in the past six months, by demographics, August 2014
                                                                                                                                                              • City disparities remain in buying channels
                                                                                                                                                              • The Consumer – Products Purchased

                                                                                                                                                                • Key points
                                                                                                                                                                  • OTC dominates the market sales
                                                                                                                                                                    • Figure 18: Product brought from in the past six months, August 2014
                                                                                                                                                                  • Gender disparity towards pharmacy products
                                                                                                                                                                    • Figure 19: Product brought from in the past six months, August 2014
                                                                                                                                                                    • Figure 20: Product brought from in the past six months, by demographics, August 2014
                                                                                                                                                                  • City differences towards product shopped
                                                                                                                                                                    • Repertoire analysis
                                                                                                                                                                      • Figure 21: Repertoire of product brought from in the past six months, August 2014
                                                                                                                                                                      • Figure 22: Repertoire of product brought from in the past six months, by demographics, August 2014
                                                                                                                                                                      • Figure 23: Repertoire of product brought from in the past six months, by demographics, August 2014
                                                                                                                                                                    • From problem solving to prevention
                                                                                                                                                                      • Figure 24: Repertoire of product brought from in the past six months, by demographics, August 2014
                                                                                                                                                                  • The Consumer – Choice Criteria Offline

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Building trust is the top priority
                                                                                                                                                                        • Figure 25: Important factor when deciding where to shop offline, August 2014
                                                                                                                                                                      • Convenience is king
                                                                                                                                                                        • Demographic disparities towards offline stores preference
                                                                                                                                                                            • Figure 26: Important factor when deciding where to shop offline, by demographics, August 2014
                                                                                                                                                                            • Figure 27: Important factor when deciding where to shop offline, by demographics, August 2014
                                                                                                                                                                          • City differences towards offline stores
                                                                                                                                                                              • Figure 28: Important factor when deciding where to shop offline, by demographics, August 2014
                                                                                                                                                                            • Product availability could increase trustworthiness
                                                                                                                                                                            • The Consumer – Choice Criteria Online

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Reassuring product authenticity
                                                                                                                                                                                  • Figure 29: Important factor when deciding where to shop online, August 2014
                                                                                                                                                                                • Demographic disparities towards online stores preference
                                                                                                                                                                                • The Consumer – Buying Habits

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Authenticity is the top priority
                                                                                                                                                                                      • Figure 30: Buying habits at pharmacies/drugstores, August 2014
                                                                                                                                                                                    • Brand building
                                                                                                                                                                                      • Privacy issues will help consumers shift online
                                                                                                                                                                                        • TCM holds the ground
                                                                                                                                                                                          • Leverage in-store assets
                                                                                                                                                                                            • Demographic differences towards buying habits
                                                                                                                                                                                                • Figure 31: Buying habits at pharmacies/drugstores, by demographics, August 2014
                                                                                                                                                                                                • Figure 32: Buying habits at pharmacies/drugstores, by demographics, August 2014
                                                                                                                                                                                              • City differences towards buying habits
                                                                                                                                                                                              • Appendix – The Consumer – Behaviour towards Ailments

                                                                                                                                                                                                  • Figure 33: Consumer behaviour towards ailments, August 2014
                                                                                                                                                                                                  • Figure 34: Most popular consumer behaviour towards ailments, by demographics, August 2014
                                                                                                                                                                                                  • Figure 35: Next most popular consumer behaviour towards ailments, by demographics, August 2014
                                                                                                                                                                                              • Appendix – The Consumer – Channel Usage

                                                                                                                                                                                                  • Figure 36: Pharmacy retailer visited in the past six months, August 2014
                                                                                                                                                                                                  • Figure 37: Most popular pharmacy retailer visited in the past six months, by demographics, August 2014
                                                                                                                                                                                                  • Figure 38: Next most popular pharmacy retailer visited in the past six months, by demographics, August 2014
                                                                                                                                                                                                  • Figure 39: Other pharmacy retailer visited in the past six months, by demographics, August 2014
                                                                                                                                                                                              • Appendix – The Consumer – Products Purchased

                                                                                                                                                                                                  • Figure 40: Product brought from in the past six months, August 2014
                                                                                                                                                                                                  • Figure 41: Product brought from in the past six months – Medical and health, by demographics, August 2014
                                                                                                                                                                                                  • Figure 42: Product brought from in the past six months – Beauty and personal care, by demographics, August 2014
                                                                                                                                                                                                • Repertoire of product shopped
                                                                                                                                                                                                  • Figure 43: Repertoire of product brought from in the past six months, August 2014
                                                                                                                                                                                                  • Figure 44: Repertoire of product brought from in the past six months, by demographics, August 2014
                                                                                                                                                                                              • Appendix – The Consumer – Choice Criteria Offline

                                                                                                                                                                                                  • Figure 45: Important factor when deciding where to shop offline, August 2014
                                                                                                                                                                                                  • Figure 47: Next most important factor when deciding where to shop offline, by demographics, August 2014
                                                                                                                                                                                                  • Figure 48: Other important factor when deciding where to shop offline, by demographics, August 2014
                                                                                                                                                                                              • Appendix – The Consumer – Choice Criteria Online

                                                                                                                                                                                                  • Figure 49: Important factor when deciding where to shop online, August 2014
                                                                                                                                                                                                  • Figure 50: Most important factor when deciding where to shop online, by demographics, August 2014
                                                                                                                                                                                                  • Figure 51: Next most important factor when deciding where to shop online, by demographics, August 2014
                                                                                                                                                                                                  • Figure 52: Other important factor when deciding where to shop online, by demographics, August 2014
                                                                                                                                                                                              • Appendix – The Consumer – Buying Habits

                                                                                                                                                                                                  • Figure 53: Buying habits at pharmacies/drugstores, August 2014
                                                                                                                                                                                                  • Figure 54: Most popular buying habits at pharmacies/drugstores, by demographics, August 2014
                                                                                                                                                                                                  • Figure 55: Next most popular buying habits at pharmacies/drugstores, by demographics, August 2014

                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                              Pharmacy Retail - China - December 2014

                                                                                                                                                                                              £3,273.18 (Excl.Tax)