China Post opens first in-house pharmacy, but experts doubt major benefits for supplement firms
Located within the China Post branch at Qinglong lake in Beijing’s Fangshan district, it is said to be the country’s first pharmacy to be housed within a post office.
This is however, not the first time that China Post has opened a pharmacy. It opened its first pharmacy that is not located inside a post office in Ningxia last December.
Pharmacies in China mainly sell medicines, with 47.7% of the sales coming from Western medicines, 27.1% from TCM, and 18.24% from non-medicines products, said a report from ASKCI Consulting.
Of the latter, 10.1% came from the sales of foods, which included health foods.
China’s health foods firm Angel Nutritech said China Post, through its logistics expertise and presence in the 3rd, 4th tier cities, as well as the rural areas, could provide vast opportunities for health foods firms.
This is in contrasts to personal care chains such as Watsons, where the deepest that it could reach out was the 3rd tier cities, Liao Xinfu, director of the marketing department told NutraIngredients-Asia.
While he looks forward to working with them, Liao also pointed out that pharmacies run by China Post would need to consider its ability to provide professional health services.
Another industry expert believes that China Post’s gradual opening of new pharmacies could be “testing the waters.”
Similar to Liao, Zhang Zhong Peng, director at China Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMPHIE), said China Post’s logistics expertise would lend itself unique advantages, especially its reach in the rural and less accessible areas.
However, Zhang cautioned that even if it were to open pharmacies in these areas, it remains to be seen if consumers from these economically less developed areas possess the purchasing power to buy health foods.
“I personally think that the opening of pharmacies by China Post is to test the waters, the industry is still dominated by big names like LBX Pharmacy, Dashenlin Pharmaceutical, and Yifeng Pharmacy Chain,” Zhang said.
As of 2017, China has about 454,000 pharmacies throughout the country.
Transformation needed
China’s pharmacies are in need of urgent transformation, including digitalisation, provide professional health services, offline-to-online (O2O) integration, according to Zhang.
To benefit the health foods industry, it is paramount that pharmacies start to expand their offerings in this area.
Asked about the incentives for pharmacies to transform, Zhang said that pharmacies could not possibly rely on medicines as the main revenue source, since hospitals were also selling them at more competitive prices.
For pharmacies to remain relevant, they will need to diversify their product range to include non-medicinal products, such as health foods.
This also means that they would need to brush up on their professional health advice services.
“The pharmacies definitely needed to transform…They especially need to work on their O2O integration, this is something that Alibaba and JD have been doing,” Zhang said.
