---
title: "Retail pharmacies welcome a recovery turning point, with dual drivers initiating a new journey in health"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/289662807.md"
description: "The pharmaceutical retail industry has undergone deep restructuring, with a reduction in the number of stores and chain operations becoming the mainstream trend. In 2024, nearly 40,000 pharmacies will close, and illegal operations will be regulated. Listed companies such as Yifeng Pharmacy, DSL, and YIXINTANG are experiencing a performance recovery turning point, as the industry shifts from barbaric growth to a stage of high-quality development"
datetime: "2026-06-13T10:20:57.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/289662807.md)
  - [en](https://longbridge.com/en/news/289662807.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/289662807.md)
---

# Retail pharmacies welcome a recovery turning point, with dual drivers initiating a new journey in health

Author / Braised Pork Under the Starry Sky

Editor / Starry Sky of Spinach

Typesetting / Black Plum Under the Starry Sky

In the past three years, the #pharmaceutical retail sector has undergone a deep **restructuring**. Under the pressure of multiple factors such as the booming development of pharmaceutical e-commerce and increased regulation of medical insurance funds, the originally rapidly expanding retail pharmacies have hit the pause button, with tens of thousands of stores closing each year, creating a chilling atmosphere in the industry.

However, amidst the gloom, new life is also emerging, as existing stores undergo multiple rounds of refinement, and the optimization and adjustment of sales terminals gradually return to normal. From the 2025 annual reports, it can also be seen that listed chain pharmacies such as #Yifeng Pharmacy (603939), #DSL (603233), and #YIXINTANG (002727) have all welcomed **recovery** after years of decline.

**1\. Growth Phase Over, Chain Operation Becomes Mainstream**

The period from 2010 to 2023 was the era of "barbaric growth" for offline pharmacies, with the number of stores rapidly increasing from 400,000 to nearly **700,000** in just over a decade. The long-standing competitive landscape characterized by small, scattered, and chaotic market conditions remains prominent, with the national pharmacy chain rate only at 57.04% in 2024. The "Guiding Opinions on the High-Quality Development of the Pharmaceutical Distribution Industry During the 14th Five-Year Plan Period" proposed that by 2025, the retail pharmacy chain rate should approach 70%, which is clearly far from this goal.

In 2024, retail pharmacies were included in the scope of medical insurance inspections for the first time, and previously tacitly accepted violations such as issuing false prescriptions and swapping projects were highlighted. The previously aggressive expansion trend has also reversed, with #China National Pharmaceutical Group (000028) shutting down thousands of stores under its Guoda Pharmacy for two consecutive years, and many chain pharmacy brands following suit. In 2024, 39,000 retail pharmacies were closed, with a closure rate as high as **5.7%**. The performance is also not optimistic, as among the six major private listed companies, all except Yifeng Pharmacy have seen declines.

 Net Increase/Decrease of Pharmacies in the Industry (Number of Stores) Source: First Pharmacy Financial Intelligence, Zhongkang Pharmacy, iFind, Guojin Securities Research Institute

In fact, such restructuring is an inevitable result for retail pharmacies. After all, for a country with a large population and vast territory like ours, the number of pharmacies seems excessive. The average number of people served by each store in the entire industry is still less than **3,000**, which is clearly excessive compared to the service scale of over 10,000 people in mature countries and regions such as Europe, America, and Japan.

The crowded competitive situation makes it difficult for individual pharmacies to operate, with more than 60% of small and medium-sized individual pharmacies nationwide generating annual revenues of less than **500,000 yuan**, and their procurement costs being higher than those of chain brands. Under multiple pressures, these types of pharmacies find it difficult to survive, and seeking refuge under the wings of large chain pharmacies is indeed a realistic choice **II. Repair signals appear, mergers and acquisitions are firm**

Entering 2025, the industry's clearing efforts remain significant, with approximately **22,000** net store closures throughout the year. However, leading companies are expanding their layouts through new construction or mergers and acquisitions while optimizing existing terminals. Although Yifeng Pharmacy and DSL closed more than 500 stores throughout the year, the total number actually increased when accounting for new stores. Some institutions predict that retail pharmacies will still maintain a net closure status in 2026, although the scale will narrow.

Such positive forecasts are closely related to policy support. On January 22 this year, the Ministry of Commerce and nine other departments issued the "Opinions on Promoting the High-Quality Development of the Pharmaceutical Retail Industry," proposing a total of **18** specific measures to improve pharmaceutical services.

Notably, the "Opinions" clearly support mergers and acquisitions in the retail pharmacy industry, which is undoubtedly good news for leading chain enterprises. As a result, the market reacted significantly, with pharmaceutical commercial stocks collectively strengthening the next day, and the overall sector rising by **3%**.

**III. Cost reduction and efficiency enhancement are the main themes**

From the performance of listed companies, 2025 is a year of **repair** for the chain pharmacy sector, with total operating revenue increasing by 4.19% year-on-year, while net profit attributable to the parent company grew by an impressive 25.52%. In the first quarter of this year, total revenue slightly decreased by 0.13% year-on-year, but net profit attributable to the parent company increased by 10.65% year-on-year.

 Revenue and profit growth of offline pharmacy sector Source: Wind, WanLian Security Research Institute

Among them, DSL is the industry leader in revenue scale, achieving revenue of 27.502 billion yuan and a net profit attributable to the parent company of 1.235 billion yuan in 2025, representing year-on-year growth of 3.8% and **35.04%** respectively. Although it closed more than 500 directly-operated stores throughout the year, it also added 501 directly-operated stores and over 1,200 franchise stores, demonstrating a strong commitment to expansion. In the first quarter of this year, DSL signed two acquisition agreements, acquiring 58 stores for a total price of 26.43 million yuan.

Yifeng Pharmacy is the chain pharmacy brand with the largest number of directly-operated stores in the industry, with revenue increasing by 1.54% year-on-year to 24.433 billion yuan and net profit attributable to the parent company growing by **9.81%** to 1.678 billion yuan. With the dual approach of opening new stores and closing inefficient ones, the total number of stores also maintained growth.

The performance of these two giants shows a characteristic where the growth rate of net profit attributable to the parent company far exceeds that of revenue, indicating that the industry is no longer in a phase of blind expansion but requires high-quality income. This places certain demands on listed companies' cost control. In other words, there is a need for **quality improvement and efficiency enhancement**, and this characteristic is even more pronounced in YIXINTANG YIXINTANG is actually the chain brand with the highest number of store closures in the industry, with revenue declining by 3.69% to 17.336 billion yuan in 2025. However, thanks to this "drastic measure," the net profit attributable to the parent company surged by **130.8%** last year, reversing the continuous decline from 2023 to 2024. In the first quarter of this year, YIXINTANG further closed 117 stores.

# Lao Bai Xing (603883) also has a distinctive strategy. Although the net profit attributable to the parent company declined in 2025 due to goodwill impairment and other factors, it has returned to a growth trajectory in the first quarter of this year, with a year-on-year increase of +5.27%. Lao Bai Xing is targeting the sinking market, with **88%** of new stores opened in 2025 located in prefecture-level cities and below; it is also seizing the opportunity of prescription outflow by promoting dual-channel stores, DTP stores, and outpatient chronic disease specialty stores.

**IV. Non-Pharmaceutical Products Support the Second Growth Curve**

Looking ahead to the future of retail pharmacies, I believe the most important trend is that **non-pharmaceutical products** are becoming increasingly important in pharmacies. In November 2024, the Ministry of Commerce and six other departments issued the "Implementation Plan for the Innovation and Enhancement Project of the Retail Industry," which clearly stated that retail pharmacies are allowed to sell non-pharmaceutical products.

Non-pharmaceutical products in pharmacies mainly refer to health products, as well as home medical devices. According to data from the first quarter of 2025, sales of these two categories of products in pharmacies increased by 15.3% and 18% year-on-year, respectively. According to data from Zhongkang Technology, stores with a non-pharmaceutical sales ratio exceeding 30% can achieve a comprehensive gross profit margin of **38.8%**, which is 5.1 percentage points higher than the national average level for pharmacies, indeed possessing the potential to become a second growth curve against the backdrop of pressure on pharmaceutical sales.

In fact, many chain pharmacy brands have been vigorously developing non-pharmaceutical businesses. Yifeng Pharmacy has made changes to its business scope in multiple locations in recent years to increase categories such as daily necessities sales. In 2025, Yifeng Pharmacy disclosed that it has established a non-pharmaceutical innovation division, focusing on functional foods and **medical beauty skincare** for business exploration.

Lao Bai Xing is transforming its stores into health service centers, introducing over 300 non-pharmaceutical SKUs in 2025 to accelerate diversified operations. YIXINTANG has proposed to transform **70%** of its terminals into general health stores, and by 2025, it has completed modifications for over 1,000 stores, with plans to complete modifications for more than 4,000 stores in 2026.

Amidst the sweeping reform wave, there is an ambition among chain pharmacy companies to reconstruct the pharmacy ecosystem. Non-pharmaceutical products are the entry point, but firmly grasping the **health needs** of the service population beyond just purchasing medicine is the core.

Of course, accommodating prescription outflow is also a frequently discussed topic. In 2024, the distribution ratio of prescription drugs in and out of hospitals was 79% and **21%**, respectively, still leaving room for growth. However, the reality is that most pharmacies still lack the capability to effectively accommodate this business In the author's view, prescription outflow business often points to chronic diseases, so it is not just a simple one-time dispensing of medication, but rather a complete, long-cycle **pharmaceutical service**.

At this stage, the number of practicing pharmacists in many pharmacies is insufficient, and the industry's trend of "focusing on marketing rather than professionalism" also restricts service capabilities. Only by freeing pharmacists' working hours from promotions and displays and investing them into a series of truly value-creating activities such as **medication evaluation**, can the path of prescription outflow have a possibility of success.

Overall, the retail pharmacy industry has shifted from a single drug sales model to a **dual-driven** era of "drugs + health services." Chain leaders that can simultaneously meet the demand for prescription outflow and open up the space for non-drug products are expected to unlock the long-term valuation ceiling.

Note: This article does not constitute any investment advice. The stock market has risks, and one should be cautious when entering the market. No trading means no harm

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