This report (chinatimes.net.cn) reporter Guo Yilin and Yu Na reported from Beijing.

When pharmacies are denser than convenience stores, this overdue wave of closures has finally arrived.

In 2025, nearly 22,000 pharmacies closed nationwide, with the closure rate rising from 1.5% in 2022 to 7.9% year by year. This means that one out of every 13 pharmacies has closed down.

More notably, the leading listed chain pharmacies, which have long been regarded as the "ballast" of the industry, have joined the ranks of closures. DSL closed 536 directly-operated stores, Yifeng Pharmacy closed 547, Yixin Tang net reduced 386 stores, Laobaixing closed 223, Shuyu Pingmin closed 223, while the "national brand" Guoda Pharmacy set a new record for the number of closures in a single year by shutting down 1,140 directly-operated stores.

From "land grabbing" to "cutting off arms to survive," from "scale supremacy" to "efficiency first," what exactly is holding back Chinese chain pharmacies? In an interview with the "Huaxia Times," Shi Tianyi, an analyst from the pharmaceutical and medical division of H&J Consulting, analyzed that chain pharmacies are shifting from "scale expansion" to "survival elimination," with the core issue being "the end of the high gross profit era and the lack of professional service capabilities." Centralized procurement has turned medicines into low-margin products, collapsing the traditional profit margin model; with store density nearing saturation, stores lacking professional service capabilities such as chronic disease management struggle to survive under homogeneous competition. Rising rent and labor costs, along with continuous diversion by e-commerce, have forced many inefficient stores to close, leading the industry into a reshuffling period where "efficiency is king."

Mixed Blessings

Looking at the annual report card for 2025, some are happy while others are worried.

DSL continued to rank first in the industry in terms of revenue scale, achieving revenue of 27.502 billion yuan and a net profit attributable to the parent company of 1.235 billion yuan. The net profit attributable to the parent company increased by 35.04% year-on-year, and the net profit excluding non-recurring gains and losses increased by 38.36% year-on-year, with profit growth nearly ten times that of revenue growth. The net cash flow from operating activities surged by 72.24% to 5.350 billion yuan, equivalent to 4.3 times the net profit for the period. Some brokerage analysts commented that DSL's growth logic has shifted from store opening-driven to efficiency-driven.

Yifeng Pharmacy also delivered a dual increase in profits. The company achieved an annual operating income of 24.433 billion yuan, a year-on-year increase of 1.54%; the net profit attributable to the parent company was 1.678 billion yuan, a year-on-year increase of 9.81%. However, a closer look reveals that the profit growth of Yifeng Pharmacy largely comes from cost savings. Sales expenses decreased by 325 million yuan year-on-year, mainly due to "reducing rent for some stores and closing stores, leading to a year-on-year decrease in rent and labor costs." However, in the eyes of industry peers, the profit growth of Yifeng Pharmacy in 2025 is largely achieved through cost savings.

The challenges faced by Lao Bai Xing Pharmacy are quite severe. In 2025, the company achieved operating revenue of 22.237 billion yuan, a slight decrease of 0.54% year-on-year; net profit attributable to the parent company was 382 million yuan, a year-on-year decline of 26.44%; and net profit excluding non-recurring gains and losses was 347 million yuan, a year-on-year decline of 30.15%. This marks the second consecutive year of revenue and profit decline for Lao Bai Xing. The company attributed the performance decline to the provision for goodwill impairment losses and land impairment losses, with goodwill impairment losses reaching 150 million yuan. As of the end of 2025, Lao Bai Xing's goodwill book value still stood at 5.613 billion yuan, accounting for 28% of total assets, which is high in the industry.

Shu Yu Ping Min is expected to achieve a net profit of 80 million to 120 million yuan in 2025, a year-on-year increase of 142.37% to 163.56%, turning losses into profits, but this is based on the low base of a first-time annual loss of 189 million yuan in 2024. The company improved its performance by closing loss-making stores and optimizing inventory, but store efficiency continues to decline.

China National Pharmaceutical Group Corporation (the parent company of Guoda Pharmacy) staged a "loss reduction and profit increase" drama. In 2025, the company achieved a net profit attributable to the parent company of 1.136 billion yuan, a year-on-year increase of 76.8%, but this growth mainly stemmed from a decrease of 686 million yuan in the asset impairment provisions for goodwill and intangible assets year-on-year. Its retail segment, Guoda Pharmacy, still incurred a loss of 217 million yuan, with over 2,400 stores closed in two years, and the total number of stores plummeted from over 10,000 at the end of 2023 to 8,221.

In this report card, the performance of Yixin Tang is a remarkable turnaround. The company expects its net profit attributable to the parent company to be between 260 million and 330 million yuan in 2025, a year-on-year increase of 127.79% to 189.12%, while reducing the number of directly operated stores by 386 throughout the year. The company clearly stated that through the refined management model of "closing inefficient stores + optimizing existing resources," it achieved a qualitative improvement in operational efficiency.

The performance differentiation among the six companies reflects that closing stores is no longer synonymous with "losing face," but rather a proactive choice for leading companies in the industry's winter, and may even be the only way out.

Industry Restructuring Crossroads

"The collective closure of chain pharmacies is the result of multiple pressures stacking up. There is continuous tightening from policy, strong impacts from online platforms, unprecedented regulatory scrutiny of medical insurance compliance, and extreme oversupply in market competition. In addition, the 'goodwill landmines' buried by years of aggressive expansion by chain pharmacies have exploded." Shi Tianyi analyzed.

It is reported that as of the end of 2025, Lao Bai Xing Pharmacy's goodwill book value reached 5.613 billion yuan, and Shu Yu Ping Min also faced high goodwill and accumulating impairment risks due to merger and acquisition expansions. When the industry's prosperity declines and the performance of acquisition targets falls short of expectations, goodwill impairment becomes a "black hole" that devours profits In this wave of store closures, the differentiation among different enterprises is intensifying, with small and medium-sized pharmacies being the biggest "victims" of this round of clearing.

According to data from Zhongkang, as of the end of the third quarter of 2025, among nearly 20,000 stores that saw a net decrease year-on-year, small and medium-sized chains (pharmacies outside the top 30) and independent pharmacies accounted for 84.5%; among nearly 30,000 medical insurance stores that saw a net decrease year-on-year, small and medium-sized chains and independent pharmacies accounted for as high as 92.9%. This indicates that industry share is accelerating towards concentration at the top—data from the Ministry of Commerce shows that the annual sales of the top 10 pharmaceutical retail companies accounted for 20.9% of the total national pharmaceutical retail market in 2020, rising to 23.1% in 2024.

However, leading enterprises are not without worries; under the pressure of policies, they also urgently need to transform. In 2026, nine departments jointly issued documents to support the merger and reorganization of retail pharmacies, continuously raising industry thresholds. The requirements for the allocation of licensed pharmacists are tightening, medical insurance settlements are mandatorily scanned for traceability, and strict checks on drug substitutions are being enforced. While small and medium-sized chains and independent pharmacies are accelerating their exit, leading enterprises also face the transformation challenge from "growing large" to "growing strong."

In this regard, Ruan Hongxian, a member of the National Committee of the Chinese People's Political Consultative Conference and chairman of Yifeng Pharmacy, bluntly stated that the era of the pharmaceutical retail industry "making money through information gaps, channel gaps, and wholesale-retail gaps has completely ended," and the industry is shifting from a "product price logic" to a "health service value logic." This judgment is becoming a consensus in the industry.

In fact, the path of transformation has already emerged. Yifeng Pharmacy relies on its hospital-side stores, focusing on DTP specialty pharmacies and "dual-channel" medical insurance designated pharmacies, shifting from pure drug sales to full lifecycle chronic disease management, promoting the transformation from "selling drugs" to "health services." DSL has achieved a dual reduction in sales and management costs through digital intelligence, finding a new balance between "increasing revenue" and "reducing expenditure." Meanwhile, Guoda Pharmacy announced its transformation into "Guoyao Health Station," seeking evolution from traditional retail terminals to health service platforms.

The era of indiscriminate scale expansion has become history; the meticulous value refinement has just begun. When offline specialty pharmacies and online e-commerce platforms form functional complements, the Chinese pharmacy industry may truly welcome its "coming of age." For every enterprise involved, "survival" is an urgent priority, while "how to survive" is a long-term strategy