The Zhitong Finance App learned that China Merchants Securities released a research report saying that the retail pharmacy industry has experienced poor policies, a low economic environment, and a wave of store closures, and fundamentals and valuations have bottomed out. From an industry perspective, on the one hand, store clearance is accelerating, and leading advantages are expanding; on the other hand, the policy environment is showing clear signs of improvement, concerns such as extreme price comparisons have been eliminated, and digitally optimized supervision methods; at the same time, policies are gradually opening up sales of non-pharmaceutical products, and various companies are actively exploring new retail formats and creating a second growth curve. Leading pharmacies ushered in a definitive inflection point in performance through restart and expansion. Against the backdrop of pressure on the overall economic environment and exploration of new business formats, the advantages of leading pharmacies in refined management capabilities, channel bargaining power, and outreach expansion are expected to expand, and the same stores are also expected to gradually recover.
The main views of China Merchants Securities are as follows:
The industry has gone through policies, a low economic environment and a wave of store closures, and fundamentals and valuations have bottomed out
From an industry perspective, store clearance accelerates the expansion of leading advantages, and the positive signs of a positive policy environment are clear; from the perspective of individual stocks, leading pharmacies have all seen positive changes in epitaxial endogenous growth, diversified sales have opened up long-term space, and attention is paid to leading investment opportunities.
Policy bottom-up, offline pharmacy channel value certification, leading companies' compliance advantages are expected to gradually be reflected
Since 2024, retail pharmacy supervision has been strengthened. Medical insurance inspections, drug price comparisons, etc. have raised market concerns, compounded by the effects of slowing market size growth, etc., putting pressure on retail pharmacies as a whole in 2024-2025. Since 2026, the “health post” concept has been proposed in nine ministry documents, and the value of retail pharmacy channels has been “corrected”. At the same time, with the optimization of regulatory methods such as traceability codes and the improvement of fairness issues in online and offline supervision, leading compliant pharmacies are expected to benefit from this.
Accelerated industry clearance and optimized supply structure
① According to Zhongkang data, the net number of stores decreased by more than 3,000 in each quarter of 2025, and the scale of store closures fluctuated and expanded from quarter to quarter. In the third quarter of 2025 alone, the number of pharmacies closed nationwide reached 16,471, setting a new high number of stores closed in a single quarter in recent years; 7,671 new stores were opened during the same period, a net decrease of 8,800 in a single quarter. ② The wave of store closures is essentially the cyclical bursting of the bubble in the number of stores, and the policy and economic environment is an accelerator. The number of retail pharmacies stabilized around 2015. The total number of stores in the industry was inflated due to the fact that after the COVID-19 pandemic, small chains and individual stores strengthened short-term cash flow and slowed clearance with epidemic prevention materials and four types of drugs, while large pharmacies accelerated the opening of stores in a local area. ③ In the post-2024-25 policy era, due to factors such as the overall implementation of the outpatient coordination policy not as good as expectations+market contraction+price comparison policy flight inspection, the pharmacy industry began to close stores, and leading pharmacies took the initiative to close their stores to improve efficiency.
Leading pharmacies restart expansion, and performance is being realized
① In 2024, leading pharmacies began actively optimizing stores, shifting from “rapid expansion” to “improving quality and efficiency”. For example, Yifeng Pharmacy closed 1,078 stores in 2024, adding 1,686 direct stores and 826 franchise stores; in 2025, it closed 547 stores, adding 193 directly-managed stores and 501 franchised stores. ② Since most of the stores closed were loss-making stores with revenue, the shutdown of stores and the significant slowdown in the pace of opening had an impact on revenue in the short term (revenue growth in 2025 is under pressure, Yifeng Pharmacy's 2025 revenue yoy 1.54%, Daishin 2025 revenue yoy 3.80%, ordinary people's income YOY -0.54% in 2025, and Yixintang's revenue YOY 3.69% in 2025), but the positive effects on profits are gradually reflected, compounded by the implementation of cost reduction measures such as rent reduction and the release of leading pharmacy profits (Yifeng Pharmacy 2025) Net profit not returned to mother Yoy 7.65%, Daishanlin's net profit Yoy 38.36% deducted from non-return mother in 2025). ③ Considering that the closing of leading pharmacies has basically ended in 2026 and restarted expansion, revenue is expected to reach an inflection point this year (epitalization+endogenous same-store improvement).
Risk warning: Risks such as health insurance supervision, price comparison and fee control, falling short of expectations in prescription outflows, and competition exacerbating compliance incidents.