艾昆纬-扩大规模以取得成功-东南亚零售药店行业正在走向整合连锁药店的重要性将增长（英）

QVIA

WhitePaper

ScalingforSuccess

SoutheastAsia’sRetailPharmacySectoronPath

TowardsConsolidation,withChainPharmaciesSettoGrowinImportance

AKRIMJANTARAPRAPA,AssociatePrincipal,StrategyConsultingANTONKIM,AssociatePrincipal,StrategyConsulting

Tableofcontents

Introduction2

SEAretailpharmacymarket:Anupdate3

Indicatorsforconsolidation5

Conclusion10

Abouttheauthors11

AboutIQVIA11

Introduction

ThepharmaceuticalmarketinSoutheastAsiahasgonethroughfundamentalshifts,underpinnedbyongoingdemographictrends,economicuncertainties,andglobalgeopoliticaldevelopments.Retailpharmaciesareincreasingly

pivotalstakeholderswithinthislandscape,withgreateraccessibilitytothegeneralpopulationthanevenbefore.

Inthisreport,wewillexploreemergingintegrationstrategieswithinSoutheastAsia’sretailpharmacysector,highlightingtheongoingtrendtowards

consolidation.Thepaperwillshedlightonkeyimplicationsforindustry

stakeholdersacrossthevaluechainandoutlinestepsthatmustbetakentosucceedinthecompetitiveenvironment.

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SEAretailpharmacymarket:Anupdate

TheretailpharmacymarketinSoutheastAsia(SEA)

hasseenarobust9.2%compoundannualgrowthrate(CAGR)intheyears2021–2023(Figure1).ThisgrowthisbeingledbythePhilippines,thelargestmarketintheregion,whichgrewatasolid9.8%overthesameperiod.Meanwhile,substantialexpansioninboth

Malaysia(18%CAGR)andThailand(13.4%CAGR)isfurtherpropellingthismarketforward.

Growthhasbeenseenacrossboththeprescriptionandover-the-counter(OTC)sub-segmentswithin

theretailpharmacychannel,eachdrivenbyadistinctsetoffactors:

•Prescription(Rx)sub-segment:Treatmentforchronicillnessisaprimarygrowthdriverintheprescription

sub-segment.Ageingpopulationsandlifestylerisk

factorsaredrivingupratesofchronicailmentssuchasdiabetes,cardiovasculardisease,andchronickidneydisease,leadingpatientstomanagetheirconditions.

•OTCsub-segment:ThekeydriversintheOTC

categoryarecoughandcoldtreatments,aswellaspainreliefanddigestivehealthproducts.Additionalfast-growingsub-segmentsincludesupplements,infantnutrition,andcontraceptives.

Figure1:Retailpharmacygrowthbycountry(SEA)(MATQ32021-2023,USDBn)

11

10

+9%

4(38%)

2(17%)1(12%)

1(12%)

1(11%)

1(10%)

9

4(38%)

1(16%)

1(12%)1(12%)

1(11%)1(10%)

4(38%)

2(17%)

1(13%)

1(11%)

1(10%)

1(10%)

202120222023

Indonesia-2%Philippines+10%Thailand+13%Vietnam+4%Malaysia+18%Singapore+10%

RetailpharmacymarketincludesRxandOTCproductssoldinindependentpharmacy,largechains,conveniencestoresandsupermarketsSource:IQVIAMIDAS,IQVIAAnalysis

3|ScalingforSuccess

Growthintheretailpharmacymarketcontinuestobedrivenbythefactorsoutlinedin2023’sIQVIASEAPharmacyRetailPlaybook(Figure2),viz.

1.Governmentinitiativesarepushingdispensing

towardsthecommunityandincentivising

collaborationsbetweenhospitalsandpharmacies.

2.Pharmaciesareenhancingtheirofferingstoexpandcapabilitiesandvalue-addedservices.

3.Consumersincreasinglypreferpharmaciesformedicationanddrugpurchasesoverhospitalsandclinics.

Figure2:Driversoftheshifttoretailpharmacies

Governmentinitiatives

encouragingpharmacy

dispending

•Increasedcollaboration

betweenpublichospitalsandlocalspharmaciesformedicinepickupsatthenearestpharmacies

•Dispensingoflong-termprescriptionsforchornicpatients

Expandingvalue-addedservicesatpharmacy

•Pharmacynetwork’s

growingcapability

andprovidingvalue-

addedservices(patient

education,chronicdiseasemanagementservices)

•Accomodatingdoctor

consultationcounterwithinpharmacypremisesfor

minorailments

Growingconsumer

preferenceforpharmacies

•Increasingawarenessofservicesbypharmaciesamongconsumers

•Growingpatientfootfallatpharmaciesduetothereluctanceonthepart

ofmanypatientstovisithospitalsandclinicsforminorailments

Flagsindicaterelevantdriversforthemarkets.Source:IQVIAWellTrackReport(2020to2023)

Thesefactorsaresettocontinueplayingapivotalroleintheyearstocome.

Withincreasingopportunitiesforkeyplayersinthemarket,wealsoobservealong-termtrendtowardsintegrationandconsolidationasmostSoutheast

Asianeconomiesmature.InthisWhitePaper,wewillexaminethistrendtobetterunderstanditsimplications.

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Indicatorsforconsolidation

Growingeconomiesandcorrelationwithchainretailers

Figure3:ModernTrade(Chainedretailers)shareas%oftotalretailsales

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

●USA

●Korea

●Germany

●Japan

●France

●Australia

Singapore

●MalaysiaThailand

●China

Intransitionmarketslike

MYandTHconsolidationishigherrelativetoemerging

Indevelopedmarketsmostoftheretailvalueattributedtochainsstores

PhilippinesIndonesia

Vietnam●India

010,00020,00030,00040,00050,00060,00070,00080,00090,000

GDPpercapita—USD(2022)

Source:WorldBank,IQVIAanalysis

Thepenetrationofretailchainsisheavilycorrelatedwiththeeconomicmaturityofacountry(Figure3).Aseconomiesgrow,weexpectchainretailers(includingchainpharmacies)toexpandpenetrationandreacharound~80%oftotalvalueatmaturity.

EmergingSEAmarketssuchasthePhilippines,

Indonesia,andVietnamareripeforrapidpenetrationbychainretailers,whileMalaysiaandThailandare

furtheralongthecurve.Forexample,since2021,

Vietnamhasseenretailpharmacychainsexpandedfromjust3%to15%ofthetotalpharmacyretail

channel,atrendthatissettopersistaseconomicand

healthcarefactorsfurtherdevelopthepharmacyindustryinthecountry.

Meanwhile,developedeconomiessuchasSingapore,

theUnitedStates,andAustraliaseemostsalesoccurringthroughchainsascomparedto

independentplayers.

5|ScalingforSuccess

Costpressures—Aburdenforindependentpharmacies

Figure4:PercentagechangeinAverage‘Sell-in’price(ASP),from2020to2023(%changefrom2020to2023)

OTC

+16%

+13%

+6%

+4%

Rx

+13%

+8%+8%

+7%

Note:Averagesell-inpricecalculatedthroughweightedaverageof2020salesvolumeandchangeinpricebetween2020and2023

Source:IQVIAMIDAS,QVIAAnalysis

PharmasupplychaindisruptionsduetoCOVIDandgeopoliticaltensionsinrecentyearshaveledtorisingcostsforRxandOTCproductsthathavebeenpassedontoretailersand,subsequently,end-consumers

(Figure4).

Inrecentyears,theaveragesell-pricechargedtoretailpharmacieshasincreasedbyupto16%intheOTC

segmentandbyupto13%intheRxcategory.

Theincreasedcostburdenwasfeltthemostby

independentpharmacies,whichlackthebenefit

ofscale.InVietnam,forexample,over12,000

independentpharmaciesclosedbetween2016and2021,representingamorethan20%contraction.

Duringthesametimeframe,thenumberofchainpharmacyoutletsgrewbymorethan5x.

|6

Consumerpreference—Shifttowardschainstorescontinues

Figure5:PreferredconsumerchannelsforSEAconsumers(%shareofrespondents)

6%8%

5%5%

1%1%

IndependentDrugstores

Chain

Drugstores

ePharmacy/e-Commerce

Specialty

Healthstore

ConvenienceStores

GroceryStores

46%

34%

26%26%

21%

21%

Jan-June2022

Jan-June2023

Source:IQVIAWellTrack

Q12d.Overall,wheredoyoumostprefertopurchaseyourhealthcareproductsand/ormedicines,particularlyfortheupcomingmonthsof2023?

Wecontinuetoobserveagreatershiftinconsumerpreferencetowardschainpharmaciesin2023

comparedwith2022(Figure5).

Thegrowingpreferenceforchainscanbeattributedtotrustinproductquality,competitiveprices,andadifferentiatedserviceexperiencecentredaround

theconsumer.

Whilethepreferencefore-channelshascorrected

post-pandemic,itremainsthesecondmostpreferred

optionforconsumptionofhealthcareproducts.

Physicalshopvisitsareanticipatedtocontinuetobemorecommonthanonlinepurchasesinthe

regionfortheforeseeablefuture,giventhehigh

valuethatSEAconsumersplaceonin-person

consultationswithpharmacists.Otherkeybarrierstoincreaseddigitaladoptionincludeconcernsoverproductquality,longdeliverytimes,andtheaddedcostsofshipping.

7|ScalingforSuccess

Largedomesticchainsexpandingcoverage

BIGPharmacyexecutesgrowth-

through-acquisitionplaninMalaysia

Activity:Fullacquisition

Date:July2023

RetailPharmacyPlayers

BigPHARMACYCARINGPHARMACY

282Stores199Stores

Details

BIGPharmacybackerCreator,a

Malaysianbasedprivateequityfirm,

announcedacquisitionofCaringfor

purchasepriceofRM900M(190MUSD)

WhyitMatters

ForeignprivateequityfirmsCarlyleGroupandCVCCapitalPartners

werebothin“advancedstagesof

negotiation,”signalinginterestof

foreigncapitaltoentertheMalaysianretailpharmacyspace

Filipinoregulatoryprobeinto

acquisitionsbyRobinsonRetail

Activity:Regulatorapprovesacquisition

Date:November2023

RetailPharmacyPlayers

SouthstardrugRosePHARMACY

112Stores400Stores

Details

ThePhilippinesCompetitionCommission(PCC)initiatedananticompetitivereviewofRosePharmacy’sacquisitionbyRobinsonRetail,theoperatorofSouthStarDrug

beforeokayingthedealinNovember

WhyitMatters

RobinsonRetailcontinuespursuitofa“multi-formatretailing”giventheiradjacentownershipofsupermarketsbrands.ThePCCreviewindicatesthatregulatorsmaybetakingnoteoftheconsolidationtrend

Figure6

AyalaHealth

pharmacyexpansionscementleadership

acrossHCvaluechain

Activity:Acquiredstakeandexpansionplan

Date:December2023

RetailPharmacyPlayers

GenerikaDrugstoreSt.josephDrug

750Stores112Stores

Details

AyalaHealthacquiredastakeinSt

JosephDrug,alsoannouncesrapid

expansionplansforGenerikaDrugstorefrom750to1,000storesby2025

WhyitMatters

Alongsideaconsumerpharmacy

offering,Ayalahasaportfolioof

pharmaceuticalimporters,distributors,hospitalsandclinics.Expansionplanscementpositionasaleaderacrossthevaluechain

Source:ManilaStandard,InsideRetailAsia,BusinessWorldOnline,IQVIAAnalysis

Inrecentyears,consolidationactivitieshavebeenobservedacrossSEAmarkets(Figure6).

InthePhilippines,AyalaHealthcareHolding’s(AC

Health)acquiredastakeinStJosephDrugandits112outletsinDecember2023.ACHealthalreadyowns

thefast-growingGenerikapharmacychain,consistingof750stores,ontopoftheirpharmaceuticalimport–exportbusinessesandarangeofhospitalsandclinicsacrossthecountry.

Creator,theownerofMalaysianBIGPharmacy,

completeditsacquisitionofCaringPharmacyandits199outletsinJuly2023.ThisstrategicmovewillallowCreatortosignificantlyincreaseitsmarketpresenceinthecountry.

InthePhilippinesthe2020acquisitionofRose

Pharmacyandits400storesbyRobinsonRetail

sparkedaregulatoryprobethatwasfinallyapprovedinNovember2023,aclearindicatorthatthisindustry

consolidationiscontinuingapaceandevensparkingtheattentionofthegovernment.

MeanwhileinThailand,thetotalnumberofchain

pharmacyoutletswasexpectedtoexceed2,300byearly2024representingamorethana15%increasefromthe12monthsprior.

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Newforeignentrants

Therehasmeanwhilebeenanuptickinthenumberofhealthcaremergers&acquisitionsacrosstheAsia-Pacificregionmorebroadlyfrom2019to2022,withacquirersincreasinglycomingfromnon-traditionalindustriessuchasfinanceandthetraditionalconsumersector.

Newentrants,whobringwiththeminnovative

businessmodels,rapidtechnologicaladvancements,anddifferentiatedserviceofferings,areinducing

consolidationinthesector.

Aprominentexampleofcross-industrypartnershipisinvolvesAlibaba,oneofChina’sleadingtechfirms,

whichrecentlytookastakeinHasaki,afast-growingomnichannelpharmacyretailerwith140outletsin

Vietnamfocusedonbeautyproducts(Figure7).Thedealissettoenhancesynergiesbetweene-commercegiantAlibabaandHasaki’slocalfootprint.

Figure7

AlibabaacquiresstakeinHasaki,entersVietnamcosmetics&pharmacyrace

Activity

Cross-sectorequitystake&partnershipNovember2023

Alibaba-~$130BRevs(2023)|Hasakiclinic-140stores

ChinesetechgiantAlibabahasacquiredastakeinVietnamesepharmacyandbeautychainHasakiforanundisclosedamount

Date

Playersinvolved

Details

WhyitMatters

Hasakihasseenrapidexpansion,growingfromjust14storesin2021to140storesand~750kshoppers

monthlyby2023.Theuniqueoperatingmodelofonline&offlinesalesmeanspartnershipmayprovevaluable

Source:DealStreetAsia,IQVIAanalysis

9|ScalingforSuccess

Conclusion

TheongoingconsolidationofSoutheastAsia’sretailpharmacymarketpresentsamultifacetedlandscapefor

stakeholders.Establishedchainpharmaciescanleveragetheirgrowingscaletofurtheroptimisecoststhrough

bulkpurchasingandstreamlinedoperations.Thisallowsthemtooffercompetitivepricingandpotentiallyexpandtheirserviceofferings,includingspecialisedconsultations,wellnessprogrammes,andmoreconvenientdeliveryoptions.However,navigatingthisnewlandscapealsopresentschallengesforestablishedchains.Theymust

maintainagilityandadapttochangingconsumerpreferences,whichmightfavournichespecialisationsoramorepersonalisedexperience.

Independentpharmaciesfaceamorepressingneedforadaptation.Risingcostsandcompetitionfrom

largerchainsthreatentheirviability.Tosurvive,theycanexploreinnovativebusinessmodels,suchasnichespecialisationinareassuchascompoundingmedicationsorcateringtospecificdemographics.Strategic

partnershipswithotherindependentpharmaciesorhealthcareproviderscouldalsoenhancetheirbargaining

powerandservicescope.Ultimately,thesuccessofindependentpharmacieswillhingeontheirabilityto

differentiatethemselvesthroughpersonalisedcustomerservice,buildingstrongcommunityties,andleveragingtechnologytostreamlineoperations.

|10

Abouttheauthors

AKRIMJANTARAPRAPA

AssociatePrincipal,StrategyConsulting

AkrimJantaraprapaisAssociate

PrincipalatIQVIAandisbased

inBangkok,Thailand.Heisresponsibleforleading

regionalconsultingprojectsatIQVIA,withafocus

onpharmacyretailers.Akrimspecialisesingrowth

strategy,segmentationandtargeting,category

management,andoperationalexcellenceforpharmaandpharmacyclients.Akrimbringsinover10yearsofhealthcareandstrategyconsultingexperiencefromleadingglobalconsultingfirms.

AkrimholdsaMasterofBusinessAdministrationfrom

theMITSloanSchoolofManagement,USA,anda

Bachelor’sdegreefromtheUniversityofMichigan,AnnArbor,USA.

ANTONKIM

AssociatePrincipal,StrategyConsulting

AntonKimisAssociatePrincipalatIQVIAandisbasedinSingapore.

Heisresponsibleforleadingregionalconsulting

projectsatIQV