As the standard for including pharmacies in outpatient planning is being raised and regulation is becoming stricter, this trend is beneficial for compliant leading enterprises. This year, the company will be more cautious in its acquisitions, but will still rapidly expand through self-built and franchised stores.
As of the end of May this year, LBX pharmacy chain joint stock had more than 4,900 outpatient unified stores. At the 2023 annual general meeting of shareholders held by LBX pharmacy chain joint stock, Chairman Xie Zilong said that the standards for pharmacies included in the outpatient unified plan are improving and regulations are becoming stricter. Under this trend, it is actually more advantageous for compliant leading enterprises.
Previously, a letter about the special action of "going online to visit stores, checking drug prices, comparing data, and grasping governance" has been sent to the procurement and bidding departments of various medical insurance bureaus. The letter has not been made public yet, according to a reporter from Caishen.
Xie Zilong paid attention to the above-mentioned letter about the special action and stated that drug prices follow market supply and demand principles. The relevant departments may hope to make consumers aware of their rights and choices by connecting data.
Starting in 2023, the impacts of medical insurance reform and the inclusion of designated pharmacies into outpatient unified management on the pharmaceutical retail industry will be profound. In the view of LBX pharmacy chain joint stock President Wang Li, the related policies of outpatient unified management are designed, in the medium and long term, to provide more sustained resource support for more standardized enterprises and market participants. From the situation in various provinces today, both in terms of individual accounts and unified accounts, the standardized head chain stores have far higher proportions of the amount obtained than market singular stores or medium-small chains. From this perspective, more standardized markets are more conducive to the concentration of head chain stores.
At the scene, an institutional investor asked: How is the company's full-year gross margin and net margin expected? "In the first quarter of this year, the company's comprehensive gross margin increased by 2.2 percentage points year-on-year, which was beyond our expectations." Wang Li said that without changing the terminal sales price, the company vigorously improves the gross margin by optimizing the product category structure, transforming the procure-to-sell system, and key business processes. In addition, only 40% of the company's total sales come from unified accounts and individual accounts, while the remaining 60% of sales come from non-medical insurance drug revenues. The company still has opportunities to improve gross margins in these areas in the future.
According to the latest data released by the National Medical Products Administration, the total number of retail pharmacies in the country had reached 667,000 by the end of 2023, an increase of 7.0% year-on-year. An investor who came from Guangdong asked how long it would take for the pharmacy industry to achieve full competition, and what challenges the company faced.
Xie Zilong said that the retail pharmacy industry is currently in a period of warlords fighting. It is not scientific to say how long it will take or how many pharmacies are reasonable. The final allocation of resources is determined by the market. Because of the fierce competition in the industry, the layout of pharmacies will be more grassroots-oriented, and the ultimate beneficiaries will be the broader population.
"During the industry reshuffle, it is a very good time for us. The era when people could make profits by simply opening a pharmacy is gone forever. Only through refined management, scale, entering the community, and getting into the hearts of customers can we have living space." It is expected that in the future, there may be about ten national leading pharmaceutical retail companies, and retail pharmacy companies that have early layout in each region may have one to two companies.
According to the company, LBX pharmacy chain joint stock's chain network (excluding alliances) has covered more than 18 provincial-level markets and more than 150 cities above the prefecture-level nationwide, with a total of 13,574 stores. Xie Zilong stated that the company plans to focus on expanding 11 advantageous provinces this year and sinking the market. While the economy is in a stable growth period, the company will be cautious in mergers and acquisitions, but self-built stores and franchise stores will still expand rapidly in the future.