CEO Nguyen Do Quyen revealed that although 60,000 pharmacies were operational before the Covid-19 pandemic, the pharmaceutical retail market in Vietnam currently only has 45,000 pharmacies. This includes drug counters.
Pharmacies typically operate with limited capital and are unable to afford storefront rentals, leading them to utilize private homes as their business premises. Moreover, these pharmacies only stock basic products like allergy and nasal decongestant medications, resulting in meager revenues (approximately 1-2 million VND per day).
Thus,
Long Chau has no intention of replacing these extremely small-scale pharmacies.
Compared to these pharmacies, Long Chau’s revenue averages around 1.1 billion VND per month per store, which is 5-8 times higher than current private pharmacies. As such,
if 3,000 stores are opened, the scale of revenue would account for over half of the market (equivalent to the combined revenue of 15,000 – 20,000 private pharmacies).
When asked about concerns over “imitation,” Ms. Quyen stated that it would not be an easy feat. This is because Long Chau introduces numerous new medications each year, and the prescription list is constantly changing. Acquiring an adequate stock of medications requires daily information gathering, making it challenging for competitors to imitate on a regular basis.
Additionally, managing thousands of stores requires extensive data and inventory management. Long Chau’s advantage lies in its parent company, FPT, which enables the utilization of AI, big data, etc. for these processes. Technology also assists Long Chau in analyzing customer needs; for instance, when customers inquire about 10 different medications, the chain can supply 9.5 of them without requiring excessive inventory.
Regarding Long Chau,
it is considered a major “gamble” by FRT and has achieved significant success to date.
From 4 acquired pharmacies in 2017, Long Chau has expanded rapidly to nearly 1,500 stores, making it the leading pharmaceutical retail chain in terms of scale. The current number of stores for Pharmacity and An Khang is 932 and 527, respectively.
This is also the
first pharmaceutical chain to publicly announce operational profitability, while industry peers continue to struggle to break even.
In 2023, the pharmaceutical segment contributed 15,925 billion VND, surpassing FPT Shop and becoming the primary contributor (50% of revenue) to the Group.
Amidst the robust growth of the pharmaceutical chain, Long Chau has declared its intention to establish a Health Care Ecosystem – an ecosystem encompassing all aspects of health.
According to “female general” Nguyen Bach Diep,
this is a broad spectrum that follows the health cycle of an individual, including preventive care, seeking diagnosis and treatment when symptoms arise, subsequent home monitoring, and finally health insurance coverage.
Preventive care, the initial stage, is of utmost importance as it enables early detection of illnesses, significantly reducing treatment costs. For example, if hepatitis patients are not diagnosed and treated promptly, they may progress to the cancerous stage. Cancer treatment is both expensive and challenging at this point. Hence, preventive care can lead to substantial savings in costs and effort for individuals.
According to FRT, the preventive care market is currently valued at billions of USD. Long Chau has recently ventured into vaccination services, establishing its first two centers in July 2023. Within less than a year, this vaccination chain has exceeded 50 centers, with plans to expand to 100 centers in 2024.
Long Chau also offers remote medical consultation services, or 247 home care services (to be launched soon). This service is anticipated to be highly beneficial for the elderly population. As Ms. Diep states, “younger generations prefer to live independently but remain concerned about their aging parents. Long Chau is here to address this concern.” With the 247 service, elderly individuals can simply take a picture of themselves each day, and FPT Long Chau will remotely assess their current health status and identify any potential issues. If any concerns are detected, FPT Long Chau will automatically notify their relatives.
