FPT Digital Retail JSC, widely known as FPT Retail, is rapidly expanding its Long Chau pharmacy network to cement its position as the largest medicine retailer in Vietnam while other rivals are downsizing operations or slowing expansion.
Despite economic headwinds, FPT Retail opened 560 pharmacies in 2023, raising the total number of Long Chau outlets to 1,497, becoming the No.1 pharmacy chain in the country and gaining a larger market share.
This rapid expansion has helped FPT Retail shares, listed on the Ho Chi Minh Stock Exchange (HoSE) as FRT, rally over the past fortnight from VND99,000 to an all-time high of VND125,000 ($5.12) apiece on February 7, the last trading day before the one-week Lunar New Year break.
FRT prices have more than doubled compared to May 2023 when they were traded at around VND54,900.
Meanwhile, Pharmacity, which used to be the largest medicine retailer as of mid-2022 with over 1,100 stores, had reduced its network to below 1,000 outlets as of end-March last year.
Similarly, the An Khang pharmacy chain of Mobile World Investment Corporation (listed on the HoSE as MWG) has shown signs of losing steam, closing 2023 with 527 stores after swiftly expanding its network to 500 outlets in 2022.
FPT Retail is targeting not only urban areas but also capitals of districts nationwide where rentals and labor costs are low, helping it reach the break-even point faster. As medicines are of vital need, consumer spending does not alter much during an economic crisis, according to the company’s leadership.
The medicine segment now accounts for around 60% of FPT Retail’s revenue while the percentage of rivals Pharmacity and An Khang is below 50%. Its diversified portfolio has helped FPT Retail gain market shares for prescription medicines.
In 2023, its medicine business brought about VND15.88 trillion ($650 million) in revenue, up 66% year-on-year. This business also helped grow FPT Retail’s 2023 revenue by 6% year-on-year while the firm's ICT business saw its revenue fall 22%.
Given its expansionary phase, the pharmacy network contributed nearly VND150 billion to FPT Retail, tripling from 2022. This business earned a profit of nearly VND5 billion ($204,700) in 2021, its first profitable year.
According to SSI Research, FPT Retail has the ambition to open 2,500-3,000 Long Chau stores in the next few years, or double the current number. With larger scale, the chain will have more advantages in finding direct suppliers and optimizing the efficiency of warehouse and logistics facilities, thereby gradually improving profits.
The average revenue of a pharmacy was nearly VND1.1 billion ($45,000) per month during 2023. Meanwhile, a store is only profitable when its monthly revenue reaches VND500-600 million ($20,470-24,570), according to chairwoman of FPT Retail Nguyen Bach Diep.
Expanding beyond pharmacies
As per its development strategy, FPT Retail, with 46.54% owned by tech giant FPT Corp. and 7.96% by a Dragon Capital-led group, aims to introduce a series of new healthcare services and products to increase revenue per pharmacy, Diep revealed.
In 2023, FPT Retail incorporated vaccination services to the Long Chau pharmacy chain. The vaccine coverage rate in Vietnam is only about 4% of the population while that in other regional countries is 15-30%. Therefore, the growth room for vaccination services remains huge.
Since its inception last July, FPT Retail has opened 30 vaccination centers in a large number of provinces and cities like Hanoi, Ho Chi Minh City, Nghe An, Bac Ninh, Phu Yen, Tay Ninh, and Bac Giang.
Notably, on January 29, the Long Chau chain and Asia's leading private healthcare group IHH Healthcare signed a strategic cooperation deal with the goal of bringing advanced medicine closer to Vietnamese people.
On this occasion, Long Chau announced its expansion into the Vietnamese healthcare ecosystem. As such, besides its medicine retail business, the chain operator will gradually build an ecosystem to serve medical needs from disease prevention to treatment, especially complicated diseases such as cancer that require advanced medical techniques.