Pharmacity returns to expansion after turnaround, but Vietnam's pharmacy market has changed

Vietnamese pharmacy chain Pharmacity has secured a $50-80 million investment from impact investor LeapFrog Investments and is resuming store expansion after nearly three years of restructuring, but it now faces a market increasingly dominated by larger rival Long Chau.

The fresh capital, announced in May, is expected to support Pharmacity's plan to expand its network to 2,000-2,300 stores by 2030, more than double its current footprint. The company did not disclose the investment's disbursement schedule.

Pharmacity's return to growth comes after a prolonged restructuring aimed at restoring profitability following years of aggressive expansion that resulted in heavy losses.

Once Vietnam's largest pharmacy chain, Pharmacity operated more than 1,100 stores in September 2022. Rapid expansion in a still-developing market, however, outpaced improvements in operating efficiency, with annual losses eroding its capital base. The company subsequently reduced its network to fewer than 900 stores by the end of 2024 as it shifted its focus to improving profitability.

Following the restructuring between 2022 and 2025, Pharmacity said it returned to profit in the fourth quarter of 2025 and remained profitable in the first quarter of this year. The chain has since resumed expansion, increasing its network to 1,118 stores, roughly 300 more than at the end of 2024.

During Pharmacity's restructuring, Long Chau, owned by FPT Retail (HoSE: FRT), strengthened its position as Vietnam's largest pharmacy chain.

Long Chau operated 2,678 stores as of early June, around 2.4 times the size of Pharmacity's current network. It added a net 261 stores in the first five months of the year and plans to open around 450 outlets in 2026, while maintaining what management describes as a selective expansion strategy.

The scale advantage extends beyond store numbers. A larger network gives Long Chau stronger bargaining power with pharmaceutical suppliers, greater supply chain efficiency, lower operating costs and the ability to roll out new healthcare services across its nationwide footprint, making it more difficult for competitors to narrow the gap.

For pharmacy retailers, expanding store networks is not only about increasing sales but also about strengthening brand recognition, improving customer accessibility and building platforms for higher-value healthcare services such as vaccination, health consultations and digital health management.

An Khang remains a wildcard

An Khang, the pharmacy chain owned by Mobile World Investment Corp (HoSE: MWG), is also searching for a sustainable growth model.

The chain expanded rapidly to 500 stores in 2022 but was forced to scale back after persistent losses, ending 2025 with 382 outlets.

By the end of May this year, An Khang had increased its network to 416 stores. CEO Vu Dang Linh said the business was approaching break-even, with management expecting 2026 to be its first profitable year.

If profitability is achieved, An Khang could resume faster expansion in line with MWG's long-term ambition of becoming a market leader, potentially intensifying competition among Vietnam's three largest pharmacy chains.

For Pharmacity, however, the heavy losses incurred during its previous expansion suggest the company is unlikely to return to a growth-at-all-costs strategy. That is reflected in its target of 2,000-2,300 stores by 2030, well below its earlier ambition of operating 5,000 pharmacies by 2025.

Competition shifts beyond drug retailing

Vietnam's pharmaceutical market, excluding vaccines, was worth about VND213.6 trillion (more than $8 billion), according to brokerage VIX Securities. Market leader Long Chau accounts for only around 16% of the market, indicating that traditional independent pharmacies and smaller chains continue to dominate the sector.

The fragmented market suggests significant room for modern pharmacy chains to gain market share, although success will depend on operational efficiency and execution rather than expansion alone.

Tighter government oversight of counterfeit medicines and growing consumer demand for trusted pharmacy brands are also expected to support the continued growth of organized pharmacy retailers.

Competition, however, is increasingly shifting beyond drug sales as major chains seek to build broader healthcare ecosystems that generate higher revenue per customer.

Long Chau has developed what it calls a "five-petal" strategy, combining pharmacies with vaccination centers, digital healthcare services, diagnostic and laboratory testing, long-term care and medical equipment. Its vaccination business had expanded to 230 centers by early June and is expected to become profitable at the corporate level from 2027.

Pharmacity is also expanding beyond traditional retail through health consultation, diagnostic support and pharmaceutical benefits management services. New formats, including pharmacies integrated with clinics and in-store health consultation areas, are aimed at creating additional growth drivers beyond store expansion.

According to IMARC Group, Vietnam's healthcare market was valued at about $19 billion in 2024 and is projected to reach $25.8 billion by 2033, substantially larger than the country's pharmaceutical market.

Against that backdrop, industry competition in the coming years is likely to be determined not only by the pace of store expansion but also by companies' ability to build integrated healthcare ecosystems, improve operating efficiency and increase customer lifetime value.

For Pharmacity, the new investment and renewed expansion mark an important step in its recovery. Whether it can narrow the gap with the market leader will depend on its ability to sustain profitability while scaling up - an operational challenge that proved difficult during its previous period of rapid growth.