The use of private capital to fund chain drugstores will help
stimulate the country's medical reforms.
The first non-state chain drugstore, Jialun Glory National Chain
Drugstore, opened by Jialun Medicine Group based in Zhuhai,
Guangdong Province, is expected to begin business this month.
According to Zhao Yue, manager of the drugstore, the shop will
reduce unnecessary procedures and offer consumers low prices.
He
said the store will carefully select suppliers and establish an
efficient distribution system.
The company will open its first store in Zhuhai, but will soon
cover the whole of the Pearl River Delta and northern and western
parts of Guangdong Province.
Zhao said the chain store then plans to spread its business
nationwide, even to remote and poorer areas.
Just few weeks ago, 999 Group, China's largest pharmaceutical maker
also announced a plan to set up a chain of 5,000 to 10,000
drugstores across the country.
Industry insiders believe that similar moves by other drugstores
will trigger a round of price cuts in the industry, as well as
mergers and acquisitions.
"This is really what we want," said Yu Mingde, director of the
pharmaceutical department under the State Economic and Trade
Commission.
Yu
said the government was engaged in medicine distribution reforms to
slash the cost of drugs for consumers.
Encouraging the establishment of chain drugstores will be a focal
point of the ongoing reforms, Yu said.
He
said it is a major change for the sector to be open to private
investors rather than being monopolized by state-owned
enterprises.
"Competition in drug market will be heated as more and more
privately owned chain drugstores are set up," said Yu.
He
added about 70 percent of drugstores will belong to chains in two
or three years.
Yu
expects there to be 10 chain drugstore conglomerates within five
years, each with over 1,000 outlets and a turnover of 5 billion
yuan (US$604 million).
The commission plans to achieve this goal by expanding existing
drugstores, Yu said.
Drugstores with potential will be given the right to do business
across provinces.
Jialun Medicine Group and 999 Group were two of 50 enterprises to
get initial approval to set up chain stores.
Their establishment is expected to lower prices, which are
relatively high under the current system.
Chain store demand will make it easier to get medicine directly
from manufacturers to the shops, thus lowering costs and leaving
room for price cuts, a move long-awaited by Chinese consumers.
(People's Daily 04/04/2001)