In recent years, the number of pharmacies in China has been continuously expanding, going from 400,000 in 2010 to 660,000 in 2024. This rapid growth has led to an oversupply of pharmacies in the market, resulting in a significant number of them closing down. Industry insiders estimate that in 2025, between 50,000 and 100,000 pharmacies could shut their doors.
According to a report by the health sector influencer “Health Awareness Bureau” on March 8th, based on data from Zhongkang, in the past decade, the number of pharmacies in China surged from 400,000 in 2010 to 660,000 in 2024. However, this rapid expansion has led to an oversaturation of the pharmacy market, leading to a recent wave of pharmacy closures. Zhongkang’s data predicts that in 2024, approximately 39,000 retail pharmacies in China closed, with a closure rate of 5.7%, resulting in an average of 107 pharmacies shutting down daily.
As 2025 progresses, the nationwide trend of pharmacy closures is intensifying, with industry experts projecting that between 50,000 and 100,000 pharmacies may close this year.
Zhongkang is a professional data service institution focusing on the Chinese medical and health industry, dedicated to providing market research, data analysis, and consulting services to the sector.
The top-ranked national chain pharmacy, Guoda Pharmacy, has recently deregistered five companies in the span of two months, affecting multiple pharmacies.
The main reason for pharmacies shutting down voluntarily is the tightening of medical insurance policies. Over the past year, authorities have been cracking down on insurance fraud, with pharmacies being a key target. In order to survive in this competitive landscape, many chain pharmacies have halted expansions. For example, Daisenlin has announced a pause in expanding to new provinces. Guoyi Pharmacy has chosen to close unprofitable stores, with five companies under Guoda Pharmacy being deregistered in recent months, affecting hundreds of pharmacies.
Additionally, new policy changes have made it more difficult for new pharmacies to join the medical insurance networks. Recently, regions like Shandong and Fujian have stopped accepting new pharmacy applications for medical insurance agreements. Without the support of medical insurance payments, the future looks even bleaker for newly opened pharmacies.
Xie Zilong, Chairman of Laobaixing Pharmacy, mentioned that before 2015, especially before 2010, every pharmacy in the industry was profitable. Whether small family-owned stores or national chains, they all made money.
However, in recent months, the Guangdong Provincial Pharmaceutical Supervision Bureau has issued several notices of pharmacy deregistrations, affecting over 40 pharmacies in Foshan, Zhanjiang, Maoming, Qingyuan, Heyuan, and other areas.
Nationally, provinces like Shandong, Jiangxi, and Jiangsu have seen multiple pharmacies applying for voluntary deregistration.
Chain pharmacies are also facing tough times. On January 17th, Guoyi Pharmacy announced its performance forecast for 2024, with an expected net profit decrease of 52.48% to 64.92% compared to the previous year. Guoda Pharmacy plans to set aside around 876 million to 1.07 billion RMB. Guoyi Pharmacy stated that various factors, including outpatient coordination and medical reform policies, significantly impacted consumer behavior and led to a decline in foot traffic at medical retail stores. Intensified competition among pharmacies and the diversion of sales to online medical e-commerce platforms have contributed to an overall industry downturn.
Among the six largest privately owned chain pharmacies listed in China, three have disclosed their 2024 annual performance forecasts, showing substantial decreases in net profits. For example, Jianzhijia expects a net profit reduction between 68.78% and 65.50% in 2024, while Yixintang predicts a profit decline of 81.8% to 72.7%, and Shuyu Pingmin is facing a loss of 120 million to 220 million RMB.
The main reason behind the current wave of pharmacy closures starting in 2024 is the tightening of medical insurance policies. Medical insurance reimbursements are a significant source of income for pharmacies, and in the past, having a medical insurance qualification was crucial for their survival. However, in 2024, regulatory authorities began strict oversight of pharmacies, which were included in routine medical insurance inspections for the first time. In May 2024, Yixintang was directly summoned by the National Medical Insurance Bureau. In October, four pharmacies in Harbin were exposed for insurance fraud, with fake prescriptions totaling over a billion RMB.
In the second half of last year, the medical insurance department signaled a tightening of pharmacy qualification requirements. Since 2025 began, many regions have taken action. On February 24th, Heze Medical Insurance in Shandong issued a notice to suspend the acceptance of new medical institution applications for medical insurance points, starting from March 1st. The following day, the Ningde City Medical Insurance Bureau in Fujian also released a similar announcement. Without medical insurance support, the survival of weaker pharmacies in the future will be even more challenging.