Pharmaceutical retail, 5 ways to survive the "labor pain" of transformation

Having witnessed the glory of the "golden decade" of the pharmaceutical retail industry, and accustomed to seeing the upward performance growth curve of listed chains, I was shocked
to see a sharp decline in the half-year net profit of listed chains, including Yixintang, which is known for its steady operation.

 

However, there is no long journey that is always smooth sailing, and there will be no "winning generals" whose performance has been growing rapidly, and temporary business fluctuations and performance decline have not changed the momentum of the continuous improvement of the industry and the sustainable development of
the chain.
After a short "labor period", listed chains will return to the growth channel and usher in a "bright period"
of better and faster development.

 

The labor pains are only temporary

 

A chain that aims to build a century-old foundation will inevitably experience business fluctuations, growth stagnation, profit decline and even losses in the process of starting a business
.
Especially during the period of industry transformation, major changes have taken place in industrial policies and operating environment, and enterprises themselves choose to transform and upgrade
with difficulty.
This stage is known in the industry as the "labor period"
.

 

The "labor pain" of the listed chain began to appear
in the third and fourth quarters of 2021.
Repeatedly affected by the epidemic, the growth rate of listed chain revenue has slowed down significantly, and the growth rate of net profit has fallen off a cliff, giving the pharmaceutical retail industry, which has been growing steadily and rapidly
, a head-on.

 

This year, the biggest unfavorable factor was that the flow of chain passengers was seriously affected, and the operating pressure increased
unprecedentedly.
Secondly, the "four types of drugs" in some cities and regions have been controlled or removed, and some stores of many chains have been temporarily closed
.
Third, in the previous year, enterprises and institutions purchased a large number of reserves of disinfection and protective equipment, and sales were considerable; In 2021, this factor no longer exists, but instead creates a high base
.
Finally, the impact
of the replacement of the national medical insurance system and the expenditure of equity incentives of some listed chains is superimposed.
These factors peaked in the second half of 2021
.

 

However, in the transformation of the industry, the "labor pain" is only temporary and short-lived, after actively adjusting and adapting, the adapted chain can quickly go through the "labor period" and continue healthy development, and the chain that cannot respond quickly may be sluggish or forced to withdraw from market competition
.
Several listed chains undoubtedly belong to the
former.

 

After the first negative growth in the single-quarter profit in the second quarter of 2021, the growth rate in the third quarter fell by 36.
6% year-on-year, until the net profit attributable to the parent in the fourth quarter was 27.
1 million yuan, a year-on-year decrease of 113.
89%; Deducted non-net profit loss of 41.
8479 million yuan, a year-on-year decrease of 123.
92%, after which the advantages of Da Shenlin such as standardized operation, strong execution, rooted in "two broads", and outstanding profitability were reflected and reversed, and the revenue in the first quarter of 2022 increased by 15.
2%, the net profit attributable to the parent increased by 12.
8% year-on-year, the single-quarter revenue increased by 26.
2% in the second quarter, and the net profit attributable to the parent increased by 8.
2%
year-on-year.
Like Da Shenlin, the performance of several listed chains in the first half of 2022 began to show a quarter-by-quarter recovery
.

 

Five solutions to break the game

 

The fact that the indicators have declined or even lost money in the quarter has sounded the alarm for listed chains, and listed chains must do the following things to get out of the "labor period"
.

 

First, scientifically and efficiently respond to the impact
of the normalization of the epidemic on the industry and the chain.
It mainly includes two aspects: first, do a good job in epidemic prevention and normal operation of all stores under the state of frequent outbreaks of the epidemic; The second is to actively use brains to launch live store promotions, and strive to increase revenue while reducing costs
.
On the evening of September 13, Kenzhijia made it clear in the risk warning that it actively adjusted its commodity strategic planning, and continued to implement the operation policy
of cost control and efficiency such as reducing rent and controlling fees, improving the efficiency of promotional activities, and increasing gross profit margin.

 

Second, actively practice the new retail model, strengthen the sales of proprietary Chinese medicines, gradually expand its own brands, and actively carry out diversified operations
.
The gross profit margin of scarce medicines, proprietary Chinese medicines, ginseng mushrooms, various pieces and medical devices is relatively high, which can not only improve the profitability of the chain, but also meet the personalized needs
of customers.

 

Third, vigorously carry out O20 and B2C online business to lay the foundation
for online and offline integration.
In recent years, the online business has expanded rapidly, and the growth rate is several times that of offline, and it has become a must for
chains at all levels.
Seize O20 and B2C online business opportunities to make up for the loss
of staggered offline business.

 

Fourth, actively carry out new businesses such as "dual channels", chronic diseases, and long prescriptions, and actively undertake the "feast"
of prescription outflow.
These new businesses may not contribute much to the chain's net profit in the short term, but they belong to early intervention, stuck and laying the foundation, and some cities have begun to include eligible designated pharmacies into the scope of outpatient overall protection, and one of the criteria for continuous selection is "dual channel"
.
Solid basic work such as professional services and outpatient overall protection is a mandatory course
for chain pharmacies to integrate into the medical insurance chain in the future.

 

Fifth, store M&A and expansion is an inevitable choice
for listed chains to become bigger and stronger.
In the process of M&A expansion, we must put the prevention and control of M&A risks in the first place, in addition to doing due diligence in advance and reasonably determining the valuation of the M&A target, we must also scientifically design the M&A plan, fully mobilize enthusiasm, ensure the success of post-M&A integration, and eliminate high goodwill risks
.