Competitive Landscape of Drugstore Chains in Japan by Region: Key Research Findings 2024

Domestic Drugstore Market: In Rural Areas, Top Companies Increase Market Share by M&A

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the domestic drugstore market, and found out the market trends, the trends at market players, and the future outlook.

Summary of Research Findings

In this research, we estimated the market size of domestic drugstores based on the sales of drugstore chain operating companies and analyzed the competitive landscape by region.
In view of the market landscape by eight major regions *, in Hokkaido, Tohoku, Shikoku, and Kyushu-Okinawa, major companies increased their market share by buyout of local drugstore chains. Meanwhile, such trend is not witnessed in Kanto, Chubu, and Kinki. In metropolitan areas such as Tokyo and Osaka, the drugstore chains are neck-in-neck in the competition for the market share.

* 8 regions: Hokkaido, Tohoku, Kanto (including Tokyo), Chubu, Kinki (including Osaka), Shikoku, Chugoku, and Kyushu-Okinawa.

Noteworthy Topics

Industry Keywords: “M&A,” “Drug Dispensing,” “PB Products,” & “Overseas Business”

There are four keywords in the drugstore market: “Mergers and acquisitions (M&A),” “drug dispensing business,” “private brand products (PB),” and “overseas business development.”

In the last few years, the market witnessed large drugstore chains expanding business scale by merger, and/or reinforcing food business by acquiring supermarkets. While the overall domestic retail market is shrinking, we presume that the mergers and acquisitions will continue to be an important method to increase market share, expand business domain, and streamline management.

Drugstores used to take distance from drug dispensing, mostly because dispensing pharmacies in close proximity to hospitals predominantly responded to the hospital's prescription demand. As a result, drug dispensing business of drugstore chain operators has long been by limited to (buyout of) dispensing pharmacies. Going forward, as the population ages and as the number of dispensing pharmacies within drugstores increases, the demand for drug dispensing in drugstores is expected to rise further. Although dispensing business (dispensing fees) is prone to the trends of National Health Insurance program and the revisions of Drug Pricing System, having competence in drug dispensing may give the drugstores a competitive advantage over grocery stores and discount stores.

Many drugstore chains also focus on the development of private brand (PB) products to increase gross profit and differentiate from other companies. In recent years, high-value PB products at high prices have also been attracting attention. We believe that PB business strengthens the drugstore's business as a manufacturing retailer (a retailer that manufactures products, i.e., handling everything from product planning to sales).

As per overseas business development, certain firms are focusing on Asian countries. Although overseas sales of drugstore chain operators remain minor in comparison to their domestic sales, companies are embarking on developing business areas where the population is projected to grow.

Research Outline

1.Research Period: January to March 2024
2.Research Object: Companies operating drugstore chains
3.Research Methogology: Face-to-face interviews by our expert researchers (including online interviews) and literature research

What is the Drugstore?

In this research, a drugstore indicates a self-service retail store that sells miscellaneous articles related to health and beauty, chiefly OTC and cosmetics, which also sells daily necessities and processed foods. The sales of prescription drugs sold at drugstores are included in the market size of drugstores, but the sales of companies that mainly operate dispensing pharmacies are excluded (here, a pharmacy is defined as a shop where medicinal drugs are prepared or sold on the basis of a prescription).

<Products and Services in the Market>

Drugstores, drugstore chain operating companies

Published Report

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