Guangzhou discount drugstores facing bankruptcy
17/10/2003 18:15
Discount drugstores in Guangzhou reported sharp sales declines after only
one year of operation, with some facing bankruptcy, eastday.com reported
today.
After the first discount store debut in the city in May last year, a
growing number of discount drugstore opened in Guangzhou.
Except for a few
well-run stores, most discount drug stores in Guangzhou are losing money.
The hospital monopoly of the drug industry with a total value of more than
10 billion yuan (US$1.2 billion) is given as the main reason for the sluggish
business in local drugstores, said an industry analyst.
Up to 85 percent of
drugs are currently sold in hospitals of Guangzhou, and more than 4,000
drugstores, including ten-odd discount drugstores, only account for 15 percent
of the drug sales, the analyst pointed out.
Moreover, excessive high
operating costs of discount drugstores limits their development, the analyst
said. For example, monthly rents for such stores as Laobaixing, Tebie and
Zhufuni reached 250,000 yuan, 450,000 yuan and 100,000 yuan
respectively.
Such drugstores, with higher costs, have to add more outlets in
order to cut their overall costs.
The China Poly Group Corporation, which
opened a discount drugstore in Guangzhou more than ten days ago, announced on
October 14 plans to invest 50 million yuan by adding four such stores in the
city within two months.
A discount drugstore usually has only 6-15 percent
profit, making it hard to become profitable in a short run.
Some discount
drugstores, together with a great number of ordinary drugstores, will become
bankrupt by the middle of next year, a medical expert
predicted.
Wendy Zhang/ Shanghai Daily news
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