Customers once flocked to low-cost pharmacies for their competitive prices, but now these businesses are losing their edge in Shanghai. Many are in a difficult position, struggling to survive in a fiercely competitive market.

Laojichuntang Pharmacy was the first low-cost drugstore to close in Shanghai last year. The two-story business used to attract plenty of customers with the wide range of medicines it sold at just 30 percent the price offered by its competitors.But the cash registers only sung for a short amount of time.

The Laojichuntang pharmacy is not the only one in a difficult situation. Poor business has forced the Shimin Pharmacy to sublet its second floor to other enterprises. And other cut-price drugstores like Jiuling are following suit.

Three years ago, the Kaixinren Pharmacy gained instant popularity when it became the first to sell cheap medicines in Shanghai. But the supermarket-like discount drugstores soon found that running their kind of business was not so easy in the big city.

Luo Yi is the vice general manager of Yifeng Pharmacy. "The investment cost is relatively bigger in Shanghai and it is not proportional to the return. This is because the rent and the human costs are bigger in the city. So our profits were far below our expectations."

The manager believes the local policies are another important obstacle to their development."More 70 percent of the customers in our store have medical insurance paid by the government. They come to our store only to buy the medicines not listed in the insurance, because they have to buy the other ones at government-appointed pharmacies to get the premium."

But other big pharmacies in Shanghai say the low-prices alone aren't enough to give them the competitive edge because of intensifying price wars. They also need professional service and a variety of products. Some stores have already started redrafting their development strategy to provide more diversified goods and services.

Source:佚名