Xi'an Yikang Secures Strategic Investment from CVC Capital to Advance Smart New Retail-Based Professional Health Services

VCBeat has learned that Xi'an Yikang, one of the largest pharmacy chain groups in Northwest China, recently completed a strategic financing round. The round was exclusively invested by CVC Capital Partners, with Haoyue Capital serving as the exclusive financial advisor.

Xi'an Yikang, established in 2001 and headquartered in Xi'an, is one of the largest pharmacy chain groups in Northwest China. With over 1,600 stores across Shaanxi, Hebei, and Ningxia, it serves more than 12 million members and holds a leading position nationwide in O2O and DTP pharmacy layouts.

With the support of CVC Capital, Xi'an Yikang Pharmaceutical Chain Co., Ltd. will expand its pharmaceutical product portfolio, enhance distribution and sales efficiency, strengthen its digital network infrastructure, and continuously scale up its business through organic growth and consolidation.

China’s pharmaceutical market has seen steady growth, with its absolute value exceeding RMB 2 trillion. Although public hospitals remain the primary channel for drug sales, the share of retail channels has been continuously rising. With the implementation of multiple policies—including zero mark-up on drugs in public hospitals, assessments of the drug-to-revenue ratio, restrictions on hospital pharmacy outsourcing, and medical insurance cost containment—prescription outflow has become a clear trend, allowing the retail pharmacy market to benefit from this wave of policy dividends.

The retail pharmacy industry is characterized by pronounced economies of scale and significant capital dependence. In the current market environment, leading pharmacy chains possess stronger financing and expansion capabilities. Coupled with tighter industry regulations, the introduction of tiered management policies for retail pharmacies, and stricter requirements for pharmacist qualifications and medical insurance accreditation, independent single-store pharmacies are facing increasing challenges. Consequently, the pace of industry consolidation toward leading pharmacy chains is accelerating. According to data from the Annual Statistical Report on Drug Supervision and Administration (2020), the number of chain pharmacy enterprises in China decreased by more than 400 in 2020, while the number of their retail outlets increased by over 23,000.

Professional Competence, Diversified Services, Online Presence, and Digitalization: The Four Core Elements Determining the Future Landscape.

Professional capabilities and diversified services complement each other, serving as a powerful tool to capitalize on the policy dividends of prescription outflow.Xi’an Yikang has established a network of over 30 DTP (Direct-to-Patient) pharmacies, obtaining operating licenses directly from pharmaceutical manufacturers. Its product portfolio primarily consists of new and specialized drugs, high-value medications, and originator drugs. Given the stronger focus of DTP pharmacies on chronic and complex diseases, Yikang requires the provision of more meticulous pharmaceutical care services to patients, including medication consultation and guidance, patient education, and comprehensive follow-up feedback. This approach helps bridge the gap with patients and has garnered increasing attention from manufacturers. In its future development, Yikang Pharmaceutical’s DTP project will continue to uphold patient-centric professional services. While enhancing service quality, it will also strengthen professional knowledge acquisition. Leveraging the integration trend among hospitals, pharmaceutical companies, and pharmacies, along with diversified marketing channels, Yikang will strategically position itself both within and outside hospital settings. It aims to continuously improve and optimize store-level services for the pharmaceutical industry, patients, and physicians, thereby meeting consumer demands.

Digitalization and Online Layout Are the Infrastructure Capabilities for Achieving Leapfrog Development.Xi’an Yikang has achieved deep engagement with over 12 million members through its self-developed “Yikang Daojia” app and WeChat mini-program. The company’s proprietary app already offers services such as health education, prescription medication dispensing, and daily healthcare products, with an O2O service coverage rate of 70%. Following this round of financing, the company will further increase its digital investments to strengthen its position as a smart retail pharmacy brand with nationwide influence in China.

Mr. He Yu, Chairman of Xi'an Yikangstated, “We thank CVC Capital for its trust in Yikang as a strategic shareholder. This financing will bring about strategic transformation to Yikang’s development. Our offline stores remain consumers’ closest health partners, and we will continue to leverage digital operations and smart new retail tools to reward our customers with multi-dimensional services integrating ‘medical care, pharmaceuticals, and wellness.’ Xi’an Yikang delivers more precise and convenient service experiences, safeguarding the healthy lives of consumers in Shaanxi Province and across China.”

Mr. Xu Jiong, Senior Managing Director at CVC CapitalCVC Capital expressed optimism about the prospects of China’s pharmaceutical retail market, driven by the deepening healthcare reforms, accelerating population aging, and the growing public emphasis on health and high-quality living. The firm particularly highlighted the efficiency gains enabled by digitalization and the economies of scale resulting from industry consolidation. “We are delighted to leverage our extensive experience in the retail sector and advanced corporate management principles to support Yikang in its technological and industrial upgrading, thereby continuing to better serve the vast consumer base in China.”

Mr. Ding Yameng, Founding Partner of Haoyue CapitalIt was stated that 2021 was a landmark year for the development of chain pharmacies, with frequent announcements of substantial financing, mergers and acquisitions, and initial public offerings (IPOs). The concentration of the pharmaceutical retail sector continued to rise, with the head effect becoming increasingly pronounced. We were honored to provide financial advisory services to Xi'an Yikang Pharmaceutical Chain Co., Ltd. in this dynamic era, enabling the company to accelerate its strategic layout with the support of renowned foreign-funded funds, deliver superior pharmaceutical care and health services to consumers, and we look forward to the company’s more rapid participation in the capital markets.

Xi'an Yikang Pharmaceutical Chain Co., Ltd. was established in 2001 and currently operates over 1,600 chain pharmacies across China, ranking 8th on the Top 100 Chinese Pharmacy Chains list. Upholding its corporate mission of “Delighting the Public, Promoting Public Health,” the company has strategically positioned itself around an integrated model of medical care, pharmaceuticals, and wellness. Its business segments include professional DTP (Direct-to-Patient) pharmacies, Putaihe Traditional Chinese Medicine Clinics, the Yikang online platform, specialized chronic disease management services, a value-added services zone, and the “Yikang to Home” mobile app. Committed to delivering more precise and convenient service experiences, Yikang safeguards the healthy lives of consumers in Shaanxi Province and throughout China.

CVC Capital has been active in Asia since 1999 and is one of the largest, longest-established private equity firms in the region with the most extensive regional operational network. CVC Capital’s Asian private equity strategy focuses on control and co-investment opportunities in high-quality companies, typically with enterprise values ranging from $250 million to $1.5 billion.

Haoyue Capital was founded in January 2014, committed to becoming a bridge connecting China’s healthcare industry with capital. Its research and transaction coverage spans multiple sub-sectors, including biopharmaceuticals, innovative medical devices, in vitro diagnostics (IVD) and precision medicine, healthcare services, and smart healthcare. The Haoyue Capital team comprises senior investment bankers with extensive experience in China’s healthcare sector. It closely monitors market dynamics and investment trends in healthcare, publishing weekly investment reports and thematic research studies that interpret new policies and emerging frontiers from the Haoyue perspective.