Shaanxi Huakang Pharmaceutical Announces Series B Funding Round, Plans to Expand to Over 1,500 Stores Within Two Years

VCBeat (WeChat ID: vcbeat), September 29 – Recently, Yikang Pharmaceutical formally signed a Series B financing agreement with Huakang Fund, sounding the charge for its comprehensive expansion into the Shaanxi market.Yikang Pharmaceutical’s Plan: The Number of Yikang Pharmaceutical Stores in Shaanxi Province Will Reach 1,500 by 2018.

According to VCBeat, Xi’an Yikang Pharmaceutical Chain Co., Ltd. was established in 2001 and has grown from a foundation of seven retail pharmacies into a specialized, large-scale pharmaceutical chain enterprise. Following rapid development in recent years, Xi’an Yikang Pharmaceutical has expanded into the largest pharmaceutical chain enterprise in western China, now operating 400 pharmacy stores, 200 large-scale low-price pharmaceutical supermarkets, and one major pharmaceutical wholesale division.As a leading regional pharmaceutical retail chain, Yikang Pharmaceutical achieves annual sales of RMB 6 billion.

In 2014, Yikang Pharmaceutical obtained the qualification certificate for online drug trading services, and its online pharmacy has now become a key area of strategic development.

In addition, two projects were released on the same day:First, Ping An Wanjia and Yikang Pharmaceutical signed a comprehensive strategic cooperation agreement; second, the Yishikang Health Management Service Center was established within Yikang Pharmaceutical’s chain stores.

Yishikang Health Management Service Center is an internally incubated project of Yikang Pharmaceutical Group, leveraging the advantages of Yikang’s pharmaceutical chain stores.Established “Yishikang Health Management Service Centers” in over 200 large pharmacies using a shop-in-shop model, facilitating their transformation into comprehensive health service hubs., comprehensively upgrade health services and membership management, while exporting this business and operational model as a complete store package for replication in chain pharmacies outside Shaanxi Province.

Yishikang has currently established partnerships with numerous large enterprises and institutions both within and outside the healthcare industry, including Baimei Gene, ZhongAn Insurance, and Bank of Xi’an, to jointly promote the development of the health sector.

This also signifies that Yikang Pharmaceutical Chain Pharmacies are upgrading from mere drug sales to comprehensive health service hubs, integrating services such as health management, chain outpatient clinics, internet healthcare, rehabilitation therapy, and sub-health management, thereby pioneering the model of integrated services for pharmacy chains.

Notably, Yikang Medicine had previously signed a strategic agreement with JD.com on the “Pharmaceutical Cloud Warehouse,” under which both parties will engage in comprehensive cooperation in the pharmaceutical distribution sector.

As the leading pharmaceutical enterprise in Northwest China, Yikang Pharmaceutical leverages its inherent strengths by actively utilizing capital, internet, and other resources to drive continuous expansion and optimize service quality.

From the perspective of the entire pharmaceutical retail industry, the drug retail sector is currently undergoing a period of transformation. The restructuring of the industrial ecosystem will profoundly impact the business environment, presenting both opportunities and challenges for major pharmacy chain enterprises.

Looking at the entire pharmaceutical retail market, there is a trend of declining growth in total sales, as well as positive news such as the separation of medicine and medical services and the outflow of prescriptions. Coupled with consumption upgrades and the transformation of pharmaceuticals towards health, the market environment for pharmaceutical retail is becoming increasingly volatile.

According to relevant data from the Ministry of Commerce, sales in the pharmaceutical retail market grew from RMB 127.5 billion in 2010 to RMB 332.3 billion in 2015, while the overall market growth rate declined from a peak of 47.8% to 8.6%.

According to the statistical bulletin released by the National Medical Products Administration, the pharmaceutical retail industry has undergone a trend of “decline in independent stores and rise in chain stores” over the past five years. While the total number of pharmacies increased by only about 20,000, the number of chain pharmacy outlets grew by nearly 70,000. In contrast, approximately 50,000 independent retail pharmacies disappeared. This shift is driven by both policy-related factors and industry-wide mergers and acquisitions. Regional leaders such as Yikang Pharmacy have been among the key initiators of this consolidation wave.

Data source: Statistical Bulletin of the China Food and Drug Administration; 2016 data are as of November.

Since the beginning of this year, the chain pharmacy sector has witnessed a second wave of initial public offerings (IPOs). Dashenlin successfully completed its IPO, achieving a market capitalization exceeding RMB 16 billion and earning its reputation as the “leading stock in pharmaceutical retail,” thereby providing significant momentum to the industry. Additionally, Shuyu Pingmin Pharmacy and Jianzhijia are currently in the IPO queue, demonstrating strong enthusiasm among pharmaceutical retailers for accessing the capital markets.

In summary, the pharmaceutical retail industry is undergoing rapid transformation. All stakeholders should fully leverage their resources to consolidate and amplify their competitive advantages.