27,000 pharmacies closed down in a year. What on earth has led to such a huge reduction in the number of pharmacies?

Over the years, with the improvement of public health awareness, pharmacies have become increasingly prevalent. In fact, pharmacies are among the most popular businesses on commercial streets in many county towns. However, media reports recently revealed that 27,000 pharmacies have closed down nationwide in the past year. What on earth has led to such a sharp reduction in the number of pharmacies?

I. 27,000 Pharmacies Reduced in One Year

According to reports from Chinanews, data recently released by the National Medical Products Administration shows that the number of domestic pharmacies continues to "shrink". The total number of pharmacies across the country dropped from 684,000 to 656,000 in 2025. Within one year, 27,000 pharmacies closed and exited the market.

However, according to the statistics, the number of domestic pharmacies reached 683,700 in 2024, and then dropped sharply in 2025. Among the 27,200 pharmacies with a net reduction, chain stores accounted for 76.6% of the reduction, and independent pharmacies only accounted for 23.4%.

Looking at the leading players, in the whole year of 2025, the total number of stores of six listed pharmacy chains including Dashenlin, Yifeng, Laobaixing, Yixintang, Shuyu Civilian, and Jianzhijia saw a net increase of 433, and the total net increase reached 1180 in the first half of 2026.

Among them, the number of stores of the three leading enterprises with a scale of over 10 billion yuan has taken the lead in restarting moderate expansion. In the first half of 2026, Dashenlin saw a net increase of 968 stores, Yifeng a net increase of 408, and Laobaixing a net increase of 202.

The number of stores of the other three is still shrinking. For the whole year of 2025, Yixintang had a net reduction of 386 stores, Shuyu Civilian a net reduction of 166, and Jianzhijia a net reduction of 65. In the first half of 2026, Yixintang had a net reduction of 240 stores, Shuyu a net reduction of 150, and Jianzhijia a net reduction of 8.

II. What on Earth Caused the Sharp Reduction of Pharmacies?

In the past year, the number of pharmacies across the country has unexpectedly decreased by 27,000. This figure looks quite alarming, and many people's first reaction is to worry about the difficulty of buying medicine, or that there is a major crisis in the industry. But if we calm down and look beyond the surface of this phenomenon, the situation does not seem to be like that. How exactly should we view this issue?

First of all, the pharmacy industry is entering a fully mature stage of market development. In the past few years, with the continuous awakening of public health awareness, residents' demand for daily medicine purchase and health care has steadily increased, making pharmaceutical retail widely recognized as a high-quality track with stable growth and low risk. Under such market cognition, a large number of capitals and individual entrepreneurs flocked into the pharmacy industry, setting off a nationwide boom of opening pharmacies. The most intuitive industry chaos is that in the core streets and community business districts of many cities, a large number of chain pharmacies and small independent pharmacies are densely distributed on road sections of only a few hundred meters, and even extreme situations where pharmacies are located next door and opposite to each other have emerged.

This unrestrained expansion is completely out of line with the basic scale of regional population and consumption capacity, and is essentially a homogeneous and inefficient involution. The market demand for pharmaceutical retail is relatively rigid and stable, and will not explode due to the increase in the number of pharmacies. After the limited customer sources are shared by a huge number of stores, the vast majority of small and medium-sized pharmacies have fallen into the dilemma of insufficient customer flow and meager revenue. In the previous expansion period of the industry, everyone held the mentality of "occupying sites and holding positions", and was willing to persist even if they operated at a tiny profit or even broke even.

However, with the complete exhaustion of market dividends and the total disappearance of industry increment space, the imbalance between supply and demand that was originally covered by expansion has been fully exposed. Industries with overcapacity will inevitably go through a clearance process. This sharp reduction in the number of pharmacies is essentially a rational return of the industry from over-saturation to supply-demand balance, which is a normal commercial law of market self-regulation.

Secondly, the changes in drug policies have also changed the underlying profit logic of pharmacies. With the full rollout and in-depth implementation of the bulk drug procurement policy, the entire logic chain of pharmaceutical distribution has been completely rewritten. In the past, due to the impact of procurement policies on the hospital side, the prices of many drugs were greatly reduced, which once made the market place hopes on "prescription outflow", believing that drugs that cannot be prescribed by hospitals will flow to retail pharmacies, thus driving the performance growth of pharmacies. But the reality is not ideal. The coverage of bulk procurement is expanding rapidly, and hospitals can provide more and more drugs covered by procurement, which further solidifies the path for patients to see doctors and get medicine in hospitals. The so-called "prescription outflow" is not as strong as expected, and is rather much ado about nothing.

Worse still, the varieties of drugs covered by bulk procurement are rapidly sinking to the retail end. This means that the high-margin and high-turnover conventional drugs that pharmacies used to rely on for survival now have their prices suppressed, and their profit margins are extremely compressed. The days of relying on information asymmetry and high price differences to maintain operations are gone forever. Many pharmacies, especially those independent stores that lack supply chain bargaining power, suddenly find themselves in an awkward situation: selling drugs covered by bulk procurement brings profits as thin as a blade, or even losses; if they do not sell these drugs, their customers will be diverted. It is no longer feasible to rely solely on selling drugs to make profits.

When drugs return to their therapeutic attributes and low-profit attributes, if pharmacies still stay in the simple role of "goods porters" and fail to build differentiated service capabilities, they will be eliminated by the market after the policy dividends disappear, which is only a matter of time. The collapse of this profit model is the core internal cause leading to the closure of a large number of pharmacies.

Thirdly, the development of instant retail for general health has further subverted the market logic. If bulk procurement cuts off the "financial resources" of pharmacies, then the instant distribution mode of Internet platforms directly revolutionizes the survival of offline pharmacies. Nowadays, when young people have minor health problems, their first reaction is often not to go out to find a pharmacy, but to open their mobile phones, search for drugs on O2O platforms, and the drugs can be delivered to their door in half an hour or even more than ten minutes. This extreme convenience has completely changed consumers' medicine purchasing habits.

The rise of instant retail for general health is essentially a dimensionality reduction attack on the "geographical location advantage" of traditional pharmacies. In the past, pharmacies relied on being close to communities and hospitals, occupying physical space. But now, Internet platforms integrate the inventory of all surrounding pharmacies to build a virtual, borderless super pharmacy, and the distribution network extends to every corner. Under this mode, consumers no longer rely on a specific pharmacy, but on the platform. This forces pharmacies to access the Internet and possess the capabilities of online operation, traffic acquisition and instant distribution.

For those traditional pharmacies that are used to waiting for customers passively and lack Internet operation thinking, this is almost a disaster. They are neither capable of building online platforms, nor understand how to do online marketing, nor can they afford the high distribution costs. When consumers' habits shift online, offline physical stores become simple "warehouses", losing their core value of directly facing consumers. Pharmacies that lack the profitability of Internet operation and cannot integrate into the instant retail ecosystem are naturally blocked from the new commercial civilization and are accelerated to be eliminated. This is an inevitable result brought by technological iteration and the change of consumption habits, and it is the cruel reality of the transformation between old and new driving forces.

Fourth, what is the future direction of the pharmacy market? In the long run, the core logic behind the sharp reduction of pharmacies is that China's pharmaceutical retail industry is undergoing a profound transformation, that is, shifting from extensive scale expansion to refined high-quality development. The days when people could make profits just by renting a storefront, placing several shelves and hiring several pharmacists are completely gone. Who are the targets of this round of reshuffling? Those inefficient stores that have long relied on medical insurance arbitrage, lack professional service capabilities, and simply want to make a quick profit in this industry.

The pharmacy of the future must not be just a "box for selling drugs", it must become a comprehensive health service terminal. It needs to be able to provide patients with medication guidance, chronic disease management, and even basic health testing services. Only this kind of service with temperature and professional barriers is the foundation for future pharmacies to survive. Because if you simply compete on price, you cannot beat e-commerce; if you compete on convenience, you cannot beat O2O; your only moat is the combination of offline physical scenarios and professional service connections.

Therefore, for all participants in the pharmacy market, complaining about the environment is useless. Only by recognizing the trend, completely breaking path dependence, and transforming from "drug selling thinking" to "service thinking", can they truly go through the cycle and gain a firm foothold in the future market.

This article is from the WeChat official account "Jiang Han's Vision Observation", and is authorized for release by 36Kr.