国泰海通｜医药：龙头率先走出泥潭，供需两侧拐点已至

Core Viewpoint - The retail chain pharmacy industry is experiencing intensified competition due to weakened demand, leading to a gradual supply-side contraction. The operational turning point for leading pharmacies is emerging, with a focus on the growth potential in 2026 through both organic and external expansion [1]. Group 1: Investment Recommendations - The recommendation is to maintain an "overweight" rating, focusing on leading chain pharmacies that are expected to benefit from supply-side clearing and demand-side recovery. The retail scale of China's physical pharmacies (including drugs and non-drugs) is projected to reach 611.9 billion yuan in 2024, a year-on-year decline of 1.8% [2]. - In the first three quarters of 2025, the industry scale is expected to reach 449 billion yuan, a year-on-year decline of 1.9%, but showing signs of recovery with a September scale of 53.8 billion yuan, a year-on-year increase of 0.8% and a quarter-on-quarter increase of 6.7% [2]. Group 2: Demand Side Analysis - The demand side is showing weakened consumption, with significant declines in sales of consumer-oriented products like health supplements. However, essential consumer products such as traditional and Western medicines are experiencing a quarter-on-quarter recovery, with a retail scale of 43.7 billion yuan in September 2025, reflecting a quarter-on-quarter growth of 6.9% and a year-on-year growth of 2.2% [3]. - The sales proportion of drugs in pharmacies has increased by 0.8 percentage points year-on-year to 81.4%, while the proportion of health supplements has decreased by 0.5 percentage points to 3.8% [3]. Group 3: Supply Side Dynamics - The supply-side clearing is leading to an increase in the concentration of leading chain pharmacies. The number of physical pharmacies reached a new high in 2024, exceeding 700,000, a growth of over 60% since the end of 2014. The average customer service level per store has dropped to about 2,000 people per store [4]. - The number of stores in the industry decreased by 4,000 in Q4 2024 and by 3,000 in Q1 2025, with leading chain pharmacies showing lower closure rates compared to smaller chains, indicating a potential increase in industry concentration [4]. Group 4: Future Outlook for Leading Pharmacies - Leading chain pharmacies are expected to recover first, with growth driven by both organic and external factors. The recent rise in flu cases is anticipated to boost sales of respiratory-related medications, with flu positivity rates reaching 8.6% in the 47th week, significantly higher than the same period in 2022-2024 [5]. - The current number of direct stores for leading chains is about 10,000, representing only 1.5% of the industry, indicating that the industry is still in the early stages of structural change, with long-term prospects for increased concentration [5].