Some pharmacies initiate trial sales of infant formula, a move to develop a new sales channel which is being promoted by government policy.

1. Pharmacy starts trial sales of infant formula
Summary: Some pharmacies initiate trial sales of infant formula, a move to develop a new
sales channel which is being promoted by government policy.
Tags: pharmacies, infant formula, LBX Pharmacy, GSP, sales channel, management system
Historically, China’s pharmacies have not sold infant formula. This reflected a regulatory
situation in which they needed a Pharmaceutical Trade License from the local Food and Drug
Administrations, while retailers selling food required a Food Circulation Permit from local
government. Few applied for both, especially as Chinese consumers were accustomed to
buying infant formula from supermarkets. Recently, though, some pharmacies have started to
sell infant formula in some cities, such as Guangzhou, Shanghai and Qingdao. However, there
are still obstacles in the development of this channel.
A case in point is LBX Pharmacy, a well known national pharmacy chain, which held an event
on 10 July to formally announce that it is focusing on promoting formula sales. The chain has
established special counters for infant formula in 3 of its flagship stores in Guangzhou;10
brands of infant formula are sold, including Abbott, Wyeth, Biostime etc. Most of those stocked
are multinational brands, but the company intends to introduce more domestic infant formula
brands. In fact, LBX Pharmacy began to sell infant formula as long ago as 2009 in its flagship
stores nationwide, although at that stage it sold only one brand –Biostime. Sales through
pharmacies accounted for about 8% of Biostime’s total sales in 2012 and Biostime believe this
channel will contribute significantly to its business in the future with more government
promotion in this sector.
This trend is indeed promoted by government policy. According to Dairy Products China News
issued by CCM in August, on 20 June, 9 ministries including the Ministry of Agriculture and the
China Food and Drug Administration (CFDA) released Suggestions on Further Strengthening
Infant Formula Safety and Quality. One of the measures requires trying out special counter
sales of infant formula in pharmacies – this attracted the public’s attention and led to requests
for further information about the policy. In this context, the CFDA released further details,
indicating that the idea of trying out sales of infant formula in pharmacies is based on the
experience from overseas markets, where pharmacies provide a key sales channel for infant
formula.
The channel is expected to better guarantee the safety of infant formula because of the strict
management system (with Good Supply Practices for Pharmaceutical Products, “GSP”) under
which pharmacies operate. The details noted that the CFDA would gradually carry out a pilot
program in this sales channel, and that any pharmacy which receives a circulation license for
infant formula can set up a special counter in this way. Based on the pilot results, the CFDA
would formulate related management measures and supervision systems to refine the
approach.

2. Some pharmacies see this as an opportunity given government promotion of the channel and
their GSP management, which is stricter than supermarkets, and the presence of nutritionists
to provide nutrition services and professional advice to consumers, rather than simply sales
staff in supermarkets. However, there are obstacles in promotion of this sales channel.
Customers are still used to buying infant formula through traditional channels in China,
especially in supermarkets, so it may be hard for them to change this habit. Supermarkets
sometimes run sales promotions on infant formula, which are attractive for customers. In
addition, some pharmacies are unwilling to try the new approach; one factor is that, unlike with
infant formula, pharmacies typically get discounts of 30-40% on the prices of healthcare
products, making them more profitable for them. It’s expected that more regulations will be
issued to lay out how formula sales though pharmacies will work in practice.
A number of pharmacies are also likely put off because in the past some such chains have
tried this channel before and then given it up or ended up struggling to make enough sales.
For example, Da Shen Lin Pharmacy, another well known national chain pharmacy, has been
selling just 2 brands of infant formula (Mead Johnson and Abbott) in some of its flagship stores
since 2010, but with only low sales to date.
Table Contents of Dairy Products China News 1308:
Prospects for Jiyuan Yili Dairy
Infant Formula Prices Decrease
Milk Supply Shortfall Debate
Pharmacy Starts Trial Sales of Infant Formula
Dairy Imports Increase in H1
NZ Starts Infant Formula Brand Register
Government Boosts Livestock Subsidy
Yili Partners with Dairy Farmers of America
Hunan Dakang Targets Dairy Business
Huishan Dairy Expands Farming Activities
Tianyou Dairy Launches New Yoghurt
QHT Performs Well in GOS
Dairy Products China News, a monthly publication issued by CCM on 15
th
, offers you the
latest information on new market dynamics, company development, new products, technology,
packaging and raw material supply, etc. It also focuses on the government’s direction and
polices, helping you get the whole picture of the industry.
About CCM
CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a
staff of more than 150 dedicated highly-educated professionals, CCM offers Market Data,
Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis, and
Consultancy Service.

3. For more information, please visit http://www.cnchemicals.com.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou
510070, China
Tel: 86-20-37616606
Email: econtact@cnchemicals.com