The Japanese drugstore market, valued at US$103.65 billion in 2023 and projected to reach $140.82 billion by 2029, is experiencing rapid growth driven by digitalization, mechanization, e-commerce expansion, and medication therapy management (MTM), according to a recent report, posted on ResearchAndMarkets.com. Established domestic chains like Matsumoto Kiyoshi, Tsuruha Holdings, and Welcia Holdings dominate the market, with global players like Watsons intensifying competition. A key trend is the increasing role of digital technologies, offering consumers the convenience of online shopping and delivery services.
Japan’s drugstore market is highly fragmented, with a diverse array of players vying for consumer attention and market share. Established domestic chains such as Matsumoto Kiyoshi, Tsuruha Holdings, and Welcia Holdings dominate with extensive store networks and strong brand recognition. These chains often offer a wide range of products, including pharmaceuticals, cosmetics, and health-related goods. Many drugstore chains are expanding their footprint through organic growth and acquisitions.
A significant trend driving the market's growth is Medication Therapy Management (MTM), where pharmacists collaborate with patients and other healthcare professionals to optimize medication use and improve therapeutic outcomes. This is particularly relevant in Japan, where the aging population necessitates comprehensive medication management for elderly individuals with multiple chronic conditions. Drugstores are ideally positioned to provide MTM services, offering personalized medication reviews, adherence counseling, and medication synchronization programs, which can enhance patient understanding, reduce adverse drug reactions, and improve treatment adherence.
Welcia and Tsuruha Merger: a Strategic Move
In a landmark development, Japan’s two largest drugstore chains, Welcia Holdings and Tsuruha Holdings, announced plans to merge with major retailer Aeon early this year. This merger aims to create the world’s fifth-largest drugstore company and capitalize on the aging populations in China and Southeast Asia. This move is set to significantly reshape the Japanese drugstore landscape and accelerate their expansion into Asian markets.
Welcia Holdings President Tadahisa Matsumoto explained that they plan to leverage Aeon Group’s infrastructure to rapidly expand into Asia. Aeon, Welcia’s parent company, will acquire about 13% of Tsuruha’s shares from Hong Kong investment fund Oasis Management for approximately 100 billion yen (US$664 million), with plans to buy more shares in stages and complete the merger by the end of 2027. Welcia is expected to become a wholly-owned subsidiary of Tsuruha through share exchanges, with Tsuruha becoming a consolidated subsidiary of Aeon, according to Nikkei Asia's reporting.
Market Impact and Future Prospects
The merger positions Welcia and Tsuruha to combine their strengths and resources, creating a powerful entity with combined sales totaling 2.1 trillion yen, approximately a quarter of the 8.4 trillion yen Japanese drugstore market. This consolidation aims to capture a larger share of the Asian market, where the aging population presents significant opportunities for drugstore chains.
The Asian market, particularly in countries like Thailand, Vietnam, Indonesia, Malaysia, and the Philippines, is expected to expand significantly, with the over-the-counter drugs market projected to grow by more than 20% from 2023 to 2028. China’s market is also expected to grow by 14%. The merger will bolster Welcia and Tsuruha’s overseas expansion plans by providing purchasing power through economies of scale, aiding in regulatory compliance, and securing pharmacists.
Despite challenges such as differing pharmaceutical sales regulations across countries, the merger will enhance their ability to navigate these complexities. This strategic consolidation is seen as timely, considering Asia’s economic growth and aging population. However, overcoming hurdles like regulatory compliance and securing qualified pharmacists will be crucial for successful expansion.
Conclusion
The Japanese drugstore market is on a growth trajectory, driven by technological advancements and strategic mergers. The Welcia and Tsuruha merger, supported by Aeon, marks a significant milestone in the industry, positioning them to dominate both domestic and Asian markets. This consolidation not only enhances their market presence but also underscores the importance of technological integration and strategic alliances in navigating the evolving healthcare landscape. As the market continues to grow, drugstores will play an increasingly vital role in providing accessible and comprehensive healthcare services, meeting the needs of an aging population.
Source: ResearchAndMarkets.com, Nikkei Asia
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