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Pharmacy Starts Trial Sales of Infant Formula (20130821)

Pharmacy Starts Trial Sales of Infant Formula (20130821)

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Published by: CCM Intelligence on Aug 22, 2013
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11/17/2013

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Pharmacy starts trial sales of infant formula
Summary:
Some pharmacies initiate trial sales of infant formula, a move to develop a newsales channel which is being promoted by government policy.
Tags:
pharmacies, infant formula, LBX Pharmacy, GSP, sales channel, management systemHistorically,
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 localgovernment. Few applied for both, especially as Chinese consumers were accustomed tobuying infant formula from supermarkets. Recently, though, some pharmacies have started tosell infant formula in some cities, such as Guangzhou, Shanghai and Qingdao. However, thereare still obstacles in the development of this channel. A case in point is LBX Pharmacy, a well known national pharmacy chain, which held an eventon 10 July to formally announce that it is focusing on promoting formula sales. The chain hasestablished special counters for infant formula in 3 of its flagship stores in Guangzhou;10brands of infant formula are sold, including Abbott, Wyeth, Biostime etc. Most of those stockedare multinational brands, but the company intends to introduce more domestic infant formulabrands. In fact, LBX Pharmacy began to sell infant formula as long ago as 2009 in its flagshipstores nationwide, although at that stage it sold only one brand
 –
Biostime. Sales throughpharmacies accounted for about 8% of Biost
ime’s total sales in 2012 and Biostime believe this
channel will contribute significantly to its business in the future with more governmentpromotion in this sector.This trend is indeed promoted by government policy. According to Dairy Products China Newsissued by CCMin August, on 20 June, 9 ministries including the Ministry of Agriculture and the China Food and Drug Administration (CFDA) released Suggestions on Further StrengtheningInfant 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
requestsfor 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 theexperience from overseas markets, where pharmacies provide a key sales channel for infantformula.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 pilotprogram 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 CFDAwould formulate related management measures and supervision systems to refine theapproach.
 
Some pharmacies see this as an opportunity given government promotion of the channel andtheir GSP management, which is stricter than supermarkets, and the presence of nutritioniststo provide nutrition services and professional advice to consumers, rather than simply salesstaff 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. Supermarketssometimes run sales promotions on infant formula, which are attractive for customers. Inaddition, some pharmacies are unwilling to try the new approach; one factor is that, unlike withinfant 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 havetried 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 beenselling just 2 brands of infant formula (Mead Johnson and Abbott) in some of its flagship storessince 2010, but with only low sales to date.
Table Contents of  Dairy Products China News 1308: 
Prospects for Jiyuan Yili DairyInfant Formula Prices DecreaseMilk Supply Shortfall DebatePharmacy Starts Trial Sales of Infant FormulaDairy Imports Increase in H1NZ Starts Infant Formula Brand Register Government Boosts Livestock SubsidyYili Partners with Dairy Farmers of AmericaHunan Dakang Targets Dairy BusinessHuishan Dairy Expands Farming ActivitiesTianyou Dairy Launches New YoghurtQHT Performs Well in GOS
Dairy Products China News
, a monthly publication issued by CCM on 15
th
, offers you thelatest information on new market dynamics, company development, new products, technology,packaging and raw material supply, etc. It also focuses on the government
s direction andpolices, 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 astaff of more than 150 dedicated highly-educated professionals, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis, andConsultancy Service.

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