The chain operation and scale advantages hidden in China's pharmaceutical retail industry have started to unveil. In 2007, the pharmaceutical chain store market underwent strong undercurrent on a seemingly quiet surface. The development of PTO, the opening for business of pharmaceutical stores, the attempts made by foreign capital and domestic chain enterprises' efforts to compete for market all resulted in intense competitions in China's pharmaceutical chain store market.

In recent years, the government has issued a series of "orders for price cuts" and withdrawn the right to price for prescribed drugs. This has gradually reduced the profit margin in the pharmaceutical industry. Currently, less than 1/3 of the pharmaceutical chain stores are profitable, while 1/3 are on the break-even point and more than 1/3 are in losses. The new policies for OTC drug prices have also been subject to discussions by all parties. The government has withdrawn the pricing right over certain prescription drugs on the medical insurance catalogue. This may trigger off a new round of drug price cuts. In addition, there is serious product homogenization. Narrowed rug price gap make sales more difficult. Together with the crackdown on kickbacks and the fall in terminal expenses, competitions among pharmaceutical stores have intensified. This trend will be brought to a new height in 2008. Pharmaceutical businesses will be further concentrated.