Retail pharmacy sector dispenses growth

WITH over 3,500 outlets nationwide and more than a dozen major players vying for market share, the retail pharmacy sector might appear to be under significant pressure.

However, the industry is thriving with corporate activity, as seen in the planned privatisation of Apex Healthcare Bhd and the upcoming initial public offering (IPO) of the Big Caring group. While Apex Healthcare is not a retail pharmacy chain, it plays a crucial role in the sector as a manufacturer and distributor of pharmaceutical products.

Big Caring is set to become the only listed retail pharmacy, with an estimated market capitalisation of RM7bil to RM8bil, according to banking sources.

The IPO is expected to be priced at around 35 times its historical earnings.

Investors who need to sell their holdings in Apex Healthcare should consider replacing them with Big Caring, assuming the valuations align.

Apex Healthcare’s buyout price of RM2.64 per share corresponds to a price-to-earnings (PE) ratio of approximately 22 times for financial year 2026 (FY26).

Despite intense competition in the local market, the sector has seen steady expansion.

Many players have evolved beyond their traditional roles as medicine dispensers. Brands like Guardian, Watsons, Big Caring and Health Lane now offer a range of services, including digital health solutions, clinical consultations and lifestyle products.

The growing number of stores nationwide underscores the strong demand for health, beauty and personal care products.

For example, Watsons Malaysia operates over 500 stores and plans further expansion to meet increasing demand.

Watsons Malaysia is part of the AS Watson Group, founded in 1841 in Hong Kong, making it one of the world’s longest-standing companies. The group operates as a subsidiary of CK Hutchison Holdings, based in Hong Kong, and is listed on the Hong Kong Stock Exchange.

In its 2025 interim report, the group’s retail division, focused on health and beauty (H&B), reported total revenue of HK$98.84bil for the six months ended June 30. Asia, excluding China, saw a 21% year-on-year revenue increase in the H&B segment, rising to HK$20.49bil in 2025 from HK$18.3bil in 2024.

This growth was driven by strong market performance across Asia, with Malaysia and the Philippines highlighted for their exceptional store sales.

Another prominent retail brand, Guardian, is also a common sight in local malls.

Guardian Malaysia has established a strong presence with about 550 outlets nationwide.

Marketing director Anna Ng highlights that the brand, already boasting one of the country’s most extensive retail networks, will shift its focus towards enhancing quality rather than expanding store numbers.

“We will expand strategically while upgrading existing stores with modern designs and advanced technologies to deliver a superior shopping experience.

“Our goal is to create more engaging, expert-led experiences,” she says.

Guardian Malaysia is also prioritising omnichannel convenience, ensuring customers enjoy a seamless shopping experience whether in-store or online.

Creador founder and CEO Brahmal Vasudevan attributes the rapid growth of such brands to population growth, among other key factors.

Malaysia is an ageing society, which means there is a growing demand for medicine.

Additionally, as more people achieve higher affluence, they gain greater spending power. In the competitive retail pharmacy sector, where margins are typically low at 3%, efficiency is crucial.

Even for family-owned businesses like Unicare Pharmacy (M) Sdn Bhd, there is optimism despite facing competition from larger outlets with stronger brand awareness.

The company, which originated as a Chinese traditional medicine store called Tong Woh Medicine Hall in 1968, now operates a single outlet in Petaling Jaya, continuing to serve its loyal customers.

Pharmacist Loh Jia Shern explains how Unicare distinguishes itself in the highly competitive retail pharmacy industry.

Its strategy focuses on a personal, people-centric approach to customers, competitive pricing, and unique product offerings.

Loh also emphasises staying ahead by keeping an eye on emerging trends and products to ensure offerings remain fresh and appealing.

Loh believes that family-owned businesses can remain competitive by staying true to their core values and making small, meaningful adjustments to align with evolving market trends and consumer needs.

While mergers and consolidations have been discussed, they have never been a priority for the business.

In contrast, Malaysian Pharmacists Society president Prof Amrahi Buang does not support full privatisation.

He notes that the pharmacy sector has seen mergers, particularly after the Covid-19 pandemic, but emphasises the importance of both small and large chains. He also highlights the growing relevance of the pharmacy sector, given the importance of health.