Leading Chinese pharmacy chains have bottomed out ahead of the broader industry, with store and same-store sales showing recovery signals

Overview

This report reviews FY25 and 1Q26 results of A-share listed pharmaceutical chain companies. The core conclusion is that the industry has stabilized from a phase of store contraction and same-store sales pressure, but recovery is not even. Leading chains including Yifeng, Dashenlin and LBX Pharmacy reversed store closures first, while the industry sample of pharmacy stores improved on a quarter-over-quarter basis and year-over-year declines narrowed. Same-store sales growth has remained positive since turning positive in mid-2025. The report also tracks sales of key retail-channel products including TCM, GLP-1, blood products, insulin and supplements to validate changes in end-demand.

Core views

Goldman sees the pharmaceutical chain industry as entering a stabilized and diverging phase. The leading companies, backed by scale economics, operating efficiency and cash reserves, are able to expand their store networks faster through self-build, franchising, or M&A. Among the three covered companies, Goldman considers Yifeng Pharmacy and Dashenlin to have stronger positioning and keeps Buy ratings; LBX Pharmacy is kept Neutral, mainly because upside depends on acquisition execution and contribution from diversified businesses, while downside remains exposed to online competition and the pace of industry integration.

Analysis framework

The report combines listed pharmacy companies’ quarterly store counts, Pharmcube sample pharmacy monthly data, same-store sales growth, sales of key product categories through retail channels, and Goldman valuation framework analysis. On valuation, Yifeng Pharmacy and Dashenlin use a 5-year exit P/E model with WACC of 8.5% and exit PE of 21.2x; LBX Pharmacy also uses a 5-year exit PE valuation with WACC of 8.5% and exit PE of 18.2x.

Methodology notes

• Valuation Method5-year Exit PE Valuation

  Derive a 12-month target price based on a 5-year forecast and exit P/E multiple.

  Yifeng Pharmacy and Dashenlin target prices are based on WACC of 8.5% and exit PE of 21.2x; LBX Pharmacy target price is based on WACC of 8.5% and exit PE of 18.2x.

• Industry TrackingTracking Store Count and Same-Store Sales Growth

  Determine the industry cycle position through listed pharmacy store counts and sample pharmacy sales growth.

  Leading store counts have stopped declining and are recovering, and same-store sales growth has been positive since mid-2025; this is a key piece of evidence for the industry stabilization call.

• Product Demand ValidationMonthly Sales Tracking of Key Products in the Retail Channel

  Track monthly sales of categories such as TCM, GLP-1, blood products, insulin and supplements.

  This approach is used to observe changes in demand structure at the pharmacy end, for example strong sales growth in semaglutide and insulin glargine, while some supplements such as Caltrate D remain under pressure.

• Goldman Internal FrameworkGS Factor Profile

  Compare stock characteristics using growth, financial return, valuation multiples and composite percentiles.

  This framework applies Goldman forecasts and standardized ranking to compare companies against the market and peers, used as an investment context reference.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Yifeng Pharmacy (603939.SS)

  One of the core recommended names, rated Buy.

  Strengths

  Strong cash reserves and operating efficiency, recovering store count, and the ability to continue expanding through self-build, franchising and M&A.

  Weaknesses

  The target price has been lowered from a higher historical level to Rmb32, implying that earnings or valuation expectations were previously recalibrated.

  Comparison

  Compared with LBX Pharmacy, Goldman is more constructive on Yifeng Pharmacy; it is similarly a relatively positive leader alongside Dashenlin.

  Risks

  Stronger-than-expected online competition, stricter reimbursement or centralized procurement policy, goodwill impairment linked to M&A, and barriers to entering new provinces such as Fujian and Shandong.

• Dashenlin (603233.SS)

  One of the core recommended names, rated Buy.

  Strengths

  Store expansion continues, with 1Q26 store count at 18,044 stores; scale advantage and operating efficiency support industry integration.

  Weaknesses

  Regional expansion still needs to be proven, especially given the difficulty of establishing market share outside Guangdong.

  Comparison

  Seen as more favorable by Goldman, similar to Yifeng Pharmacy and more constructive than LBX Pharmacy.

  Risks

  Stronger-than-expected online competition, price pressure from reimbursement or centralized procurement policy, acquisition-related risks, and difficulty building share in Guangdong-outside markets such as Guangxi and Henan.

• LBX Pharmacy (603883.SS)

  Covered name, rated Neutral.

  Strengths

  Store count has recovered slightly in 1Q26; faster M&A execution and contribution from diversified businesses could support upside.

  Weaknesses

  Store count recovery is weaker than some leaders, rating has been downgraded from Buy to Neutral, and target price has been cut multiple times.

  Comparison

  Goldman is more cautious on LBX Pharmacy than on Yifeng Pharmacy and Dashenlin.

  Risks

  Online competition may hurt more than expected, policy implementation may be slower than expected, and industry consolidation may be weaker than expected; upside depends on M&A execution and contribution from diversified businesses.

• A-share Chinese pharmaceutical chain industry

  Industry theme asset, with leaders bottoming out earlier than the broader market.

  Strengths

  Same-store sales growth has turned positive, store counts are recovering quarter-over-quarter, and policy support supports M&A and consolidation.

  Weaknesses

  Many smaller players remain in store-reduction mode, and industry year-on-year store growth is only just recovering from negative growth.

  Comparison

  Divergence between leaders and smaller chains has widened, with leaders more likely to capture integration gains.

  Risks

  E-commerce competition, reimbursement and volume-based procurement policy, M&A integration failures, and cross-region expansion challenges.

Key data

• Yifeng Pharmacy store count1Q26 is 14,943 stores14,831 stores at the end of 2025, with slight recovery continuing in 1Q26.
• Dashenlin store count1Q26 is 18,044 storesExpanded continuously from 10,045 stores in 2022 to 1Q26.
• LBX Pharmacy store count1Q26 is 15,001 storesA slight recovery versus 14,975 stores in 4Q25, but still below 15,492 in 3Q25.
• Sample pharmacy store trendImproved from roughly -8% to -9% year-on-year at year-end 2025 to near flat by April 2026Visual estimate from Pharmcube charts.
• Sample pharmacy sales growthAbout +6% in March 2026 and about +5% in April 2026Most months in 2024 were negative; growth turned positive after May 2025.
• Yifeng Pharmacy rating and targetBuy, Rmb3212-month target price, based on 5-year exit PE valuation.
• Dashenlin rating and targetBuy, Rmb2512-month target price, based on 5-year exit PE valuation.
• LBX Pharmacy rating and targetNeutral, Rmb1612-month target price, with exit PE assumptions lower than Yifeng and Dashenlin.

Impact & implications

If the recovery trend in both store counts and same-store sales continues, the pharmaceutical chain industry could move from broad pressure to a phase of higher concentration among leaders. Companies with stronger scale, cash, and operating efficiency are more likely to expand through M&A and franchising under policy support and capture share during industry consolidation. From an investment perspective, the report favors leaders with stronger operating efficiency and expansion capability over smaller chains still reducing stores or recovering slowly.

Risks

• Online pharmacies and e-commerce competition stronger than expected, squeezing footfall, pricing and margins.
• Healthcare reimbursement or VBP policy tightening could create additional price pressure.
• M&A expansion may bring goodwill impairment, integration underperformance, or increased management complexity risk.
• Cross-provincial expansion may be affected by regional competition, operational management complexity, and difficulty establishing market share.
• Industry consolidation and policy support may be implemented more slowly than expected, weakening leaders’ expansion pace.

What to watch

• Whether leading pharmacies continue to post sequential store count increases quarter by quarter.
• Whether same-store sales growth remains positive through 2026.
• M&A announcements, franchising expansion and cash usage pace at Yifeng Pharmacy, Dashenlin and LBX Pharmacy.
• Changes in healthcare reimbursement, VBP and pharmacy retail regulatory policies.
• Trends in key product sales in retail channels, especially GLP-1, blood products, insulin, TCM and supplements.
• Whether LBX Pharmacy can improve the investment case via faster M&A execution or stronger contribution from diversified businesses.