"Warehouse-Style Pharmacies" Resembling Hypermarkets Spread, but Government Remains in the Dark

"It's convenient because I can buy emergency medicine even late at night, and they sell pet medicine, which used to be expensive online, at a low price, so I visit often."

Kim (34), an office worker living in Yongsan-gu, Seoul, said this, explaining that they have recently been frequently visiting warehouse-style pharmacies.

Warehouse-style pharmacies operate like hypermarkets, featuring large-scale stores spanning hundreds of pyeong (one pyeong is about 3.3 square meters) equipped with shopping carts, where consumers directly select and pay for over-the-counter (OTC) drugs, health functional foods, cosmetics, and pet medicines.

Adopting an operating model similar to overseas drugstores, these warehouse-style pharmacies are attracting consumer interest by offering low prices and long operating hours.

In online communities, information on recommended products that can be purchased at warehouse-style pharmacies, such as highly effective vitamins and acne treatments, is being shared.

However, because many of these large stores operate late into the night and some are open year-round, they pose a threat to small neighborhood pharmacies.

While there are currently known to be about 50 warehouse-style pharmacies nationwide, it has been revealed that the government does not know their exact operational status, prompting calls for countermeasures.

Today (June 23), according to data on the "Status of Openings and Closures of Domestic Warehouse-style Pharmacies and Small- and Medium-sized Pharmacies" received by Rep. Kim Mi-ae of the ruling People Power Party, a member of the National Assembly's Health and Welfare Committee, from the National Assembly Research Service (NARS), it was confirmed that it is difficult to grasp the exact operational status of warehouse-style pharmacies because they lack a legal definition under the current Pharmaceutical Affairs Act.

Since "Mega Factory," known as the first warehouse-style pharmacy in South Korea, opened in June last year, about 50 new locations have been authorized nationwide, but only about 40 are estimated to be actually operating.

According to NARS, the Ministry of Health and Welfare also stated in October last year that "there are limits to grasping the exact status of openings because there is no legal definition for warehouse-style pharmacies."

While no detailed understanding of warehouse-style pharmacies has been established, the trend toward larger pharmacies in the market has become clear.

The number of pharmacies with annual sales of 30 billion won or more increased by 50% from 18 nationwide in 2021 to 27 in 2024.

The share of sales for these pharmacies also expanded from 2.7% to 3.7% of total pharmacy sales during the same period.

Total sales in the nation's pharmaceutical and medical supplies retail sector increased by 23.42% from 26.7877 trillion won in 2021 to 33.0607 trillion won in 2024.

The average sales per business also rose by 20.18% from 1.016 billion won in 2021 to 1.221 billion won in 2024.

Accordingly, concerns are growing that the ecosystem of neighborhood pharmacies in local commercial districts could collapse.

Indeed, the Korean Pharmaceutical Association stated that since the opening of warehouse-style pharmacies, sales of OTC drugs at nearby pharmacies have plummeted by about 30% to 40%.

A survey conducted by the association in April also showed that 81.6% of pharmacists near warehouse-style pharmacies perceive the current situation as "serious."

However, NARS noted that under the current statistical system, sales are not compiled separately by pharmacy size, making it difficult to confirm the actual scale of sales decline for neighborhood pharmacies.

NARS explained that major foreign countries are establishing institutional mechanisms to prevent large pharmacies from dominating the market.

As 38.9% of independent pharmacies in the United States closed down between 2010 and 2021, the U.S. Federal Trade Commission (FTC) proposed expanding the participation of independent pharmacies in "preferred pharmacy networks" as an alternative in a report.

A "preferred pharmacy network" is a system that protects local pharmacies by designating specific neighborhood pharmacies and offering drug price discounts to insured individuals who use those pharmacies.

Rep. Kim Mi-ae urged, "We do not even know exactly how many warehouse-style pharmacies are in operation. How can we respond properly in this situation?" She added, "The government must first establish the legal concept of warehouse-style pharmacies and prepare a management system that considers both the protection of local pharmacies and consumer benefits."
※ Please note: This article was translated by AI and may contain errors.