Korea's first warehouse drugstore worries pharmacy sector

Shoppers browse for drugs and other household medical supplies at Mega Phactory in Seongnam, Gyeonggi Province, Tuesday. Korea Times photo by Ko Dong-hwan

SEONGNAM, Gyeonggi Province — Korea’s first warehouse-style drugstore, where customers can shop for medicines much like they would in a grocery store, is quickly gaining popularity.

Since opening last month, the store has continued to draw crowds, with visitors leaving with bags full of medication — a rare sight in a country where pharmacies are already abundant in most neighborhoods.

However, the rise of the warehouse drugstore is drawing mixed reactions from pharmaceutical companies and traditional pharmacies. While it could boost sales of over-the-counter (OTC) medications for drugmakers, concerns are growing over potential misuse of medications and the disruption of pharmacies' traditional role within local communities.

Mega Phactory, located in Seongnam’s Sujeong District in Gyeonggi Province, continues to attract large crowds more than a month after its opening. On Tuesday, vehicles lined the streets around the store, forming a queue so long that police were dispatched to manage traffic congestion. Shoppers streamed out of the store carrying plastic bags filled with their purchases.

Inside the store, visitors packed each aisle, pushing shopping carts as they browsed. The shelves were stocked exclusively with OTC medications. An employee in a white doctor’s coat explained that the store does not carry prescription drugs.

The entrance to the store was crowded with heaps of drug boxes, as employees busily unboxed and restocked shelves to keep up with the steady flow of paying customers.

The store's popularity is a positive sign for pharmaceutical companies that develop and manufacture OTC drugs. In addition to local community drugstores and those inside large supermarkets that they have been supplying, the warehouse drugstore is emerging as another retail hotspot contributing to their sales.

“Having another outlet to supply should be a good thing for any pharmaceutical firms,” said an official from Chong Kun Dang, a major pharmaceutical company.

An official from Yuhan, another major player in the industry, echoed the sentiment.

Consumers’ appreciation for the warehouse drugstore is partly driven by its lower prices. Thanks to bulky supply deals, the store can offer medications at prices lower than those of regular drugstores.

Customers consult with a pharmacist at a drugstore in Seoul's Jongno District, Sept. 1, 2023. Newsis

The ability to freely browse shelves and compare products before making a purchase is another advantage of the warehouse drugstore — something not possible at regular drugstores, where pharmacists typically recommend and select medications for customers.

However, there are rising concerns about drug safety and the potential impact on regular drugstores. Before the arrival of the warehouse drugstore, pharmacists dispensed drugs to customers in proper amounts based on their needs. It is unprecedented to see people pushing shopping carts and stock up on drugs in quantities meant to last for weeks or even months.

“Drugs are not food. They need to be chosen carefully and taken in proper doses, not stockpiled at home like frozen goods," said Choi Hun-soo, chief of the external relations office at the Korean Pharmaceutical Association (KPA).

“Aside from lower prices, I don’t see any real benefit from warehouse drugstores.”

Choi also expressed concerns over the warehouse drugstore’s potential market influence over the traditional drugstores, which have a unique social role that must be preserved.

“Local drugstores in every community have been frequented by locals who come to ask for medical help casually," Choi said.

"These drugstores also often support the socially vulnerable in partnership with local governments, including the Seoul Metropolitan Government. These valuable social functions, if the warehouse drugstore begins to expand, will no longer be served because of the local drugstores’ falling market share.”

An official from another major pharmaceutical company also expressed concerns about warehouse drugstores, citing the potential for drug misuse or abuse by shoppers.

“Cheaper drugs may be good for consumers and their sales may be good for pharmaceutical companies. But I understand the KPA’s concerns. Drugs could cause side effects and must be used under expert guidance. If the warehouse drugstore’s business keeps running and causes any problem, the country’s present Pharmaceutical Affairs Act may not be able to define who is responsible,” the official said on condition of anonymity.

The Division of Pharmacy under the Ministry of Health and Welfare’s Bureau of Healthcare Policy which oversees the country’s pharmacy regulations declined to comment to The Korea Times on the issue.