Three points about the changing pharmacy market in Sweden
The Swedish pharmacy market was deregulated in 2009. Since then, the market has changed a lot.
#1: Online driving growth, except last year
As with many retail categories, the shift to online has been a fundamental change for the pharmacy industry in Sweden. Online revenues have been published since 2015. The transition to online has accelerated over the last five years, especially during the pandemic.
Since deregulation, the Swedish pharmacy market has grown by 63% (21 billion SEK). Of that growth, exactly half has come from the 10,5 billion SEK of the online channel.
Of the eight years that online sales have been published, online has grown more than the stores five times.
During the last five years, online sales have grown by 218%, while store sales have increased only by 14%. During that time online share of pharmacies has grown from 8% to 19,5%.
Of the three main categories of pharmacy retailing in Sweden, online is the smallest in the biggest category, Prescription drugs. However, prescription drug sales have grown slower than the category of "other products". In that category, online represents a whopping 42% of the revenues.
Lower prices online: a challenge for the stores
The rise of the online channel has been partly driven by the efficient operations that have led to a significant competitive advantage. Apotea has become the price leader that often sets the price, which the other chains follow.
The curious part of how the other chains follow Apotea is that Apotea's prices are matched only online. For example, Apotek Hjärtat has two prices, only store prices. And the store prices seem to be much higher than online.
This will probably accelerate the move to online.
#2: The number of stores grew rapidly for ten years and then started to decline
Since the deregulation, many new pharmacies were opened, especially during the first years of the 2010s. During the first ten years, until 2020, the number of pharmacies in Sweden increased by 54%.
As a result of the rapid growth and more efficient operations of online pharmacies as well as the pandemic, the number of pharmacies has declined in 2021 and 2022. The number of pharmacies is down by -1,8% from the 2020 peak.
Of the pharmacy chains, Apoteket AB (the former monopoly) and Apotek Hjärtat (owned by the grocery chain ICA) have the biggest number of pharmacies. Both have 390 pharmacies. They have also been the most significant two chains in the market, with market shares in 2022 of 39,4% (Apoteket) and 31,4% (Hjärtat). However, Hjärtat has been catching up with Apoteket's lead.
The challenger, Kronans Apotek, with about 16% market share, acquired a smaller chain Apoteksgruppen. The combined company has the most pharmacies despite the relatively small market share.
#3: Urban areas have received most of the new pharmacies
The rapid growth in the number of stores has been distributed unevenly. While the number of pharmacies in the whole country has increased by 51,5%, in Northern Sweden, the amount pharmacies have increased only slightly.
In Norrbotten, the northernmost part of the country, only one new pharmacy has been opened. At the same time, in Stockholm and Skåne regions, the amount of pharmacies has increased by more than 75%.
After the deregulation, the density of pharmacies started to represent the country's population.