Hangzhou-based pharmacy China Jo-Jo Drugstores has reported fallen revenue for both its second fiscal quarter and six months to September 30.
For the quarter, revenue was $20.2 million, 10.7 per cent down from $22.6 million for the same period last year, while gross profit grew 9.5 per cent year-over-year to $4.4 million, gross margin increased 4 per cent to 21.6 per cent, and retail pharmacy gross margin rose 7.1 points to 29.4 per cent.
For the six months, revenue was down from $43.9 million to $41.1 million, gross profit increased 5.8 per cent to $8.8 million, gross margin edged up 2.5 points to 21.5 per cent, and retail pharmacy gross margin increased 5 to 29 per cent.
“Our gross margin continued to expand, benefitting from more vendor rebates attributable to our focused marketing efforts in promoting brand-name pharmaceutical products,” says chairman/CEO Lei Liu.
“During the quarter we achieved sales volume with certain brand pharmaceutical suppliers and received substantial rebates. In addition, now the G20 summit is behind us, we have normalised our marketing activities and expect a rebound in retail sales in the third quarter.”
Lower revenue was mainly caused by a decline in the company’s online pharmacy business, partially offset by the increase in wholesale business.
To improve same-store sales, the company continued to optimise product mix, enable mobile payment, roll out in-pharmacy virtual doctor clinics, and work with reputable vendors to promote third-party products. The pharmacy store count increased to 62 compared to 59 stores a year ago.
Online pharmacy sales nearly halved to $3.8 million from $6.6 million in the same quarter a year ago. The company says the drop was mainly because of lower sales through third-party eCommerce sites resulting from the China Food & Drug Administration (CFDA) suspension of OTC drug sales on these platforms, and fewer transactions referred from pharmacy and health insurance benefit card Yikatong.
To address these challenges, the company is adding more non-medical health products such as nutritional supplements on the third-party eCommerce platforms, while seeking alternative referral arrangements from other pharmacy benefit management providers.