Goldman Sachs China Healthcare Services: Drug Chains — Policy Supportive, Fundamentals Bottoming in 4Q25; Reiterate Buy on 3 Pharmacies
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Goldman Sachs highlights an inflection point for China’s pharmacy chain industry, supported by favorable policy and bottoming fundamentals. On January 22, 2026, nine government ministries jointly released guidelines to promote high-quality development in pharmaceutical retail. Notably, Article 13 explicitly supports retail pharmacy consolidation and encourages horizontal mergers and acquisitions. Analysts expect leading enterprises with robust scale, compliance, and digital capabilities to capture additional market share through organic growth and external integration.
Simultaneously, industry fundamentals bottomed in the fourth quarter of 2025. According to sample data, the total number of pharmacies recorded positive month-over-month growth of 0.1% in November, ending 15 consecutive months of contraction, followed by a 2.5% increase in December. Furthermore, same-store sales growth has remained positive year-over-year since May 2025.
Goldman Sachs reiterated Buy ratings on three pharmacy chains: Yifeng Pharmacy, Dashenlin, and LBX Pharmacy. For 2026, their projected price-to-earnings multiples stand at 15 times, 18 times, and 15 times, with anticipated earnings growth rates of 11.3%, 13.9%, and 21.2%, respectively.
Twelve-month target prices are set at Rmb34 for Yifeng, Rmb24 for Dashenlin, and Rmb21 for LBX, derived from two-stage discounted cash flow valuations. Although policy implementation typically requires roughly a year to execute fully, analysts have not yet adjusted earnings estimates, pending further visibility into the actual impact. Retail channel data indicates stable mass-market demand, complemented by strong growth in human albumin injectables.