By Dr. Maurice Yeates and Dr. Tony Hernandez

In this CSCA Research Insight we have compiled evidence from a variety of sources related to the drugstore/pharmacy retail sector in Canada to answer a basic two-part question. Are the drugstores becoming more concentrated in the hands of a few major players? If so, why is this occurring? Our analysis highlights that concentration in the sector has increased markedly. In the early 2010’s less than 30% of all drugstores were controlled by the Big Five (Loblaw, Sobeys, McKesson, Walmart and Metro) this doubled to 60% in the latter part of the decade. Our answer to the second part of the question is that the owner/operators of drugstore/pharmacies are consolidating in order to maintain profitability through ever greater expansion of their front-of-store sales. We demonstrate this with sales evidence related to: two major chains; and, operating margins related to chain and non-chain stores. Our assumption, for which good evidence is provided, is that the drugstores/pharmacies in chains are operated mainly by the biggest corporations.