Compliance with regulations has become an insurmountable red line for the survival and development of retail pharmacies.
According to People’s Daily, some pharmacies, including Laobaixing Pharmacy and Yangtianhe, were recently exposed for allegedly misusing medical insurance funds. On the 22nd, the Hunan Provincial Medical Insurance Bureau urgently summoned these pharmacies and urged relevant cities and prefectures to complete on-site inspections of the involved stores.
A preliminary investigation by the medical insurance department showed that the 10 involved pharmacies had violations such as swapping products and settling payments with substitute cards. The confirmed issues involved a total of 3,267.14 yuan from employee personal medical insurance accounts. No misuse of the medical insurance pooling fund was found in the related pharmacies.
The swift response and serious handling by relevant authorities reflect a zero-tolerance attitude toward fraudulent use of medical insurance funds. In recent years, the National Medical Insurance Bureau has continuously strengthened fund supervision and intensively issued policies to solidify regulatory responsibilities. Compliance has become an insurmountable red line for the survival and development of retail pharmacies.
Involving Listed Pharmacy Chains
According to reports, specific violations at the involved pharmacies included: swapping cosmetics and health foods for settlement as “medicines”; promoting prescription drugs through “buy medicine, get medicine free” promotions; staff skillfully evading surveillance, forging prescriptions, and arranging “medicine swapping schemes”; and some individuals regularly assisting others in swiping medical insurance cards, forming a fixed operational model.
This incident involves several well-known pharmacy chains, including the listed chain Laobaixing. Specific stores include Huaihua Xuanqi Laobaixing Health Pharmacy, Hunan Hengyang Laobaixing Health Pharmacy (Institute of Technology store), and Hunan Shaoyang Laobaixing Pharmacy Shuiying Mingcheng store, involving both directly operated and franchised stores, sparking widespread concern.
This is not the first time Laobaixing Pharmacy has been involved in medical insurance violations. According to a previous notice from the National Medical Insurance Bureau, in June 2025, six Laobaixing Pharmacy stores in Loudi, Hunan, were found to have swapped health products for medical insurance drug settlements and failed to verify identities while assisting in purchasing drugs under fake names. The involved stores were ordered to return the fraudulently obtained funds, fined administratively, and had their medical insurance service agreements terminated.
The frequent fraudulent activities at Laobaixing Pharmacy are linked to the company’s pressure from industry adjustments affecting performance growth. Currently, the retail pharmacy industry is no longer in the era of “rapid expansion.” It is shifting from pursuing scale to intensive management. Under the influence of multiple factors, such as tightened policies and intensified market competition, many listed pharmacy chains are facing performance pressure.
Financial data shows that in 2024, Laobaixing achieved revenue of 22.358 billion yuan, a year-on-year decrease of 0.36%; net profit attributable to shareholders was 519 million yuan, a sharp decline of 44.13% year-on-year. Both indicators fell for the first time in a decade. In 2025, the company’s revenue was 22.237 billion yuan, down 0.54% year-on-year; net profit attributable to shareholders was 382 million yuan, down 26.44% year-on-year. Excluding the impact of goodwill and land impairment, net profit was 620 million yuan, still down 1.0% year-on-year.
On the other hand, these cases also expose shortcomings in internal control management among some leading pharmacy chains during rapid expansion. Although the pace of industry expansion has slowed in recent years, the store counts of listed companies like Dashenlin, Laobaixing, and Yixintang remain above 10,000.
As of the end of 2025, Laobaixing had stores covering 18 provinces and more than 150 prefecture-level cities and above, totaling 14,975 stores, including 9,732 directly operated stores and 5,243 franchised stores. Additionally, as of the third quarter of 2025, Laobaixing had over 23,000 alliance pharmacies, with cumulative equity investments in 176 partner companies involving 10,085 stores.
Notably, among its more than 9,000